In December 2020, Congress passed the Veterans Health Care and Benefits Improvement Act. Part of that bill increased the number of National Guard troops having access to VA loan benefits. The United States National Guard Association estimates more than 50,000 Guardsmen will win VA loan Authorization.
What has changed
Previously, guardsmen and reservists were eligible for VA home loans after six years of service, says Chris Birk, VP of Mortgage Insight and Director of Education at Veterans United.
While six years of service was the standard requirement, exceptions were sometimes granted. For example, Guardsmen called up under Title 10 (instructed by the President to register for active duty) were chosen for a VA loan after 90 days of consecutive service. However, the guardsmen called up under Title 32 (by the governors of their states) were not granted early authorization.
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Birk explains that guardsmen who have served in major government disasters like the COVID-19 pandemic and Hurricane Katrina have not been granted early-stage authorization. This bill was designed in part to bring the benefits of Title 10 and Title 32 closer together.
“Under this bill, Guardsmen mobilized under Title 32 will be eligible for VA loans after 90 days of full-time service, provided at least 30 of those days are consecutive,” Birk said.
An additional benefit of the new legislation is that the change is retroactive. Guardians who served a long time ago but did not meet the six-year requirement can now get a VA loan.
Why it matters
The signing of this bipartisan law recognizes the role played by members of the National Guard, both full-time and reservists. These are the men and women who go to disaster areas while others are leaving and risking their lives to protect fellow citizens. It can be a small thank you to question them for a VA loan. However, if the National Guard Association is correct, it is offering the chance for thousands of guardsmen to own a piece of the American dream.
Benefits of a VA Loan
VA loans are guaranteed by the US Department of Veterans Affairs (VA). While private lenders do the MortgagesThe VA supports them and promises to repay the lender if the borrower fails to make payments. There is a lot to like about VA Loans, including the following features:
- No deposit. Veterans don’t have to wait years to save for a down payment – they can enter the real estate market at any time.
- Historically low interest rates. Data from Ellie Mae shows that VA loans have offered the lowest fixed rate on the market for five years.
- No mortgage insurance. When a home buyer takes out a conventional mortgage or other type of government-secured loan, they must pay a 20% down payment or purchase private mortgage insurance (PMI). PMI is an insurance policy that protects the lender if the borrower defaults on the loan. The fact that the VA is backing the loan means buyers don’t have to pay a monthly PMI payment. The savings can be thousands of dollars over the life of the loan.
- More forgiving lending standards. According to Birk, the VA has “more flexible and forgiving credit policies than other types of credit”. Additionally, guard members and reservists can use their service revenues to qualify for a mortgage. Lenders check how long they have served and how stable the income is. However, if all looks good, that extra monthly income can help them get into the house they want.
Some form of the US National Guard has been around since 1636. While it is easy to ask what took Congress so long, it is good to know that guardsmen and reservists are now recognized with these benefits.
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