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Home Buyer's Recession Survival Guide - VA Loans

Updated on May 26, 2009

Our country's veterans have placed their lives on the line for our freedom and independence, and each and every one of us owes them a profound debt of gratitude. Thus it is fitting and proper that the Veterans Administration offers facilitated mortgage loans to our men and women who have worn the uniform, and if anything, the program doesn't go as far as it should!

There technically is no such thing as a VA Loan, since the agency does not normally act as a lender. The VA will guarantee the performance of a loan to a lender, so that there is no risk of default. The VA has various requirements for the Veterans to fulfill including a good credit rating, and a confirmation of sufficient income to cover the loan payments. However and unfortunately, the VA loan guarantee is not necessarily an automatic benefit, and many argue that it should be!

VA loan guarantees cover many forms of mortgage lending, including Zero Money Down High Ratio mortgages and in some cases for a total of up to $350,000! That is one amazing loan that many prospective homeowners would love to get their mitts on! Keep in mind that there is a VA Funding Fee of approximately two percent for first time buyers and three percent for second time buyers. So the Zero Money Down is not exactly zero. Fortunately some vets are exempt from this fee, so for them, it is still possible to get the loan without reaching in their wallets at all. The VA has various rules and regulations (of course) as to the eligibility for Fee waivers and they should be examined carefully as they can be very advantageous.

Another advantage is that there is no requirement for Private Mortgage Insurance (PMI) when dealing with a VA loan guarantee. The VA's Streamline Refinancing Program allows vets to refi relatively inexpensively, and in some cases without paying anything at all in fees. The VA will also allow its vets to have 41% in total debt to income and still issue a guarantee.

Since the VA is a part of the Federal Government there are forms. Yes, and lots of them. There is an online program called the Automated Certificate of Eligibility (ACE) which vets can use to determine their eligibility for the guarantee they seek. Unfortunately the ACE database doesn't have sufficient information on each vet, (it should!) thus those individuals will have to fill out a VA Form 22-1880 which will request that the VA issue a Certificate of Eligibility manually. They will have to send in supporting paperwork (starting to sound familiar?) along with a copy of their DD214 discharge documents. What many people are not aware of is that there are ways of being discharged from the Armed Forces without an honorable discharge, but for reasons that do not qualify as a dishonorable discharge. For those vets in limboland, the best move is to seek assistance directly from the local VA office to sort the whole thing out.

When it comes time to selling the property it is imperative that the VA be contacted to obtain a VA loan release of liability. Failure to do so could create a very nasty financial issue, so it's best taken care of promptly.

Perhaps in a perfect world, the financial powerhouse that is our country might see fit to ensure that every vet would have a home without financial worries. In this imperfect world, however, the VA does try to help!

Read The Entire Survival Guide

Home Buyer's Recession Survival Guide - The Subprime Meltdown
Home Buyer's Recession Survival Guide - The Advantage Of Renting Over Buying
Home Buyer's Recession Survival Guide - Why Rent? Why Not?
Home Buyer's Recession Survival Guide - Five Common Mistakes House Buyers Make
Home Buyer's Recession Survival Guide - Get Your Home Sold Quickly & At Your Asking Price
Home Buyer's Recession Survival Guide - Improve Your Home's Value And Sell It For More!
Home Buyer's Recession Survival Guide - Learn The Value Of Curb Appeal
Home Buyer's Recession Survival Guide - Home Staging: Valid Selling Technique Or Fraud?
Home Buyer's Recession Survival Guide - Before You Go House Shopping
Home Buyer's Recession Survival Guide - The Home Condition Checklist
Home Buyer's Recession Survival Guide - Getting A Mortgage From Different Types Of Lenders
Home Buyer's Recession Survival Guide - What To Do After You're Turned Down
Home Buyer's Recession Survival Guide - New Initiatives To Help Get You Approved
Home Buyer's Recession Survival Guide - Isn't HUD An Old Paul Newman Movie?
Home Buyer's Recession Survival Guide - Jumbo Isn't As Huge As He Once Was
Home Buyer's Recession Survival Guide - FHA Q&A
Home Buyer's Recession Survival Guide - The FHA's Credit Requirements Vs. The Bank's
Home Buyer's Recession Survival Guide - Your Credit Score And Your Mortgage
Home Buyer's Recession Survival Guide - Credit Score Confusion
Home Buyer's Recession Survival Guide - Keeping That Credit Score Nice & High
Home Buyer's Recession Survival Guide - Minimize The Interest Payable
Home Buyer's Recession Survival Guide - What Is PMI & Why Do I Care?
Home Buyer's Recession Survival Guide - The LIBOR-COFI-COSI Alphabet Soup
Home Buyer's Recession Survival Guide - REO: Get Rich Quick Or Just Waste Time?
Home Buyer's Recession Survival Guide - Obtaining Flipping Money
Home Buyer's Recession Survival Guide - Consider The Additional Costs
Home Buyer's Recession Survival Guide - What Is Escrow?
Home Buyer's Recession Survival Guide - Tips To Avoid Foreclosure
Home Buyer's Recession Survival Guide - The Changing Value Of Your Mortgage Dollar
Home Buyer's Recession Survival Guide - How To Ride The Interest Rate Spikes
Home Buyer's Recession Survival Guide - Can't Get A Mortgage? What A PITI!
Home Buyer's Recession Survival Guide - Calculating Your Closing Costs
Home Buyer's Recession Survival Guide - Mortgage Broker or Mortgage Banker?
Home Buyer's Recession Survival Guide - The Magic Of A Down Payment
Home Buyer's Recession Survival Guide - A Refinance Checklist
Home Buyer's Recession Survival Guide - Refinancing With Bad Credit
Home Buyer's Recession Survival Guide - The Self-Employed Mortgage Maze
Home Buyer's Recession Survival Guide - VA Loans
Home Buyer's Recession Survival Guide - Offset & Reverse Mortgages
Home Buyer's Recession Survival Guide - The Reasons To Not Buy An Offshore Retirement House
Home Buyer's Recession Survival Guide - How To Pay Less Than $500 A Month
Home Buyer's Recession Survival Guide - Five Easy And Cheap Tips To Save Big $ On Energy

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