Michael Holigan: David Kittelson served in the US Navy six years as an electronics technician. As a former member of the military, he's entitled to many benefits. One is a home loan from the Department of Veteran Affairs.
David Kittelson: I didn't have any hesitation, because I thought it was the best way to purchase a home. And the VA loan came out on top because of the...for me it costs a lot less to get into the house utilizing the VA loan, because there's no down payment involved.
M.H.: For generations, returning veterans have been able to buy or build millions of homes at very favorable terms. The VA loan is one of the best programs available. To qualify, you need to have served in active duty, although some reservist's are eligible. With a VA loan you may have no down payment. There are pre-paids for insurance and taxes, but the seller or builder is sometimes allowed to pay them. There are closing costs, but again, the seller or builder is allowed to pay that too. Another great feature is that the debt ratios are larger than a conventional loan. There is only the back ratio, and it's set at 41%. Say your monthly gross income is $4,000. Your payments can be as high as $1,640 a month with recurring debt. That amount can buy a nice house. David couldn't pass up this deal.
D.K.: I thing if I was going to estimate, it would probably cost me $5,500 to $6,000 to move to a home like this, cash up front. And a VA loan cost about $900.
M.H.: There are a few disadvantages. A few of 2% to 3% of the loan amount is usually charged to help pay for the program. This can be rolled into you loan. And there's some problem with paperwork because it's a government program. The VA loan is a great way to go. You can use the program more than once and in some cases, no closing costs and no pre-paids. If you're a veteran, this is the loan you want.
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Episode 35 1996 - 97 Season
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