VA home loans are strong! The Department of Veterans Affairs’ VA home-loan program has gained significant market share compared with competing private and government options. The VA’s home-purchase financing program is now at record levels. New loans to buy houses have more than doubled since 2007. Since 2011, when VA-backed home loans represented about 3 percent of total home-purchase finance activity, they’ve soared to roughly a 7 percent share, according to the Mortgage Bankers Association. For sales of newly built homes, the VA share is larger: 14.5 percent compared with a 16.7 percent share for the other major federal housing finance program, FHA. So VA loans are housing’s hot product, but why? Lots of reasons: VA-guaranteed loans come with terms that few other financing sources can match: ZERO DOWN payment; flexible and generous credit underwriting that emphasizes the individual applicant rather than the algorithm-driven computer programs that dominate conventional lending. Also, VA interest rates are competitive and maximum loan amounts are the jumbo range in some areas. VA’s default rates are as good as or better than “prime” conventional loans and far superior to FHA’s. VA’s low rates of serious default are attributable in part to its intensive, hands-on servicing of home loans. At the earliest hints that a borrower may be facing financial strains, VA servicers get in touch to begin finding ways of solving whatever problem may exist. Demand is booming. There are now an estimated 22 million veterans in this country, many of them with eligibility for VA loan benefits. In an era of extremely tight credit in the marketplace, the VA program looks like an extended hand for creditworthy vets who don’t have large amounts of money to put down on a home purchase or are transitioning into regular employment in the mainstream economy. Source: Ken Harney, The Nations Housing
Posted on: Wed, 12 Nov 2014 17:47:10 +0000
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