In an effort to support the men and women who’ve served in the military, the federal government provides assistance benefits to disabled veterans as well as active service members. Disabled veterans in need of mortgage loan assistance or help with refinancing may qualify for programs sponsored through the U.S. Veterans Administration.
Veterans Disability Benefits
The Veterans Administration (VA) offers a range of benefits and services to veterans with service-related disabilities. Among these offerings, mortgage assistance programs provide veterans with access to competitive mortgage rates and help with financing. Eligible veterans have service-related disabilities or disabilities that developed after time served in the military. In both cases, a person’s disability must affect their ability to maintain gainful employment for prolonged periods of time. Veterans receive disability benefits through two programs, known as the Disability Compensation Program and the Non-Service Connected Pension Program. Applications for benefits are available through any local State Veterans Service Officer.
VA Guaranteed Loans
Through the VA Guaranteed Loans Program, disabled veterans can qualify for mortgage help when purchasing a new home or refinancing an existing property. Working through private lending organizations, such as banks and mortgage companies, the Veterans Administration guarantees a certain percentage of each loan made, meaning if the borrower defaults, lenders can still recoup a portion of the sale. This guarantee enables lenders to offer reduced interest rates and fees. In addition, veterans can obtain competitive financing rates without putting down a down payment amount provided a property price does not exceed $417,000, according to the U.S. Department of Veterans Affairs.
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Subprime Mortgage Refinancing
Subprime mortgage loans often carry high interest rates and fee charges due to the increased risks lenders take on when working with borrowers who have less than perfect credit. In response to the effects of the economic recession of 2008, the federal government enacted the Veterans Benefits Improvement Act to provide refinancing options for disabled veterans struggling to afford subprime loan costs. According to the U.S. Department of Veterans Affairs, this program is designed to benefit veterans facing foreclosure or those looking to save on mortgage interest rate costs. In effect, this law enables veterans to refinance a subprime mortgage at 100 percent of a home’s value as opposed to the 90 percent limit available in earlier years. Eligible veterans can refinance loan amounts up to $729,750 depending on the market value of a home.
At the Veterans Administration’s discretion, disabled veterans facing home foreclosure may qualify for a refunding option offered through the VA. The VA considers a refunding option whenever a lender is about to place a VA home, or mortgage in foreclosure. In effect, the VA pays off the lender and sets up new payment terms with the homeowner. The VA exercises this option in cases where financial relief will make it possible for a homeowner to afford to keep his home and a lender refuses or is unable to offer financial alternatives.
- U.S. Department of Veterans Affairs: Enhanced VA Mortgage Option; October 24, 2008
- California Housing Finance Agency: Homeownership Program Bulletin
- Military.com: Veteran’s Benefits FAQs
- U.S. Department of Veterans Affairs: Fact Sheet on VA Guaranteed Loans
- Vermont Veteran Services Directory: VA Disability