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How a VA Loan Got Me My First Home – I Loved That House

How VA loans got me this cute homeI'm a veteran.

I'm mentioned that a few times. I wrote about 1st Sgt. Whatshisname a few years back and I've posted a few other times about my two-year stint in the U.S Army.

I learned quite a bit in those two years. And I also got some good benefits out of it. Cash for college was the one I used pretty much right away after I got out.

Then when I decided to buy a home, I used the absolute best benefit of military service and took advantage of the VA loan program.

VA loans are awesome, especially for young folks and first time home buyers (which I was when I bought my home). That's the house in the picture.  A little west side Detroit bungalow. That house was awesome. Built like a tank. Brick exterior, plaster walls, original hardwood flooring, nice-sized backyard, pretty good location (near lots of good suburban Detroit shopping) and even very close to some sizeable woods (not what you'd expect in the Motor City, but I actually saw several deer and coyotes in the area in the 11 years I lived there).

And I was able to afford it all with a VA loan that required no down payment and got me what at the time was a very low mortgage rate (rates have since dropped to historical lows, but at the time my 7.25% fixed rate was pretty darn good). Being a mortgage rookie at the time, I also appreciated the assurance that the VA would "review" my loan and make sure there was no funny business going on. It was nice to know that someone was looking over my back in what, at that time, was the biggest financial decision I had ever made.

Here's a little more about VA loans from Wikipedia:

The original Servicemen's Readjustment Act, passed by the United States Congress in 1944, extended a wide variety of benefits to eligible veterans. The loan guarantee program of the Veterans Administration has been especially important to veterans[1]. Under the law, as amended, the Veterans Administration is authorized to guarantee or insure home, farm, and business loans made to veterans by lending institutions. Over the history of the program, 18 million VA Home Loans have been insured by the government. The VA can make direct loans in certain areas for the purpose of purchasing or constructing a home or farm residence, or for repair, alteration, or improvement of the dwelling. The terms and requirements of VA farm and business loans have not induced private lenders to make such loans in volume during recent years.

The Veterans Housing Act of 1970 removed all termination dates for applying for VA-guaranteed housing loans. This 1970 amendment also provided for VA-guaranteed loans on mobile homes.

More recently, the Veterans Housing Benefits Improvement Act of 1978 expanded and increased the benefits for millions of American veterans[1].

Despite a great deal of confusion and misunderstanding, the federal government generally doesn't make direct loans under the act. The government simply guarantees loans made by ordinary mortgage lenders (descriptions of which appear in subsequent sections) after veterans make their own arrangements for the loans through normal financial circles. The Veterans Administration then appraises the property in question and, if satisfied with the risk involved, guarantees the lender against loss of principal if the buyer defaults.

So anyway, I thought I'd share this info to anyone who served in the military or knows someone who did. They should really take advantage of the VA loan benefit. Especially in today's tighter credit world, VA loans are pretty much the only option to buy a home without a down payment.

If you earned the VA loan benefit, use it.

I did. 

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Comments

  1. Nice post. There are really a lot of benefits you could get from a VA loan. Getting your first house may be a hassle. If you qualify for a VA loan, use it, don’t let the opportunity pass by you.

    Posted by: Alex Monroe | June 16, 2010
  2. First of all, thank you for your service, 2nd, I’m glad you were able to get a good VA loan on your home. My cousin is vet and looking for his first home. I like your clarification on the government backed loans to the lender. I’ll have to let him know about this.

    Posted by: Jake Gibson | January 27, 2016

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Thursday, July 27, 2017