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Do You Qualify for a VA Mortgage?

Posted by:  Chip Poli
2012-10-16 12:12:00

In 1944, Congress enacted the GI Bill, a comprehensive benefits package for returning war veterans that included such items such as tuition and income assistance along with funds to start a business or buy a house. Formally called the Servicemenís Readjustment Act of 1944, the GI Bill provides a host of benefits for those who serve our country.

The home mortgage guaranteed by the Department of Veteranís Affairs or VA mortgage, is perhaps one of the most attractive benefits of the Bill yet is sometimes not quite understood. The VA mortgage can be used for a purchase or for a refinance and is allows for absolutely no money down from the veteran. Thatís the most compelling case for taking advantage of a VA home loan along with reduced closing costs and relaxed underwriting guidelines.

One would think that with no money down and easier qualifying that VA home loans would have a higher default rate but in reality the reverse is true. When compared to both conventional loans underwritten to Fannie Mae and Freddie Mac guidelines and FHA mortgages, the VA home loan has historically had the lowest delinquency rates of all.

But who qualifies for a VA loan?

The first answer is obviously the veteran, a service member who has been honorably discharged from service and is now gainfully employed in the private sector. Yet there are others who qualify for this coveted loan. Who are they?

One of those eligible for the VA mortgage is any active duty service member who has served for more than 181 days. Another group that is eligible for this popular loan program is reserved for those that have served in the National Guard or Armed Forces Reserve for a minimum of six continuous years.

A VA loan is also available to surviving spouses of veterans who have died while in service or who died from wounds suffered during active service. One may also be eligible for the VA mortgage if he or she is the spouse of a service member who is mission in action or a prisoner of war.

How to Qualify for a VA Mortgage

Finally, there are certain federal employees who may be VA mortgage-eligible by serving in the Public Health Service as well as cadets at the United States Military, Air Force and Coast Guard Academy. Others include those at the Naval Academy and the National Oceanic and Atmospheric Administration, or NOAA. Finally, any merchant marine with World War II service can qualify for this benefit.

Purchase or Refinance

One last note regarding eligibility is that those who use this benefit to buy or refinance a home loan can use it again and again, as long as the VA mortgage has been retired by way of refinancing out of a VA mortgage and into a conventional loan or the property has been sold, reinstating the VA mortgage benefit.

If you have an affiliation with any of these groups, then by all means talk with your loan officer to see if a VA mortgage will benefit you. Odds are, if you have the benefit and youíre searching for enough funds to close on a home, then the VA loan is absolutely your best choice for financing in todayís market.

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