The VA offers guaranteed home loans for eligible members and former members of our country's armed forces. These guaranteed loan programs are available through private lending institutions. Any FDIC bank or credit union is able to service the VA loan program. The guaranty from the VA is a promise to the private lender that the government is backing the loan in case of default or other unforeseen circumstances. This protects the lender from loss if the loan defaults therefor allowing for more favorable financing terms for the Veteran. This program often allows the Veteran to purchase their home for little or no money down but does not guarantee that a Veteran will receive a home loan. Their are credit history requirements for the VA Loan Program just as their are for the traditional home loan.
Before starting the VA home loan process the Veteran is required to have an Automated Certificate of Eligibility. This can often be obtained from their lending institution if they have access to the ACE database. This is a process that is easy to complete and can be completed via the internet. If the chosen lending institution does not have access to the ACE database, an eligibility certificate can be obtained through the VA Eligibility Center.
Once the borrower is deemed to be eligible for a VA Home Loan, the purchasing process proceeds as any other home purchase would. The loan process will require an appraisal but it is suggested that the Veteran have a home inspection done on the home as well. It is ultimately the purchasers responsibility to ensure that they are purchasing a structurally sound home. The VA can not force the seller to guarantee that the home being purchased is structurally sound or force them to later make repairs if the need arises.
If after purchasing a new home the Veteran finds that they are unable to make payments as agreed in the mortgage loan, the VA recommends calling the loan holder immediately. It is better to call the lender before the loan is delinquent as they are much more likely to work towards a resolution if made aware of the situation first.
The VA does offer financial counseling to help home owners avoid foreclosure and warns Veterans against letting someone assume their loan. If the Veteran decides to sell their home to avoid the foreclosure process, the VA Loan Guaranty Division suggests that the Veteran call their center in order to have the offer reviewed to insure that the Veteran is not being taken advantage of or entering into an unscrupulous agreement. By reporting such offers and allowing The VA Loan Guaranty Division to review the offer, the Veteran is taking the right steps to protect their best interests and helping the VA Home Loan Program stay strong by avoiding fraud.
