There are various types of loans that the department of veteran affairs gives to military families and veterans. VA home loan benefits a lot of people in recent times with lenders giving priority to such cases. Lower interest rates are charged on such loans enabling servicemen and women, as well as their families, get homes that are within their budget. Before initiating the process of acquiring the loan, it is essential for one to understand the different types available and which ones they are eligible for. Additionally, it is fundamental for one to identify the homes they are interested in so that they estimate how much they will need.
VA home loans are geared towards helping military personnel buy, build, or improve their home. Staff who are already homeowners are not locked out of accessing the loans. Getting the certificate of eligibility helps one know which credit they qualify for hence getting this document ought to be a priority. Some of the loan types availed by VA include;
- VA direct home loan
This option does not involve and external lender. VA works as the mortgage lender, and they apply for the loan and manage it on behalf of the veteran, military personnel, or spouse. Most people prefer this program since it has better terms and lower rates than banks, credit unions, or mortgage companies.
- VA- backed home loan
VA guarantees a loan taken from a private lender, making it possible for the financer to recover most if not all their losses when a home goes into foreclosure. Less risk is involved in this type of financing; hence private lenders advance the loans with better terms. Certain aspects such as down payment may be removed from the plan making it possible for veterans and military personnel to acquire homes without being squeezed too hard. Other requirements laid down by the lending institution must be met as well as those of the department of veteran affairs before a loan is given.
- Native American direct loan
This loan caters to Native Americans only. If a veteran or their spouse is Native American, they can take out a loan for this program and build a home on federal trust land. One must meet the credit standards and get a certificate of eligibility, indicating that they can get this type of financing from VA. Taking this loan requires one to prove that they will be able to cover the mortgage among other costs. Proof that one will live in the house built or bought using this loan is a must before it is given.
- Re-finance loans
The interest rate reduction and cash-out re-finance loans are availed by the department to help veterans, servicemen, and women change the terms of their agreement and seek lower rates or take some cash out of their house equity. The interest reduction re-finance allows for the decrease in monthly payments to make them stable. The cash-out refinance, on the other hand, enables VA members to get money to take care of their different needs and still keep their homes.