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21 May 10 VA Loans What Need to Know About a VA Mortgage

VA mortgage loans are offered through the Veterans Administration (VA).  The VA provides benefits and health care to the US military, its veterans, and their spouses. Not everyone qualifies for VA financing benefits; rather only people who qualify for VA benefits or services are eligible for a VA mortgage.  VA loans are different from traditional mortgages because the VA itself guarantees a certain percentage of the mortgage should it go into default. However, VA loans are not actually offered by the VA. Rather, they are offered by independent VA lenders and merely insured in part by the VA.

Why are VA home loans so unique? VA loans are the last home financing vehicle that allows 100% financing with no down-payment required.  The VA loan program does not require a minimum credit score, and it allows a qualified borrower to buy a home with no down payment. Further, VA loans require no private mortgage insurance (PMI). PMI is a special type of insurance that most homebuyers have to pay if their home is worth less than 80% of the loan amount. With a VA loan, the traditional borrower lending costs like private mortgage insurance are waived.

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