All About VA HOME LOANS
The VA Loan program is the most powerful and flexible home loan program on the market for veterans and military families. These flexible, government-backed loans come with significant benefits that open the gateway of home ownership to veterans who might otherwise struggle to obtain financing.
THE INCREASING POPULARITY OF VA MORTGAGE LOANS IS LARGELY DUE TO THE LOAN PROGRAM’S SIGNATURE BENEFITS, WHICH INCLUDE:
1. No Down Payment
Saving money and building credit can be difficult for service members who are constantly on the move. VA mortgage Loans allow qualified borrowers to finance 100% of the home’s value without putting down a penny.
2. No Private Mortgage Insurance
Most conventional lenders require borrowers to pay private monthly mortgage insurance unless they’re able to put down at least 20 percent, which is a tough task for many veterans. Private mortgage insurance (PMI) is an insurance that protects lenders in case of a borrower default.
Since the federal government backs all VA Loans and assumes the risk that is typically covered by PMI, there i no PMI required for VA Loans. This is a significant reduction in monthly payment, as compared to a conventional loan, which allows borrowers to save thousands of dollars over the life of their loan.
3. Competitive Interest Rates
Interest rates on home loans are based on risk assumed by the bank to finance the loan. Because the VA backs each VA Loan with a guaranty, financial institutions carry less risk and can offer interest rates that are typically lower than conventional interest rates.
A lower interest rate and the ability to purchase a home with no money down with no private mortgage insurance adds up to significant savings.
Lower Interest = More Savings
ADDITIONAL BENEFITS OF VA HOME LOANS:
Basic Allowance for Housing (BAH) is a significant benefit for qualified active military members. Lenders can count your Basic Allowance for Housing as effective income for qualification of the VA Mortgage Loan.
BAH varies based on your pay grade, your geographic location and your number of dependents.
VA HOME LOAN – VA REFINANCE (IRRRL)
VA refers to them as the IRRRL (Interest Rate Reduction Refinance Loan). This type of loan works perfect for someone in Las Vegas that currently has a VA loan and also happens to be upside down in their mortgage. This is because in most situations, the appraisal is not required. However, you must currently have a VA mortgage to do the streamline refinance of the current loan.
With this type of VA Refinance, the process is much more streamlined. The documentation we must collect from you to apply for the refinance is reduced. The following is the list of items you would need to submit for the application of a VA Refinance (IRRL):
- A copy of your NOTE from the loan package you received from the title company when you closed on your loan last
- Your current VA Case #. This is listed on your HUD-1 settlement statement which is also part of the loan package
- A most recent mortgage statement
- Copy of your homeowners insurance
- Copy of your Drivers License and Social Security Card
- Payroll Stubs for the last 30 days. If you are active miliary, then a Leave & Earnings Statement (LES) which must be printed from a base computer
- Copy of your DD214 if you are not active miliary
WHAT ARE THE REQUIREMENTS FOR A VA HOME LOAN?
In addition to the normal Employment and Income loan qualification guidelines, VA applicants must also provide a Certificate of Eligibility (COE). Determinations of eligibility are based on the length of service and are issued to veterans who were not dishonorably discharged. Here is the COE Request form. If you are a veteran and no longer active duty, you will need to request your Certificate of Release or Discharge form DD-214. I am happy to help you with this! Call! Email! Apply online today!
VA HOME LOANS – COSTS
Although there is technically no mortgage insurance in a VA loan, there is an upfront “funding fee” (which can be, and typically is financed into the loan balance). There are a few exemptions, including exemptions for veterans with disabilities, but most VA home loans include a funding fee in order to help fund the VA guaranty. The funding fee ranges from 0.50% to 3.30%, depending on what type of loan is obtained, down payment amount (if any), and whether it is the first time use of a VA home loan or a subsequent use. Below are some of the most common VA purchase loan funding fees for active duty or veterans (not reservist):
- For first time use VA Home Loans with less than 5% down payment: 2.15%
- For first time use VA Home Loans with 5%-9.99% down payment: 1.5%
- For first time use VA Home Loans with over 10% down payment: 1.25%
If you want to do some reading, you can read through the VA Lender Handbook for all of the VA home loan details straight from the source.
Call today Mike Marroquin for more information about qualifying for a VA home Loan and get your home search started off on the right foot!