The Home Buying Process for Veterans

By
Real Estate Agent with Fontana Realty

Several people are facing the challenges of accessing financing for buying houses. And of course, there are different types of loans or mortgages available to people. Meanwhile, the government has made a provision for the veterans and active service persons to finance their home buying without any stress and that is VA home loan program.

VA home loan is a mortgage option with zero down payment specially created for the veterans. VA home loan is facilitated by the US Department of Veterans Affairs. Unlike other types of mortgages, VA home loan was designed to help veterans have access to a loan to buy houses without paying any amount as down payment. The VA home loan can be drawn by veterans, service members, and other military spouses. Private lenders can issue VA home loan while the US Department of Veteran Affairs (VA) serves as the guarantor for such loans.

The history of VA home loan dates back to 1944 when the government established it to help returning service members buy homes eliminating the traditional request for a down payment or good credit score that are considered to determine the eligibility of applicants.

The VA home loan has benefitted millions of veterans, active service members, and their families, and spouses of servicepersons who died during active service as they can purchase houses or refinance their home loans using VA home loan program.

Veteran Home Loan Guidelines

In the recent years, most lenders now tighten the requirements for giving a loan based on the current economic conditions. As a result, it has become more challenging for people to access funding to purchase their dream houses. However, VA home loan offers a lifeline to veterans and active military homebuyers to have access to fund and avoid facing the stringent conditions demanded by lenders.

The VA home loan has its uniqueness and offers a lot of convenience to veterans when compared to the traditional mortgages available in the market. VA home loan has proved to be a powerful loan program with the benefits to the military homebuyers in focus to provide access to fund whenever they wish to buy a house without facing the stringent requirements by the conventional mortgages.

When compared to the traditional or conventional loans, the VA home loan is more flexible, convenient, and affordable. In addition to its zero down payment, VA home loan does not require the Private Mortgage Insurance (PMI) because the government legislation backs the loan. As a result, banks will not need military homebuyers to buy Private Mortgage Insurance.

Besides,  VA home loan is easier to qualify for due to the government backing, banks are exposed to less risk, and therefore, banks do not place strict qualification standards on applicants because VA home loan is easy to obtain according to the way it is made to run.

Meanwhile, it should be mentioned that although the VA home loan is a federal government’s program, the government will not be responsible for making direct loans to veterans. Instead, the private lenders in the market will facilitate the loans to the veterans.

VA Home Loan Benefits

The VA home loan program has several advantages above other conventional mortgage programs. And the convenience and benefits it offers cannot be matched by other home buying financing programs. Millions of people, especially veterans have been able to have a roof over their heads, thanks to the VA home loan program.

The VA home loan benefits are immense as millions of veterans, and active service members may not have become homeowners but for the VA home loan. No other type of mortgage is as beneficial, convenient, and flexible as the VA home loan for veterans; consequently, it is the best option for veterans and military homebuyers. In all ramifications, the VA home loan benefits are desirable.

Here are some of the VA home loan benefits.

1. VA home loan does not require eligible homebuyers to have a down payment ready before accessing the loan. This is considered the greatest of all VA home loan benefits. Other conventional mortgage programs require at least five percent down payment while FHA loan’s minimum down payment is 3.5 percent while the VA home loan requires no down payment.

2. The VA home loan does not involve the monthly payment of mortgage insurance premiums or PMI. Other types of mortgages involve the payment of PMI. The money that could have been used of the PMI can go into the loan repayment to fast-track the repayment of the loan.

3. The VA home loan offers lower average interest rates than other mortgages. The VA home loan has the lowest interest rates among all types of mortgages. This is aimed at helping veterans, and military homebuyers have light financial burdens.

4. The VA home loan allows borrowers to pay off the loan earlier than scheduled time without any financial penalties. There are no prepayment penalties, and that gives borrowers the privilege of paying off the loan whenever they have the opportunity.

5. The VA home loan allows military homeowners with existing VA loans to refinance their loans for lower monthly payment with interest rate. Military homeowners who have existing mortgages other than the VA home loan can take the mortgage of the VA home loan to refinance their existing mortgage. What an easier way to get out of conventional stringent conventional mortgages.

6. The VA home loan offers eligible homeowners the second tier entitlement such that veterans who have used their loan benefits can buy homes again by using VA home loan through the restored loan entitlement.      

7. Foreclosure can be prevented in VA home loan program. With the present economic situation, every lender wants to recover all loans as at when due. Some VA borrowers who are struggling to make payments on their mortgage may communicate with the VA for help. Veterans can negotiate with the lender on behalf of the borrower for easier repayment plans, loan modifications, and other alternatives to prevent foreclosure.

 

The VA home loan benefits are inexhaustible. VA home loan is different from all types of loans; in that, it does not only get veterans into homes but also helps the veterans to keep the homes. When compared to other mortgages, the VA home loan is convenient and provides stress-free access to financing their homes. VA home loan benefits outweigh whatever benefits the conventional mortgages may have to offer. Consequently, VA home loan is too hard to beat for conventional mortgages.

VA home loan program provides the easiest and the most efficient path to homeownership for veterans and active military servicepersons. And it is not surprising that VA home loan volume has continued to grow over the years as more veterans, active servicepersons, and spouses of dead military persons make use of the VA home loan to buy houses.

VA Home Loan Requirements

Every mortgage has their peculiar requirements, although some are easier than others. In spite of several VA home loan benefits over the conventional mortgage, many VA home loan requirements must be met to qualify for the VA home loan program. Here are some of the VA home loan requirements.

1. Credit Score

Although  VA home loan does not set a minimum credit score that a homebuyer must have to qualify, the lender will make a lending decision after a thorough review of the loan profile of the applicant. All lenders have the minimum credit score they can grant access to the loan. Consequently, a military homebuyer with a good credit score will stand a better chance more than with a poor score.

2. Assessment of the VA home loan Debt-to-Income Ratio

VA home loan does not specify the maximum debt-to-income ratio. However, when the ratio is more than 41 percent, most lenders will want to be sure that the borrower can pay the loan by evaluating the “residual income” and mortgage will be.

3. Lender Requirement

Lenders usually add the other requirements to the basic VA home loan requirements. Some lenders could analyze clients’ information with regard to all the submitted information regarding credit accounts and other reported late payments. Lenders may not disclose reasons for denying some applications, but these are the results of additional requirements. As a result, it is best to apply to more than one lender.    

4. Down Payment

According to the standard, eligible applicants do not need to make a down payment under VA home loan program. However, if you offer to make a down payment to a lender,  VA funding fee will reduce, and your application will be attractive to the lender.

Besides, if you are buying a home in a competitive market with buyers outnumbering home sellers, a down payment may be necessary when you are bidding to show that your seriousness as a potential buyer.

5. The VA Home Loan Limits

There are limits on the price of homes that can be bought a down payment. As at 2018, an eligible borrower can purchase a house priced up to $453,100 without a down payment, although the amount can vary by county, this limit is in respect of the single-family loan limit set by the Federal Housing Finance Agency. Meanwhile, areas where properties are highly priced, there are higher value limits such as Hawaii, Alaska, and Guam.

6. The Property Requirements

VA home loan program has several stringent requirements for each property in question. The requirements cover the compliance with the existing building codes, living conditions, and the property’s safety. To qualify, houses that are newly constructed are required to have some warranties or safety plans or must be a house built by a veteran for personal occupancy.

7. Required Fees

Although VA home loan requirements do not involve paying mortgage insurance, you will pay a funding fee. The payment assists VA in covering the amount of money spent on mortgage foreclosures. The fee is charged at 1.25 – 3.3 percent of the loan amount and based on down payment, duration of your services and the division of the military, and if you have used your VA home loan program before.

The VA Home Loan Eligibility

The most important of VA home loan requirements is eligibility. Before you are qualified to apply for the VA home loan, you must be an active duty military, or you must have left the military service under honorable discharge. To qualify for the VA home loan program, a veteran must meet the length of service requirement. Active service members must have served for the minimum period. Also, the surviving spouses of deceased veterans may qualify for the VA home loan program.

As evidence of eligibility for VA home loan, a certificate of eligibility issued by VA is required. The certificate is, however, most often obtained through a lender. But before you contact a lender, it is better to verify your eligibility. The eligibility of the VA home loan program can be summarized as stated below:

a. 90 days of active service in wartime

b. 181 days of active service during peacetime

c. At least six years in the Reserves or Nations Guard

d. Active-duty servicepersons

e. 90 days of active service for servicepersons still in active service.

f. Reservists and members of the National Guard

If you fall into any of the groups mentioned above, you are qualified for VA home loan program. However, veterans who were discharged dishonorably are not eligible for VA home loan payment; they could apply for other mortgages other than the VA home loan program.

The VA home loan is a beneficial mortgage that could be taken advantage of to buy a home as an eligible homebuyer. It is, however, a wise decision to make use of VA home loan when you need to buy a house or refinance an existing mortgage on your property. Contact VA home loan lenders close to you to apply. Contact as many as possible to increase the chances of being granted. If you are Veteran and relocating to the Ocala, Florida area, visit  https://www.localrealtyservice.com

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