Buying a home has become more difficult since the global financial crisis and housing crash. Lenders have implemented more stringent procedures for people who are applying for a mortgage. However, ex service personnel have one advantage when it comes to purchasing a property. They can apply for a VA loan which allows them to secure funding without having any money to put down up front.
Considering the fact that regular mortgages usually require a down payment of 20%, you can see how much of an advantage this can be for any veteran who is looking to purchase a new home, or re-mortgage their current property. It's a significant boost for any veteran who is struggling to manage financially.
VA loans – how do they help?
Aside from the fact that most VA loans do not require a down payment to be made, they are also guaranteed by the Department of Veteran's Affairs. This means that many lenders are happy to provide good rates to lenders as they know that they will not lose all of their money should the lender ever default on the mortgage.
Some restrictions still apply to VA loans. For instance, credit scores are still taken into account when lending decisions are being made. More information about this is available here. Generally, veterans need to have a credit score of 620 or higher to be awarded a loan from the VA scheme. This means that not every veteran is guaranteed to be accepted if they apply for a VA loan.
Despite the restrictions that apply, VA loans still provide veterans with a reliable and affordable way to buy a home when they return to life as a civilian.
Advantages of having a stable home for veterans
Homelessness is a big problem for many service personnel. It happens for many reasons, one of which is mental health issues. These issues are not helped by individuals being homeless, so a vicious circle is created. Having access to a home of their own can be a major boost to the mental health of veterans. It can also make it a lot easier for them to secure work as a civilian.
Home ownership can also be important for veterans who have a family to provide for. They are able to provide better care for partners and children if they have a stable roof over their head. This is a benefit not just for the veteran involved but for their families as well. This is why VA loans are so vital to many veterans.
Loans in the VA scheme are provided by independent lenders and have government guarantees to back them. The fees that are paid by borrowers are provided directly to the VA. This money is used to provide for the continuance of the scheme well into the future. This means that veterans will be able to continue to benefit from VA loans down through the generations, in the same way as they have since the loans were first introduced in the 1940s.