Just keep in mind: Not all lenders can issue VA loans, and even among those that do, the loan options can vary. VA loans can be used for the purchase, refinance or renovation of a home (with some stipulations), and there are several types to choose from. Today, VA loans account for about 11% of all mortgage activity, according to the Mortgage Bankers Association. This means if a VA borrower fails to make payments on their loan and defaults, the VA will repay the lender a portion of its losses.īecause of this added protection from the government, lenders (those who are approved to offer VA loans, at least) can be more lenient on credit score and down payment requirements when making these loans and lend out larger amounts.Ĭreated in 1944 as part of the GI Bill of Rights, the VA loan program was intended to help service members returning from war more easily purchase homes and reintegrate into society. VA loans are typically issued by private mortgage lenders (we’ll go into the one exception later on) but the VA assumes some of the risk. A VA loan is a mortgage guaranteed by the Department of Veterans Affairs.
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