When beginning the process of purchasing a home, it’s important to understand the different roles that each organization plays.
We will focus on three organizations to answer the question, “does the VA lend money?” You need to understand what a mortgage broker is and does, what a lender does and how they work with a broker, and what Veterans Affairs (VA) does.
A mortgage broker is a company that specializes in preparing all the documents and helping the borrower through the process of getting approved and closing the loan. The broker’s primary concern is the borrower. They want to make sure you get approved at the best rate and as smoothly and quickly as possible.
A lender is the bank, and your broker will find you the best lender for your particular situation. They’ll get you one with the highest probability of approving your loan at the lowest rate. The lender you ultimately end up using will be your source of money so that you can buy the home.
The VA does not lend money – that’s the lenders job. The VA is there to give your lender some peace of mind. They do this by insuring a portion of the loan amount. This fiscal guaranty gives your lender confidence to require no-down-payment from you, and to offer you some of the most competitive rates and terms.
So there you have it, the VA does not lend money, they guarantee money to your lender in case something bad happens.
If you’d like more information of this, feel free to reach out to us. We’re eager to help you out. Call 1.800.920.5420 to speak to a live loan specialist.