Business and Personal Finance Dictionary

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• VA LOAN
  
  VA loans are loans for veterans backed by the Veterans Administration. Veterans use VA loans to purchase a home. Many veterans who would otherwise not be able to buy a home can do so through the VA loan program. Eligibility is specific and those who qualify must have a Certificate of Eligibility from the Veterans Administration. There are both benefits and disadvantages to VA loans, but it really depends on the veteran and their situation. The Veterans Administration doesn't give out VA loans. They run the VA Loan Program. Lenders work with the Veterans Administration to become approved partners in the program. The lenders give out the VA loans, and the Veterans Administration will pay a percentage of the loan if the veteran happens to default on it. At the current percentage, the Veterans Administration will cover up to $36,000 for a $144,000 VA loan and up to $60,000 for a loan over $144,000. Most people find a VA loan to be beneficial. Typically, there are no prepayment penalties, and no down payment is required for VA loans. VA loan interest rates are also considerably low. Though the process can be tedious, sometimes VA loan approval is faster than approval for conventional loans. Another benefit is there is no need for Private Mortgage Insurance (PMI) and closing costs can be completely covered by the seller. VA loans are not all great, though. They do have some setbacks. Sometimes VA loans take longer to process so lenders aren't always eager to process them. Also, not all lenders are VA approved so veterans' choices of lenders are limited compared to someone looking for a conventional loan. Another disadvantage is that the sales price of the home will probably be less negotiable because the seller will be asked to pay closing costs. Lastly, if the veteran defaults on the VA loan, the Veterans Administration will pay the lender, but most likely try to get the money back from the veteran. You may find that a VA loan is perfect for your situation. Many veterans are left disabled or unable to work. This makes buying a home extremely difficult. With the VA loan program, veterans can own homes. The best source for information on VA loans is the Veterans Administration website or someone at your local Veterans Administration office. They can tell you if you are eligible after you fill out a form. If you are eligible, they will give your lenders a Certificate of Eligibility. To find a lender, you may want to work with a mortgage broker or ask around to see which company is recommended. Above all, pray about the decision to pursue a VA loan.
  
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