The number of VA-guaranteed loans reached a record high in the year 2013, with no signs of slowing down. The steady increase represents an upward trajectory since the collapse of the housing market. The Department of Veterans Affairs guaranteed approximately 630,000 mortgage loans in fiscal year 2013, about half of which were borrowed with the purpose of refinancing.
Reasons for the increase include not only historically low interest rates on the loans, but also the fact that service members view the loans as the most viable option compared to other alternatives in the tough lending climate of the last six years. Another big incentive for first-time homeowners is that the VA loans do not require a down payment. They also save buyers money by not requiring private mortgage insurance, which would otherwise add to monthly payments and thus, increase the cost to the borrower over the life of the loan.
To qualify, the loan must be for a primary residence, and the borrower must show enough monthly income after personal debts and housing costs to meet “residual income” levels, which are determined by the department. However, this prudence pays off; according to the Mortgage Bankers Association, VA loans have yielded the lowest foreclosure rate for the last five years.
If you are a service member interested in becoming a homeowner, please feel free to contact the Real Estate Department of HoganWillig at (716) 636-7600.