Mortgage Options for Active Duty Military Personnel and Veterans

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If you are an active duty military member or veteran and are interested in buying a home, are having trouble meeting your mortgage payments or are interested in refinancing your current mortgage, there are numerous options at your disposal. Outlined below are some mortgage programs that cater to homebuyers and homeowners in the military.

VA Home Loan Program

Run by the US Department of Veteran Affairs (VA), the VA home loan program is a guaranteed loan program for veterans and active duty personnel. Although you get the loan from a private lender, the VA backs the loan with that lender. That means if you ever have trouble making the payments, the VA covers any losses that the lender may incur. Essentially, a VA loan guaranty is like insurance that the VA provides to the lender. Advantages of the VA home loan program include low or no down payment, no private mortgage insurance, a limit on closing costs, and no penalty fee if you pay your mortgage off early.

Cal Vet Home Loan Program

Specifically designed for military veterans who want to buy homes in California, the Cal Vet home loan program boasts low or no down payment and low interest rates. It is also easier to qualify for a Cal Vet home loan. Cal Vet home loans are offered in amounts of up to $521,250. The program is available at no cost to California taxpayers. Interest rates are “locked in” from the date that you apply. The Cal Vet home loan program obtains the loan guaranty from the VA. Eligibility for the Cal Vet home loan program has been expanded, so most veterans buying a home in California are now eligible. There are no prior residency requirements.

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Military Forbearance Option

If you’re facing financial hardship because of an injury you incurred during active duty, military forbearance might be an option. Military forbearance is an agreement between you and the lender that temporarily suspends or reduces your monthly mortgage payments during the forbearance period. The forbearance period may last for up to six months.

The military forbearance program enables you to overcome short-term financial problems and receive the help you need to get back on your feet. After the forbearance period is over, you are responsible for repaying the amount that was reduced or suspended. You can either pay it back by lengthening the term of your mortgage and moving those payments to the end, making a one-time payment or adding a specific amount to your monthly payments until it is paid back.

Interest Rate Reduction Refinancing Loan

The Interest Rate Reduction Refinancing Loan (IRRRL), also known as the Streamline or “VA to VA” loan, is a refinancing loan that offers current VA mortgage holders the opportunity to take advantage of low interest rates. To qualify for an IRRRL, the new interest rate must be lower than the existing rate. For an IRRRL to be worthwhile, your interest rate should be at least 1% lower than your existing rate. If you’re refinancing from an adjustable rate mortgage to a fixed-rate mortgage, however, the interest rate may increase.

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