Home Loan Guaranty Benefits by gdi650


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									VA Department                   of Veterans Affairs                                           Home Loan Guaranty Benefits
WHAT IS A VA GUARANTEED                       LOAN?

VA guaranteed loans are made by private lenders, such as banks, savings & loans, or mortgage companies to eligible veterans for the
purchase of a home which must be for their own personal occupancy. To get a loan, a veteran must apply to a lender. If
the loan is approved, V A will guarantee a portion of it to the lender. This guaranty protects the lender against loss up to the amount
guaranteed and allows a veteran to obtain favorable financing terms. There is no maximum V A loan but lenders will generally limit
VA loans to $240,000. This is because lenders sell V A loans in the secondary market, which currently places a $240,000 limit on the
loans. For loans up to this amount, it is usually possible for qualified veterans to obtain no downpayment financing. A veteran's
maximum entitlement is $36,000 (or up to $60,000 for certain loans over $144,000). Lenders will generally loan up to 4 times a
veteran's available entitlement without a downpayment, provided the veteran is income and credit qualified and the property appraises
for the asking price.


     o   Equal opportunity for all qualified veterans to obtain a VA loan.
     o   No downpayment (unless required by the lender or the purchase price is more than the reasonable value of the property).
     o   Buyer informed of reasonable value.
     o   Negotiabl interest-rat .                                                       - - ---
     o   Ability to finance the V A funding fee (plus reduced funding fees with a downpayment of at least 5 % and exemption for veterans
         receiving VA compensation).
     o   Closing costs are comparable with other financing types (and may be lower).
     o   No mortgage insurance premiums.
     o   An assumable mortgage.
     o   Right to prepay without penalty.
     o   For homes inspected by V A during construction, a warranty from builder and assistance from V A to obtain cooperation of
     o   V A assistance to veteran borrowers in default due to temporary financial difficulty.


     o Guarantee that a home is free of defects. V A guarantees only the loan. It is the veteran's responsibility to assure that he/she is
       satisfied with the property being purchased. The VA appraisal is not intended to be an "inspection" of the property. A veteran
       should seek expert advice (a qualified residential inspection service), as necessary, BEFORE legally committing to a purchase
     o If you have a home built, V A cannot compel the builder to correct construction defects although V A does have the authority to
       suspend a builder from further participation in the home loan program.
     o VA cannot guarantee that a veteran is making a good investment.
     o V A cannot provide a veteran with legal services.

HOW DOES A VETERAN OBTAIN A VA GUARANTEED                                       LOAN?

1.   Contract to purchase: Veteran selects home and discusses purchase with seller or selling agent and signs purchase contract
     conditioned on approval of a VA guaranteed loan.
2.   Loan application: Veteran selects lender, presents Certificate of Eligibility, and completes loan application. Lender will develop
     all credit information and request VA to assign a licensed appraiser to determine the reasonable value for the property. Veteran
     will pay for credit report and appraisal unless the seller agrees to pay. Either V A or the lender will issue a value for property for
     loan purposes based on the appraisal.
3.   Loan decision: If the established value is acceptable to all parties and the lender develops that a veteran is credit and income
     qualified, the loan may be approved. Most lenders are authorized to make this decision.
4.   Loan closing: Veteran (and spouse) attend the loan closing and sign the note, mortgage, and other related papers. The lender or
     closing attorney will explain the loan terms and requirements as well as where and how to make the monthly payments. When the
     loan is reported to V A, the Certificate of Eligibility is annotated to reflect the use of entitlement and returned to the applicant.
     (The loan closing procedure may vary in some states.)


Call VA at 1-800-827-1000 or visit VA's web site at www.va.gov       or contact a local lender or real estate professional.
    Pamphlets available from V A include:
      26-4      VA Guaranteed Loans for Veterans
      26-5      Pointers for the Veteran Homeowner
      26-6      To The Homebuying Veteran

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