One of the three main options available through the U.S. Department of Veterans Affairs (VA) Home Loans and Housing-Related Assistance Program, a VA purchase loan can make it significantly easier for current and former servicemembers to buy or build a home—a fact that seems to be catching on.
According to a new report issued by the Consumer Financial Protection Bureau (CFPB), the use of VA loans among first-time home buyers has been increasing steadily over the last several years, from 30 percent prior to 2007 to 63 percent in 2009. And in 2016, the number of military first-time home buyers skyrocketed to 78 percent, which is evidence that more veterans and active-duty servicemembers are taking advantage of the well-deserved benefit.
“The greater share of VA loans among servicemembers was part of a larger shift among consumers (both servicemembers and non-servicemembers) away from conventional to government-guaranteed mortgages between 2006 and 2009,” the report noted. Researchers also pointed out that the median loan amount for first-time home buyers using a VA loan increased from $156,000 in 2006 to $212,000 in 2016.
Why take advantage of the VA home loan benefit?
Compared with conventional loans, VA purchase loans offer several key benefits for first-time home buyers. No down payment, no private mortgage insurance, lower monthly payments, competitive interest rates and a cap on closing costs are just some of them. And, because there is more flexibility and leniency with VA loans, lenders are more likely to overlook lower credit scores as well as past foreclosures or bankruptcies.
What’s more, you can still take advantage of the VA home loan benefit even after you buy your first home. Because it is a lifelong benefit, there is no limit on the number of times an eligible veteran can use the program.
Are you a first-time veteran home buyer? Remember these four tips:
Familiarize yourself with the VA home loan process. As with any major decision, it is important to know what you are getting into. Start by reading through the information provided on the VA website, which covers everything from the different loan types available to the process of completing your Certificate of Eligibility (COE).
Research other available loan options. While a VA home loan is typically the best option for veterans and military families, it still pays to do your homework and research every possible option—including conventional loans. Purchasing a home, especially for the first time, is an important decision, so you want to make sure you look into every possible opportunity.
Work with a military-friendly realtor. Not only are they familiar with how the VA home loan program and appraisal process works, but military-friendly realtors also understand the unique needs and requirements of veterans with disabilities. You can read more about that here.
Be ready to provide proof of service. As with similar benefits, veterans will need to show they are eligible to use the VA home loan program. This typically means having a copy of your DD214 in hand to show proof of service and honorable discharge. If you never received a copy, or if your DD214 was lost, stolen or damaged, you will need to order a new copy before you can complete the VA home loan process.
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