Reconsider the VA Loan this Holiday Season

Service members and veterans considering a home purchase or refinance in 2011 should look no further than the VA Loan Guaranty program.

These low-cost government-backed loans have helped millions of veterans and their families become homeowners since 1944. Today, VA loans are more important than ever in the face of economic uncertainty and tighter lending requirements.

The VA and its approved lenders utilize credit and underwriting standards that provide service members with a degree of flexibility and buying power that other lending programs can’t match. Qualified borrowers can secure a loan valued at $417,000 (and even more in high-cost parts of the country) without putting down a single collar.

In fact, about 90 percent of the 325,000 VA loans issued during Fiscal Year 2009 featured absolutely no down payment. There’s really nothing else comparable on the market — FHA and conventional financing requirements requires at least a marginal down payment, not to mention some kind of monthly mortgage insurance or built-in mortgage insurance premium.

Not so with VA loans. There’s no down payment. No private mortgage insurance. And realistic underwriting requirements that open the doors of homeownership to scores of service members who might otherwise fail to secure financing.

There are certainly unique cases when a conventional loan might make more sense for a given borrower. VA loans do require a Funding Fee that every borrower must pay, although there are exemptions for those with service-connected disabilities. But even with that fee factored in, the vast majority of borrowers will enjoy lower rates and ultimately lower monthly costs with a VA loan.

The same goes for folks with existing loans, too. VA refinance loans help veterans get into lower-cost mortgages to free up income each month.

This unique program is a benefit that thousands upon thousands of veterans and active-duty service members already qualify for — but fewer than 10 percent of the nation’s 24 million veterans have taken advantage of their VA home loan benefits.

Over the coming weeks, Americans will gather with family and friends to celebrate the holiday season. This month is a great time to talk with the veterans and service members in your life, just to make sure they’re aware of the VA loan program and the potential benefits that await.

Photo thanks to Michel Filion under creative common license on Flickr.

Chris Birk is director of content and communications for Military United, one of the nation’s leading financial services providers for service members and their families. His work has appeared in dozens of publications, from the Chicago Sun-Times and Insurance Journal to Motley Fool and

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