If the housing market is in fact struggling, you would not realize it by judging the VA loan activity over the last decade; the year 2012 in particular was remarkable for VA loans. The New York Times reported that the Department of Veterans Affairs guaranteed nearly 540,000 loans in 2012 alone, which is the highest number of VA loans utilized since 1994. This number is up almost 300% compared to only five years ago.
So, why are so many borrowers flocking to VA programs for home loan financing? Let’s take a closer look at the basics of this program in order to gain a better understanding.
What is a VA Loan?
The VA loan program has been in existence for many decades, and is designed to make it easier for returning soldiers, and their families, to be able to acquire loans for housing. The loans themselves are not supplied by the Department of Veterans Affairs, but are instead issued by private lending institutions.
The federal government simply guarantees at least a portion of the loan, which enables the lenders to accept more applicants, have more lenient restrictions, and offer more favorable terms. For most people in the mortgage or real estate industry, it’s easy to see the benefit of such a backing after the last few years of changes in our industry.
Using VA Loans to Refinance
Of the monumental number of homeowners who obtained a VA loan in 2012, well over half of these individuals used the funding in order to refinance their current mortgages. The interest rates for VA loans have dropped significantly over the past few years alone, and it is possible for a veteran Louisiana homeowner to refinance at very low rates using this program (please call or complete our pre-qualification form for current rates and pricing).
Anyone who qualifies for VA lending can refinance using a VA loan, and it is especially quick and simple for someone who already has a VA loan to refinance. If you have already received this type of financing in the past, there is no need to go through all of the steps to reprove your eligibility.
Purchasing A Home Using a VA Loan
While many people do use these loans for refinancing purposes, the number of people purchasing new homes using these financing tools has risen significantly as well. What makes these loans very unique, and so helpful to returning veterans in particular, is that they are available with no down payment. The Department of Veteran Affairs provides a financing limit that is based on many different factors, such as the value of the home.
Unlike similar types of conventional loans, there is no requirement to purchase any type of mortgage insurance, but there can be an initial funding fee. Talk to a loan officer to get more details about this.
Qualifying for a VA Loan
In recent years, the lending industry in general has seen a significant change in guidelines related to credit and income qualifications which has in turn affected the ease or difficulty with which people can obtain the loan terms they seek. As this has happened in the conventional market, veteran’s loans have surged in popularity, in large part because they provide an affordable and more accessible alternative.
There are two primary requirements applicants must meet when pursuing a VA loan:
- The first is a credit score of approximately 620.
- Secondly, you must be able to show evidence that you will be able to handle the loan payments, and other financial responsibilities, after you have received the financing.
You can find out more by contacting us today to schedule a free consultation, where we can review your VA eligibility and discuss the particulars of your loan situation with the goal of helping you get pre-qualified. You can also learn more by visiting the official VA site which includes detailed eligibility requirements and much more.