What Is A VA Loan?

By
Mortgage and Lending with Horizon Lending Services, LLC NMLS # 198754
https://activerain.com/droplet/59md

The Department of Veterans Affairs (VA) offers appealing home loan options to qualifying service veterans. However, there are some strict requirements that must be met before a veteran can qualify for a VA loan. Once qualified, though, VA loans can offer many benefits and advantages for borrowers.

 

Requirements

There are a few groups who qualify for VA loans. These groups include: veterans, active-duty personnel, reservists, National Guard members, and some surviving spouses. Within these groups, certain criteria has to be met.

If a person in one of these groups has a suitable credit score and income level, along with a valid COE (Certificate of Eligibility), they can get a VA loan. The VA offers three types of loans through their program: purchase loans, IRRRL (Interest Rates Reduction Refinance Loans), and cash-out refinance loans.

The full list of eligibility requirements can be found at the VA’s website.

 

The Benefits

Although qualifying can bring a few hurdles, it is well worth going through the process. Some of the core benefits of getting a VA loan include: 

  • No down payment. If you qualify for a VA loan, you do not have to put any money down on your house purchase. The only reason you should find yourself putting money down is if your home falls above the VA’s loan limits (in which case you will need to pay the difference).
  • Good interest rates. Interest rates for VA loans are competitive and negotiable.
  • You can refinance the VA funding fee, and you can even be exempt from it if you are a veteran receiving VA compensation. If you provide 5% down, you will save on funding fees.
  • Save on closing. The VA will ensure you do not pay over a certain amount on closing costs. Closing costs are comparable to other loan options and can even be lower. The seller may also cover them.
  • No mortgage insurance. You will not have to pay PMI, or Private Mortgage Insurance as you would have to with an FHA loan and some other options.
  • The ability to get an assumable mortgage that can be transferred to a home buyer before paying off your house. They will pick up where you left off, which will save them on interest and make your home easier to sell.

The VA loan program also comes with unique additional benefits, like the ability to prepay your mortgage without any penalty. The VA will also offer you assistance if you ever fall into temporary default due to financial hardship.

 

How To Get A VA Loan

Once you decide that a VA home loan is the right choice for you, there are a few simple steps to follow in order to get your home loan. 

  1. Check the eligibility requirements.
  2. Locate a lender in your area who participates in the VA home loan program.
  3. Acquire your COE (Certificate of Eligibility).
  4. Apply for your loan.

While you are looking up eligibility requirements, you will also want to check the loan limits for your area. They are set by county and can be located online, but you will want to make sure you are checking a recent document as they change each year. On average, eligible individuals can get up to $417,000 down with no money down.

All of these benefits are what make the VA loan program appealing to individuals across the country, even though meeting the VA’s criteria can occasionally raise hurdles. In short, it is worth your consideration and most certainly worth the small bit of trouble if you qualify.


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Pat & Sharon Mistowski

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