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But - The VA DOES NOT lend you the money!
The mortgage lender lends you the money, and the VA loan guarantee is where you get the benefit of your Service.
The VA guarantees the riskiest part of your loan – the first 25%
This means that if you borrow $100,000, the lender is “guaranteed” that if they have to foreclose, the VA will pay the first $25,000 of your loan, and then the lender will sell off the collateral, your home, to collect on the remainder of the balance.
Since the average loss on a foreclosure is around 30% of the loan amount, the lender is giving out a nearly risk-free loan.
Lenders will welcome you with open arms, because NO OTHER LOAN is a risk-free as a VA mortgage. (Lenders LOVE the words “risk-free”, it warms their hearts, trust me on this one)
Example – A friend of mine, Ret. Major Samuel Jason Conner, told me of how he went to the bank for a mortgage in 2009, after the 2008 housing collapse. Most banks were not interested in even discussing mortgage lending (Banks weren’t too thrilled about lending money for mortgages in 2009, to put it mildly!)
When he mentioned he qualified for a VA Mortgage, the bank officer motioned for him to sit and suddenly he was welcome to apply!
The VA program was simply too good for the bank to pass up!
Your VA mortgage is your ticket to $0 down payment homeownership!
The history of the VA mortgage loan guarantee:
The VA home loan was created in 1944 by the U. S. government to help returning service members purchase homes without needing a down payment or great credit.
The VA has guaranteed more than 31 million VA loans, helping Veterans, active-duty military members and their families purchase or refinance a home. Today, the VA mortgage is more important than ever.
Thousands of Veteran and military buyers found it increasingly difficult to get home financing in the wake of the Great Recession in 2008, and many lenders tightened their guidelines again because of the 2020 global pandemic. VA loans have proven to be a lifeline for Veterans and active Military homebuyers facing higher credit score and down payment requirements. VA loans are a specialized loan product, but they aren’t more difficult than other types of home loans. In fact, in my opinion, they’re easier than regular mortgages. This blog was written to explain the VA mortgage process, and give you the simple steps to buying your home.
Refinancing is covered as well, but we’ll start with the purchase process, as my experience is 90% of VA mortgages are for buying a home.
Let’s take a look at the VA Mortgage and get started!
