Buying a home is the most expensive purchase most people make in their lifetime. In addition to the purchase price, there are down payments, interest, closing costs, and other costs associated with home ownership.
But buyers who currently serve in the military or who are veterans can take advantage of government-guaranteed home loans that don’t require them to make a down payment or pay for the mortgage insurance that is typically charged when a borrower pays. less than 20%.
Thanks to a new law, even more borrowers now have access to these affordable VA loans, backed by the US Department of Veterans Affairs.
Tens of Thousands Get New Access to VA Loans
A law signed by President Donald Trump earlier this year allows more members of the National Guard to purchase homes using VA loans. Now is the right time, as mortgage rates are still at historically low levels.
Prior to the legislation, those serving in the Guard were only eligible for the VA home loan program if they had had 90 consecutive days of active service or had completed six years of service.
Now, the threshold is 90 days of full-time service with at least a period of 30 consecutive days. And the change is retroactive. The United States National Guard Association has estimated that up to 50,000 Guard members have gained immediate access to the VA loan benefit.
More than 24 million military veterans have benefited from the VA home loan program since its inception in 1944, said Republican North Carolina Senator Tom Tillis, one of the bill’s supporters.
The old limitation on Guardsmen and Reservists – many of whom responded to the COVID-19 pandemic and helped with vaccination efforts – was just a “technicality,” Tillis said last year during the introduction of legislation.
How borrowers can save with a VA loan
VA home loans, designed for military, veterans, and some surviving military spouses, are provided by private lenders, including banks and mortgage companies. The VA guarantees part of the loan, so borrowers are not required to deposit money or pay private mortgage insurance premiums.
However, they must pay an upfront financing fee to help offset what the loans are costing US taxpayers. The fees can reach 3.6% of the loan amount.
If you’re ready to start shopping for a VA guaranteed mortgage, keep in mind that the best interest rates go to borrowers with the highest credit scores. If you haven’t checked in a while, it’s easy these days to check your credit score for free.
Comparison shopping will help you find the lowest mortgage rate available in your area and to someone with your credit score. Studies by mortgage giant Freddie Mac and others have shown that borrowers who seek loan deals from at least five different lenders typically save thousands of dollars over time.