The men and women of the United States Armed Forces have always been respected, and many Americans believe there is no higher honor. One of the first ways the country repays their veterans when coming back from service is providing them a lending option called a Veteran Loan.

These loans are available only to veterans and their spouses and give incredible rates with very few restrictions. The purpose of these loans is to help veterans make up the time they lost while serving their country, encompassing the time not furthering education or the money they could have made in a civilian career.

Originally called the G.I. Bill or the Serviceman’s Readjustment Act, veteran’s loans were started in 1944 for men and women returning from World War II. This bill was passed by President Franklin Delano Roosevelt and was one of the final pieces of his “New Deal” which was a plan to bring the United States out of the great depression. The Bill gave 7.8 million veterans access to an education or training program and 2.4 million home loans. What these loans did for the economy was created a massive boost in the amount of home production available and expanded the middle class to a much larger range of people, doing away with much of the disparity that caused the depression in the first place. The surge in education and homeowners in the 1950’s put the United States back on the world stage following the depression and it soon became the main player in global affairs.

In 1966 the Veterans Readjustment Benefits Act allowed all veterans the option to apply for the G.I. Bill, as opposed to before where the loan was only offered to those serving in times of war. The bill was highly used by Vietnam veterans for education since most of them were drafted immediately following high school and weren’t given the option of college educations. Once the draft ended in 1973 veterans had to serve at least 180 days in order to achieve the benefits of the Bill, since the military had moved to an all-volunteer force.

The bill has been changed over the years but the concept has remained the same, today it is known simply as a VA loan. The U.S. Department of Veteran Affairs guarantees these loans, but any qualified lender can issue them. By being able to go through any qualified lender this makes the loans highly accessible to the veterans, but certain companies do specialize specifically in VA loans.

VA loans do not require Private Mortgage Insurance (PMI) because the U.S. Department of Veterans Affairs is in charge of insuring the loan.

All loans require insurance because in the case that the mortgagor is not able to make their payments and repay the loan the lender is able to regain some of the costs lost through the foreclosure. Private Mortgage Insurance is required in cases where the homebuyer cannot put down 20% of the value of the home; this is usually the case with veterans and is another reason why VA loans are so important.

Without having to spend a large amount of capital initially, almost all veterans are able to buy a home because VA loans require no down payments. This initial investment is what separates renters from buyers and allows people to start making progress towards paying off a home as opposed to spending money on rent, which does not build equity. By paying rent every month many people are spending money that will not come back to them in an investment like a home.

One of the greatest American dreams is to own a home, because by owning a home people are able to invest in a piece of property that will hopefully appreciate in value by the time they sell it. The amount of money people put into their home goes towards two numbers, the interest and the principal. The interest is the amount of money owed to the bank for using their money and the principal is the amount borrowed from the bank, which needs to be paid off before the interest can disappear. A major problem with loans is that people are unable to pay off their principal, and their interest does not go down each month. By paying off more of the loan people are able to pay less interest and make progress towards eventually owning their home completely.

Another added benefit of owning a home is the fact you can borrow on the home mortgage. This means you can bypass many of the high fees associated with credit cards and you actually have something (home

equity) that you can put up as proof you will pay back the money borrowed. The downside to borrowing on your home is that if you are unable to pay back the loan and the money borrowed, the bank is able to take back your house.

Most of these problems are easily solved for people with VA loans since the interest rates on loans are very low, typically around 5%.

However without having to make an initial down payment on a VA loan you are required to pay a funding fee of roughly 2.15 % every month, this is included in the loan amount up to $417,000. The exception for this funding fee is if you have a disability related to your service, in which case the funding fee is waived. These figures make VA loans a great option for veterans even when they have enough money to make a down payment.

Home loans are a great way for people to get ahead and make their money work for them by investing it in real estate, which is one of the most profitable markets. By investing in a home you are investing in something dependable that you’ll make good use of every day.

Veterans who take advantage of the benefits of government insured loans will save money allowing them to make up for time lost over seas or at home serving their country.