US Helps Veterans with Mortgages

VA benefits no mortgages began in the WWII era when the government decided to help veterans get into homes. Because loans for homes depended on good credit history, and because many young veterans had not had the opportunity to build up credit history, banks tended to have an aversion to lending to them. To help veterans in this respect, the government began to place guarantees on money borrowed by veterans so that banks would not treat them as risky borrowers and give them good loan terms.

What VA Benefits Did: -Banks do not require private mortgage insurance on government insured loans. PMI helps banks cover the cost of borrowers who default on their loans. Because the bank is insured against loss by the government, they do not need to charge vets PMI. -Due to the fact that banks do not risk defaults on loans made to veterans, they charge less interest than they would on someone more likely to default. -Down payments are optional for veterans. -Borrowers may prepay without a prepay penalty that some lenders charge. This gives vets more home refinancing options should interest rates improve by making this process more affordable than for those whose lenders do require prepay fees.

Vet loans can’t:

-The government is not giving veterans money; they are guaranteeing that banks will get paid. This allows banks to give veterans preferential treatment. -The government is not responsible to deal with any concerns about the house after it has been purchased. -A fee is charged of veteran who wish to refianace.

How do you know if you qualify for these benefits? Check the official website, www.homeloans.va.gov, for this and more information that you should be aware of. The site can be used to look up information or ask any questions that you might have.