Military service to the United States is something that does not go unrecognized. When a soldier’s tour of duty has ended, veterans are entitled to VA loans, otherwise known as GI loans. These loans can mean the difference between a lifetime struggling with debt and some generous breathing room to make the ordeal a much more bearable one.
What is a VA loan?
VA loans are offered by the American government for veterans who have ended their tours of duty. This loan allows these former military personnel to start life anew, whether it would be in building a new home or financing a business venture.
What advantages are there in applying for this loan?
One of the first and foremost benefits of a VA loan is the low interest rates. While conventional loans can run up to five percent interest or more, the maximum interest that a VA loan can reach is about 3.3% without a down payment. Paying down payment can cut down this already low interest rate down to as much as 1.25%.
Which is where another advantage of a VA loan comes in. These loans do not even down payment to be availed! In exchange for not paying a down payment, the interest rate will reach 3.3%, which is still a significantly lower interest rate when you consider the standard rates of conventional loans.
The deal is made even sweeter since the loan will be financed up to $417,000. That means a veteran can apply for the loan with almost no expenses when it comes to processing the loan, further helping save money when making the loan. A loan above $417,000, though, will require the veteran to hand out the money directly from his or her pockets.
Who is legible for this loan?
While the obvious answer would be veterans of a conflict, not all veterans are qualified to obtain VA loans. While veterans are given an edge with the availability of the VA loan, they still need to be assessed both for their ability to repay the loan and their credentials in the military. The VA loan also extends not just to veterans who are returning from a tour of duty, but to reservists and soldiers in active duty as well. As such, an applicant must fill up VA form 26-1880, which can be obtained from the Department of Veteran Affairs. A period of time will then pass for the DVA and financing institution to assess the eligibility of the loaner before granting the VA loan.
Are there any complications with this loan?
While the VA loan has considerable benefits, repossession is still the primary consequence when one fails to make payments on time. Like any loan, any payments that are made on time will result in repossession of financial assets to cover for the unpaid amounts. This is a standard practice in any financial institution, and veterans are not exempt from it.
VA loans are an excellent benefit for those who serve in the military. Availing them would mean lower interest rates, generous down payment schemes and financed loan fees, and this makes them all the more attractive for current and former military personnel seeking to settle into their new lives.