Certified Residential Appraiser Practice Exam

What is a primary focus of a VA-guaranteed mortgage?

1. To offer high-interest rates for veterans

2. To provide no-interest loans for military personnel

3. To assure lenders against borrower default

4. To facilitate quick home sales for veterans

The correct answer is: To assure lenders against borrower default

The primary focus of a VA-guaranteed mortgage is to assure lenders against borrower default. This government-sponsored program is designed specifically for veterans and active-duty service members, enabling them to access favorable loan terms without requiring a down payment or private mortgage insurance. The guarantee essentially protects lenders by compensating them in the event of a borrower defaulting on the loan. This assurance is crucial because it lowers the risk for lenders, encouraging them to offer loans to individuals who may not otherwise qualify due to limited financial resources. By mitigating the risk involved, the VA guarantees make it easier for veterans to secure financing for home purchases, contributing to higher home ownership rates among military families. In contrast, the other options focus on misconceptions or details that do not align with the primary aim of VA loans. High-interest rates, for example, are contrary to the program’s intention of providing affordable financing. No-interest loans are not offered, as VA loans typically do involve interest rates, albeit generally lower than conventional loans. Quick home sales are not a direct aim of the program either, as the focus is more on facilitating access to home ownership rather than expediting sales.