New Jersey Real Estate Practice Exam Practice Question
Which of the following is true of a VA loan?
Correct Answer: D
Rationale: Option D accurately describes the VA loan program, as the Department of Veterans Affairs guarantees a portion of the loan to lenders, mitigating their risk in the event of a default by the veteran. This guarantee encourages lenders to offer favorable terms to veterans.
Option A is incorrect; while VA loans do not require mortgage insurance, they do involve a funding fee, which helps sustain the program.
Option B is misleading; VA loans are primarily intended for primary residences, not for purchasing rental investment properties.
Option C is also incorrect; VA loans typically do not offer below-market interest rates but rather competitive rates, which may be similar to or slightly lower than conventional loans.
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