What is a VA Loan?

      Veterans Administration (V.A.) Loans are available to qualifying MIA (Missing in Action) spouses, United States veterans, and their surviving unmarried spouses (providing the veteran was killed in service or from a service related injury or disability.)   The government is not the lender, but they guarantee the loan, making it less risky for the lender.
       The amount that is guaranteed is 25% of the maximum loan amount, which is called the Veteran’s entitlement. When the loan is repaid, the entitlement amount is reinstated.
       The veteran does not pay for this guarantee, and he or she is prohibited from paying any of the VA points. The VA points can be paid by the seller, or another party. There is a 1% loan origination fee, and a 1% funding fee. Only the latter may be financed.
       The borrower can borrow up to a specific amount, with no down payment. If the sales price exceeds that, the buyer must come in with a 25% down payment for the excess amount. Under some circumstances the borrower may borrow money to use as a down payment.
       When the property is appraised, the V.A. will issue a Certificate of Reasonable Value (CRV). If the borrower would like to purchase a property whose price exceeds the CRV, he or she must pay cash for this extra amount.
       Unlike a FHA loan, the borrower in a VA loan must occupy the property. VA Loans tend to have more lenient underwriting rules, and offer fixed or adjustable rates. There are no prepayment penalties with VA Loans.
       For more information on VA Loans, contact your VA approved lender.

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