The VA Loan Guaranty program was created over 65 years ago to honor the service members returning from World War II. Since then, the program has serviced over 20 million active-duty and veterans, providing them with flexible, low-cost lending.
Service members have long had a history of constant moves and deployments, which tends to have a negative effect on one’s finances. That transient lifestyle can take a toll on a service member’s ability to plan for and build toward the future, including providing the high down payment required by most conventional loan programs. This is the main reason why the VA loan program has proved to be so crucial for the last 66 years.
VA loans come with a guarantee from the U.S. government. In short, the VA agrees to repay up to a fourth of a borrower’s mortgage if he or she defaults on their loan. That guarantee gives a greater degree of confidence to lenders, which, in turn can offer qualified borrowers competitive interest rates and flexible loan terms.
In fact, the VA Home Loan program is one of the few remaining zero money down mortgage options available. Veterans and active duty across the nation see not having to place a down payment as one of the greatest benefits, and without it, they would not have been able to acquire proper housing.
Interest in VA loans is surging across the country. Amid a tight credit environment and a rollercoaster of a housing market, service members are turning to the safety of these government-backed loans in record numbers.
In the past year, a surge in VA home loan refinance has been responsible for the VA Loan program guaranteeing nearly 360,000 single-family loans for the fiscal year ending September 30.
Kevin Pearia is a mortgage commentator for Veterans United Home Loans, the nation’s leading dedicated provider of VA home loans.
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