The VA Home Loan Benefit “Knowledge is Power”
Branch Manager, VA Mortgage Center of Hawaii
President, VA Loans Hawaii
The last few years have proved a mixed bag for home buyers and home owners alike. Borrowers who qualify have reaped the benefits of government-sponsored tax credit programs and record low interest rates. At the same time, the subprime mortgage meltdown and ensuing financial crisis created a restrictive credit environment and made it significantly tougher for some to purchase homes or refinance.
That relatively grim storyline isn’t exactly the same for military members.
VA loan volume has soared 135 percent since 2007. Falling home prices and a watertight credit market have brought new attention to the long-cherished VA home loan program.
Veterans and active duty service members don’t need to hit strict credit or income guidelines to participate. These loans also come with significant financial benefits. Veterans routinely point to the program’s signature benefit as its most powerful: Qualified borrowers can purchase a home with no money down.
Given the current lending environment, it’s hard to believe anyone can buy a house today without shelling out money up front. But it’s true, and it’s a benefit that only one other loan product, USDA Rural Development loans, can still provide.
Nearly 90 percent of the VA loans issued in fiscal year 2010 closed with no down payment.
Most people don’t realize until they apply for a loan, especially younger people and first-time home buyers, all the implications of being able to obtain a mortgage without a down payment, which can be as much as 20 percent of the purchase price of the home it can make the difference in whether or not you can qualify.
The VA loan and military borrowers have also proved resilient in the face of foreclosure. VA loans have the lowest rate of foreclosure of any product on the market. Part of that success is due to the loan counseling experts at the VA who work tirelessly to keep veterans and their families from losing their homes. But committed military home owners deserve much of the credit as well.
Despite their wide-ranging benefits, VA loans have been utilized by only a fraction of the nation’s 24 million veterans. Fewer than 13 percent have taken advantage of the program to purchase or refinance a home, according to VA benefit breakdowns. Nearly 20 percent of veterans across the U. S. are not even aware of the program’s existence, according to a 2004 report from the VA. And, at our monthly VA Loan seminars here in Hawaii, we’ve discovered that many of those who attend are surprised when we enumerate all the benefits they can take advantage of now. Many express regrets that they didn’t find out sooner…or they might already be living in the home of their dreams, or own an investment property to enhance their family’s financial security in the future.
A VA loan may not be a perfect fit for every military borrower. Veterans who can come up with sizable down payments and have sterling credit may find better loan terms elsewhere. However, this crucial program has served as a springboard to home ownership for more than 18 million veterans since 1944 and is more valuable than ever in today’s volatile real estate marketplace.
The VA home loan benefit is so valuable that it has become our passion to educate as many veterans as possible about it. Knowledge is power -let us empower you.