The Best Mortgage Deals Around

It's tough to get a mortgage today. But that's not news. Every financial institution is tightening lending standards, requiring a higher down payment and raising interest rates. Well, almost every lender is doing that.

If you're a veteran who has been honorably discharged from the military, you can get a great deal on a home loan.

The Veterans Administration (VA) has a mortgage guarantee program that is available to the more than 23.8 million U.S. veterans who were honorably discharged from service. But fewer than 2.1 million have taken advantage of VA loans. And they're missing out on a very good deal.

With a VA loan, veterans can get 100% financing without private mortgage insurance (PMI) and a 30-year fixed rate of 6.5%. There is a small origination fee paid to the VA, typically 2.4%, which is rolled into the mortgage itself.

The mechanics of the loan are relatively simple. Essentially, the U.S. Government guarantees 25% of a veteran's loan for a lender. So from the lender's point of view, the borrower is putting up a 25% down payment at the time of purchase. Thus, the borrower needs no cash to get the mortgage.

Very few mortgage brokers know about this type of loan, or work for companies that are registered to make them. I'm indebted to Daniel Chookaszian, vice president of sales at American Street Mortgage Company, for bringing this program to my attention. He specializes in making these VA loans to veterans, as well as FHA (Federal Housing Administration) loans to other homebuyers.

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