By Military1 Staff
June is National Homeownership Month, declared by presidential proclamation to highlight the benefits of owning a home. For military veterans, the Department of Veterans Affairs home loan was created especially for them, in hopes it would provide returning combat veterans with stability.
After World War I, military veterans returned with only a train ticket home, and less than $100 in their pocket. This bleak ending to the war was something the federal government wanted to avoid following the second world war. But, what to do?
First they considered a weekly allowance for returning troops, but they were afraid of making the veteran population dependent on the government and without any incentive to look for work. Providing financial assistance for a college education was contested, because, at the time, government officials were afraid to send “hardened” combat veterans to school with the children of the nation’s rich.
The solution? A comprehensive piece of legislation that would come to be known as the G.I. Bill. Provisions for education, training, unemployment pay were included in the landmark bill, as well as one of the biggest benefits to be created for veterans: home loan guaranties.
It wasn’t a free home, or even free money, but it was a guarantee from the federal government that a military veteran’s home loan would be partially backed by the U.S., giving lenders a huge sense of security when deciding to provide them with a mortgage.
Why did a partial-loan guarantee from the federal government provide so much stability after a tumultuous war? Easy: It helped create the image of the American dream, white picket fence and all.
For many Americans, owning a home was a pipe dream, due to the cost and expense, not to mention the difficulty of being approved for a loan. However, when thousands of veterans returned from World War II, they began utilizing their new benefit, and helped start a post-war housing boom. Between 1944 and 1952, 2.4 million veterans purchased a home with the help of government-backed loan.
For military members and veterans, a VA home loan is still one of the most popular ways to purchase a home, and it’s a benefit they can use over and over again. It also had traditionally lower interest rates, offers the option to forgo private mortgage insurance, has fewer fees associated with it and has the lowest foreclosure rate among its borrowers.
When World War II veterans came home from overseas, they not only started the baby boom, but also helped contribute to what eventually became a booming economy and a booming housing market, all thanks to the provisions provided in the G.I. Bill of Rights at the time, and what is known now as the VA home loan.