Long regarded as one of the best programs of its kind, the VA Home Loan program guarantees loans made to veterans of the United States armed forces and allows them to purchase a home with little or no down payment.
In fact, in some cases, the veteran can even include the costs of closing in the loan itself, allowing a home purchase with literally no down payment.
Couple that program with the soon-expiring federal “First Time Home Buyer” tax credit of up to $8,000, and there is an almost irresistible incentive for any qualifying vet to stop renting and start owning now.
Here’s what you need to know:
● VA loans are available to qualifying veterans, up to a limit of $417,000 in most Georgia counties. In most cases, the veteran will need 181 days of active service, but requirements vary based on service dates and branch of service.
● VA loans are available through most mortgage lenders, although my advice is to seek a lender who specializes in VA and FHA products, as they require a different qualification process from most conventional loan programs. Your real estate professional can suggest several lenders.
● Because VA loans are guaranteed by the government, lenders are willing to lend up to 100 percent of the purchase price, and, in some cases, include all closing costs and expenses. No mortgage insurance is required. In addition, because the lender sees little risk in a guaranteed loan, the interest rates are typically competitive with conventional loans.
● Qualifying for a VA loan is easier because the lender’s loan is backed by the government, so a less-than-perfect credit application may be accepted. Even so, your income, your monthly debts, and the proposed mortgage payments are all totaled up to see where you land in terms of debt.
● First-time home buyers purchasing any sort of home, new or resale, are eligible for the tax credit. The credit can be used against future federal income taxes, or you can file an amended return for last year and get a check quickly.
● The First Time Home Buyer tax credit is for an amount equal to 10 percent of the purchase price, up to a maximum of $8,000. It is available to anyone, not just veterans. And “first-time” means neither you nor your spouse may have owned a principal residence during the three years prior to this purchase. Here’s the kicker: this tax credit is currently set to expire on Dec. 1, so my advice is to move quickly. There’s still time! For more information, talk to any real estate professional or home loan originator.
John Adams is a broker and investor. He answers real estate questions on radio station WGKA (920am) every Saturday at noon. For more real estate information or to make a comment, visit www.money99.com.
