Did you know that millions of veterans and military families are missing out on a powerful home loan benefit?
We can never repay their sacrifice, we want to help active-duty service members, veterans, and surviving spouses of veterans to achieve their homeownership dreams by taking advantage of the VA home loan program. Let’s see if we can answer some questions about VA Loans and how they work?
What is a VA home loan?
It’s a $0-down mortgage option that requires no down payment, no private mortgage insurance, and has few closing costs. It rewards service members with great terms, low-interest rates, and no pre-payment penalties.
It’s no exaggeration that there are many Veterans who are unaware of this program that allows them to get a home loan with no down payment. It’s a great loan program offered to future homeowners,
Are sellers less likely to accept a VA loan buyer’s offer?
Not at all—in fact, VA loans often signify a high degree of trust and security for sellers.
Unfortunately, there is a lot of misinformation floating around that could deter eligible families from taking advantage of this program.
There are many rumors and Myths out there about VA Loans and maybe we should debunk a few of them…
Myth #1: Very few veterans are eligible for VA loans.
Given that only 12% of eligible veterans take advantage of VA loans, eligibility extends further than you might think. VA home loans are available to active-duty service members and veterans in a variety of different situations. Buyers are eligible for a VA loan if they
Served for 90 consecutive days in wartime
Served for 181 consecutive days in peacetime
Have 6 years of service in the National Guard or Reserves
Are the spouse of a service member
Myth #2: You can only use your loan to purchase a pre-built, single-family home.
VA loans provide qualifying veterans with flexibility. With these loans, you can
1. Purchase several different property types:
1. Single-family homes
2. Multi-family homes (up to 4 units)
3. Manufactured homes
4. Lots and land
2. Finance construction for a custom-built home
3. Refinance your existing mortgage
4. Access equity to make energy-efficient upgrades to your current home
This flexibility may come with limits in some cases, so make sure to talk to your Mortgage Advisor about your plans to ensure they’re consistent with VA rules and regulations.
Myth #3: VA loans are small, and you can only use this benefit once.
Loans are available at traditional loan limits and above.
VA loans aren’t just for starter homes. Qualified veterans with a full entitlement can borrow as much as their lender is willing to extend. When it comes time to buy a newer or larger home, you can apply for a VA loan again. Veterans often use these loans to invest in property and build their personal wealth, so don’t discount that as an option for your family!
Myth #4: VA Loans involve a lot of red tape, making them difficult to work with & unappealing to sellers.
There’s no truth to the idea that sellers don’t like working with VA buyers. In fact, VA loans often signify a high degree of trust and security for sellers. Evidence shows that VA buyers are just as likely to make it to closing day as any other buyer. VA loan requirements for sellers are no more stringent than other loan types, and these loans close just as quickly, too.
Closing Costs & Funding Fees
If you’re considering a VA loan, there are a few other things to be aware of. Information about closing costs and funding fees can be misconstrued in ways that make these loans sound less appealing than they actually are.
Closing Cost Restrictions
One of the biggest benefits of a VA backed loan is the reduction of closing costs for the buyer.
Though this may mean that the seller has to pay more in closing costs than they might for other loan types, that doesn’t make VA loans a bad deal. In fact, the VA requires that the seller cannot pay more than 4% of the total home loan in concessions.
Additionally, negotiation is absolutely an option in these transactions, just as it is with any other loan type. VA buyers can do things like making a higher offer to cover closing and other costs
VA Funding Fee
The VA funding fee is a one-time payment that the buyer makes at the beginning of their loan. Instead of a down payment or PMI, buyers pay this fee to help offset the cost of the VA home loan program. For the typical first-time home buyer with no down payment, this fee is 2.3% of the loan amount. This fee can be paid all at once at closing or folded in with your monthly payments.
However, not all veterans, service members or survivors need to pay this fee. You may be exempt if you are:
Being compensated for a service-related disability
A surviving spouse currently receiving Dependency and Indemnity Compensation
An active-duty service member who has received a Purple Heart
More VA Loan Benefits
Now that we’ve busted some myths, let’s get down to brass tacks and talk about the benefits of a VA home loan. This loan program is a great reward for our service members hard work and includes such perks as:
No down payment
No private mortgage insurance (PMI) or mortgage insurance premiums (MIP)
Fewer closing Costs
Great terms and low-interest rates
No penalty fees for paying off your loan early
On top of all that, this loan type includes access to assistance from the VA if you ever have trouble making your payments. This all makes the VA loan one of the best loan types out there. If you can qualify, you should absolutely weigh the benefits of this loan type against other options. Your Mortgage Advisor can help you understand the specifics of each loan type available to you—though everyone’s situation is different, chances are pretty high that a VA loan may offer you the best-possible terms.
Specifics like these are another reason why it’s important to provide your Mortgage Advisor with full details when considering a VA loan. The more you share, the more they can help you find additional benefits and ensure a smooth transaction.
A Veterans Affairs Loan is a massive benefit you don’t want to miss, especially if you’ve done the work to earn access to it. After all, you’ve served in the armed forces, put some parts of your life on hold—like settling down, perhaps—to give back to your country. That deserves acknowledgment and any benefits that come with it.
Many Veterans are unaware of this program that allows them to get a home loan with no down payment.
Applying for a VA Loan is done the same way as applying to get any other home loan. You follow the standard steps:
Get pre-approved
Find a home and put an offer on it.
Go through VA appraisal and underwriting.
Close on the home.
It’s a great loan program….So if you’ve done the honor of serving -Uncle Sam helps you out by granting you the right of utilizing one of the most enviable loan programs offered.
The VA doesn’t provide the loan. Instead, the Veterans Affairs works with lenders to determine your eligibility for this amazing benefit. Your lender communicates with the VA that you want to use your VA Loan benefit. The VA relays information back to your lender that they then use to determine your eligibility.
You can use your VA Loan more than once. A common misconception is that the option to use this loan goes away once you’ve used it. Not so! Provided you reinstate your entitlement and pay off your previous loan, and you apply for another VA Loan, you can use your entitlement over and over.
A VA Loan is reserved for primary residences only. You can’t use it to buy a cabin in Sun Valley or a retreat in the Keys, unless you’re going to live in that Key West retreat
Ready for this one? No monthly mortgage insurance. It’s true! If you’ve ever used another loan program and ended up with mortgage insurance rolled into your monthly mortgage payment, you’ll appreciate this. A VA Loan carries no monthly mortgage insurance.
If you don’t know what mortgage insurance is, it’s a fee you pay with other programs when you don’t put 20 percent down on a home loan.
VA Loans on both purchase and refinance options come with a required funding fee, but hey, it can be rolled into the loan or waived for some Vets with disabilities related to their service.
All in all these are great loans and interesting enough only 12% of our Vets take advantage of this great opportunity.