Tips & Special Topics
The Spring 2010 VA Home Loan Opportunity
Added March 8, 2010
Several factors have combined to make spring 2010 an advantageous time for many to take advantage of their VA home loan benefits. Not only can purchasing a home with a VA loan mean zero money down and no private mortgage insurance (PMI), but dips in real estate markets combined with government response to the lending crisis are providing some additional benefits to home buyers.
Not only is there a large inventory of bank-owned homes at below-market prices, but builders hungry for work are offering big discounts for newly constructed homes. A new home in 2010 may be much more affordable than in years prior. Qualified VA borrowers can buy a home with no down payment, and a well-planned real estate purchase agreement can designate the seller to pay 100% of the buyer’s closing costs in the form of a sales concession.
The VA home loan program is currently one of very few mortgage programs offering 100% financing. After the mortgage crisis of 2008, many lenders across the country adjusted their criteria to include a standard 20 percent down payment. This requirement has reduced the competition in the home buying marketplace because many people who aren’t VA-eligible simply don’t have money for a required down payment.
The uniqueness of the zero down feature of VA loans has contributed to veterans’ mortgages nearly doubling in 2009. The annual report from the Department of Veterans Affairs shows a jump from $40.58 billion in VA loans 2008 to $74.04 billion in 2009, the largest total on record. It is also the largest year-to-year increase.
Additionally, interest rates in the first part of 2010 are at historic lows. The Fed announced its plans to hold the discount rate at its current low levels for the near term, but could start raising the discount rate later in 2010. Many people are considering spring 2010 to be the opportune time to buy before rates start to rise again.
For many, one of the most compelling reasons to act is the homebuyer tax credit outlined in the 2009 Stimulus Bill. The credit is scheduled to expire on June 30, 2010, and a buyer must have a home under contract by April 30, 2010 to qualify for the $8,000 first time home buyer tax credit or the $6,500 repeat home buyer tax credit.
The VA home loan program can be used again and again by qualified active military and veteran home buyers. For more information about purchasing a home with a VA loan, contact a VA loan professional.
