Have you ever served in any branch of the United States Armed Forces, Selected Reserves, or National Guard? Whether one is planning to take advantage of the current Buyer’s real estate market, wanting to refinance an existing loan, or hoping to receive the 2009 First Time Buyer’s $8,000 Tax Credit, the Veteran’s Affairs Guaranteed Loan may be the way to go!

History of the VA Loan Program

The first version of the VA loan was part of the original “Serviceman’s Readjustment Act” of 1944, Public Act 78-346. Credit was considered important to aid a veteran in his/her transition back to civilian life after World War II. Providing a venue to provide home ownership for the veteran also established credit and, hopefully, allow the veteran to transition into a farming or business venture. A “win-win” by-product of the loan program provided an investment arena for large amounts of savings which existed in the United States economy at the end of World War II. The original law guaranteed 50% of the home loan, up to $2,000. Loans were limited to 20 years, and maximum interest rate was 4%.

Over the past 65 years, the program has adjusted to meet the needs of veterans and keep up with the lending trends. In the past, there was a time limit for the veteran to use his VA eligibility. Today, veterans as far back as World War II continue to use eligibility and many veterans have used the VA program multiple times.

Am I Eligible?

There are different service requirements for various periods of time, beginning with veterans who served our country as far back as 1940. Eligibility for VA loans are offered to some “wartime” vets serving a minimum of 90 days. “Peacetime” veterans serving 181+ consecutive days of active duty may also be eligible for VA eligibility. If an individual does not qualify under veteran guidelines, but has served in the Selected Reserves or National Guard for six consecutive years, VA eligibility may be awarded. Other persons qualifying for VA eligibility include the unmarried surviving spouse of the member of the armed forces who died in service or as the result of a service related disability, spouses of members of the armed forces who are Missing In Action (MIA) or Prisoners of War (POW).

Veterans dishonorably discharged are deemed ineligible to receive VA loans.

Why VA?

With all the loan products in the open mortgage market, why would one opt for a VA loan?

1-VA is a guaranteed loan, offers a 100% financing, with no monthly Private Mortgage Insurance (PMI) requirement.

2-There different loan limits for each municipality in the United States. In Kaua`i county, VA will lend up to $775,000 to qualified veteran borrowers.

3-VA loans reflect current rates and can be used to refinance a higher interest rate VA or non-VA loan. When refinancing an existing VA loan through the VA program, “streamline refi” is offered, with no appraisal, and no income & asset verification.

4-The low “funding fee” can be further reduced with down payments of 5% -10%.

5-Contrary to popular belief, the VA eligibility can be used more than once, and borrower can hold simultaneous VA loans, as long as he/she resides in the home for the first 12 months of the loan.

6-VA loans are not only for single-family homes. A VA loan may be placed on a maximum four unit property, as long as the borrower lives in one of the units for a minimum 1 year.

7-VA loans may be assumed by non-veterans.

8-Funding fees are waived for veterans with a minimum 10% disability.

9-The funding fee and other closing costs can be financed as part of the loan.

Where do I begin?

1-Contact a VA approved lender. (Not all lenders are VA approved.)

2-Provide requested documentation and obtain a VA “certificate of eligibility”.

3-Select a Realtor; preferably one whom is:

*full-time,

*knowledgeable of the market,

*knows what issues may disqualify a property from VA financing

*understands VA financing and contract-writing.

4-Locate the property.

5-Submit a VA loan application. (online available)

6-Hire a professional home inspector to make sure there are no maintenance issues that must be remedied prior to funding.

7-Work with the lender and escrow to provide requested documentation.

8-Address and negotiate maintenance issues uncovered by the home inspection and/or termite inspection.

9-Review and sign VA documents.

10-Loan is funded and sale closed.

11-You move into “home sweet Kaua`i home” with a VA guaranteed loan!

Special acknowledgement to Tony Dias, President of VA Loans Hawaii & Branch Manager of Platinum Mortgage Partners for information included in this article.