The term “Veterans Administration” is the previous name of what is today a Cabinet-level department in the federal government. It is now referred to as the U.S. Department of Veterans Affairs (VA). It was established during the Great Depression, and used to be an independent government agency.
In 1989, it became a department and had a change of title to the U.S. Department of Veterans Affairs. It provides medical care, benefits, and essential services to veterans of the U.S. armed forces and their families.
The VA does not provide mortgage loans directly to veterans to fund their mortgages. Private lenders, such as banks and credit unions, make the loans, and the VA guarantees a portion of the loans. The main feature of a VA home loan guarantee is that the VA promises that it will reimburse a home loan lender if it experiences a loss due to foreclosure.
This VA loan guarantee makes it possible for a private mortgage lender to give VA home loan borrowers more favorable terms, e.g., lower interest rates, than might be available on the market to borrowers who are not veterans. There are other benefits to a VA-guaranteed home mortgage loan as well. They are noted below.
A legal consultation in Texas with a Texas lawyer would give an individual additional information. Their lawyer would tell them that VA home loans in Texas work as they do in other states in the U.S., because the program is a federal program that is available to qualified veterans all over the U.S.
What Is the Veterans Benefit Administration?
As noted above, the correct title is the “Department of Veterans Affairs” (VA). It provides several services to veterans of the U.S. armed forces. It manages 170 VA hospitals and outpatient clinics throughout the U.S. that provide medical care to eligible veterans.
Other benefits that the VA provides to veterans include the following:
- Disability compensation
- Vocational rehabilitation
- Education assistance
- Mortgage loan guarantees
- Life insurance.
The VA also offers burial and memorial benefits to eligible veterans and members of their families at 135 national cemeteries.
In Texas, What Are the Eligibility Requirements for Getting a VA Home Loan?
A veteran completes a Certificate of Eligibility (COE) in order to prove to a lender that they qualify for a mortgage based on their service history and duty status. To get financing for a VA-backed home loan, they must meet the credit, income, and occupancy requirements of both the VA and their preferred mortgage lender.
A veteran who believes that they qualify can find a COE online at www.va.gov. or they can ask a mortgage lender to submit an online application on their behalf. If a veteran is able to supply all of the information required for the COE when they fill it out online, they may get a COE directly through the online form.
If a veteran has served for at least 90 continuous days, they meet the minimum active-duty service requirement. Additional minimum active-duty service requirements depend on when a veteran served. The requirements apply to service going all the way back to September 1940.
For veterans who served between August 2, 1990, and the present, they would meet the minimum active-duty service requirement if they served as follows:
- At least 24 continuous months, or
- At least the full 90 days for which they were called to active duty, or
- At least 90 days if they were discharged under a qualifying exception, or
- Less than 90 days if they were discharged because of a service-related disability.
For veterans who served between September 8, 1980, and August 1, 1990, they would meet the minimum active-duty service requirement if they served as follows:
- At least 24 continuous months, or
- The full 181 days for which they were called to active duty, or
- At least 181 days if they were discharged under a qualifying exception, or
- Less than 181 days if they were discharged because of a service-connected disability.
Veterans who served between October 17, 1981, and August 1, 1990, would meet the minimum active-duty service requirement if they served as follows:
- At least 24 continuous months, or
- The full 181 days for which they were called to active duty, or
- At least 181 days if they were discharged under a qualifying exception, or
- Less than 181 days if they were discharged for a service-connected disability.
There are qualifying exceptions that apply to each qualifying service period. A veteran could check with a mortgage lender or the VA for additional information about their specific situation.
National Guard and Reserve members have their own qualification requirements. Again, these could be verified by checking with a mortgage lender or the VA.
A VA-backed mortgage loan is a benefit that a veteran can make use of as many times in their life as they wish. A veteran is not limited to getting one mortgage loan only. So, they might get one loan for a starter home and then obtain other loans later in life as their life circumstances change.
What Are the Advantages and Disadvantages of VA Home Loans in Texas?
Because mortgage loans to qualified veterans are guaranteed by the VA, they offer flexibility that is not available to non-veteran borrowers. For example, the borrower of a VA-backed loan does not have to make a down payment. Other borrowers would have to pay from 3% to 20% of the purchase price in ready cash as a down payment. It is saving up a substantial down payment that is a barrier to buying a home for many people.
In addition, loans backed by the VA do not require the borrower to have private mortgage insurance (PMI). Not having to pay the monthly premium for PMI reduces the monthly payment the borrower must make. Also, the VA funding fee can be added to the loan balance, so this reduces closing costs. Of course, a homeowner is going to want to get other kinds of insurance to protect their investment in their home, even if PMI is not required.
It is relatively easy for veterans to qualify for a mortgage loan if it is to be backed by the VA. A veteran can obtain a VA-backed loan with a lower credit score than a private lender would accept from other borrowers. Again, VA loans do not require a down payment.
They are available for residential dwellings that would be used as primary residences only. They would be available to a borrower who had gone through bankruptcy and or a foreclosure in their past. Finally, there is no penalty for paying off the loan before the loan term expires.
Of course, at the closing of a home purchase, there are still a substantial number of mortgage loans documents to complete in order to transact the purchase and obtain the mortgage loan.
The VA also offers veterans booklets and other tools replete with helpful information about how to access VA-backed home mortgage loans and about home ownership in general.
Are There Any Legal Issues or Disputes Involving VA Home Loans in Texas?
The residential properties that veterans can purchase with a VA-backed loan must meet certain minimum standards. This can limit the types of properties that a veteran can buy.
There are different processes for foreclosure on a VA-backed mortgage loan, but foreclosure is still a possibility if a veteran is unable to pay their mortgage as required by the terms of their mortgage agreement.
Additional benefits may be available for veterans with service-related disabilities, but reportedly accessing these benefits can prove challenging, and a veteran might need legal advice to get the full benefits to which they are entitled.
Should I Hire a Texas Lawyer for Help With a VA Home Loan Issue?
If you have a VA-backed mortgage loan and have issues with it, you want to talk to a Texas mortgage lawyer. Your lawyer can help you navigate the rules and regulations that apply to the VA-backed loan guarantee program and get you into the house you want with the benefits to which you are entitled by your military service.
