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In 2020, there was more than $375 billion in funding secured through VA loans.
Buying a house is a stressful process any consumer can go through. Luckily for current and former US military veterans, there is the VA loan.
With the US Department of Veterans Affairs’ (VA) help, there are other low-cost mortgage options for qualifying active military or veteran families. VA purchase loans are available across the country to qualified buyers.
First introduced as part of the GI Bill, VA loans have grown exponentially in popularity as of late. They are especially popular with younger generations who tend to look for non-traditional financing to purchase homes.
There are also non-monetary benefits to using this route for securing a home loan. For example, the VA will sometimes vet new communities before the buyer moves in. This way, they can determine if the community is suitable for veterans with disabilities.
Whether it be a VA purchase loan or a refinance, there are various benefits to the VA mortgage. Keep reading to learn more about these loans and who can qualify.
What Are VA Loans?
VA loans are mortgages provided to veterans and active-duty service members who meet specific qualifications. It can sometimes apply to widowed military spouses.
The loans are originated by private lenders and are government-backed through the VA. The veteran pays an upfront “funding fee” as part of the loan, which reduces risk, and lenders can offer more favorable terms than many other traditional mortgages.
There are various types of VA loans:
The VA purchase loan is a VA loan to buy a home that is new to the buyer.
It does not require a down payment and has no cap on the loan amount of the home. Though, individual lenders may still place a limit on how much they will approve buyers for.
These loans are less common, as they only apply to a small percentage of the population—Native American veterans. NADL funds help those who qualify to purchase, build, renovate, or refinance a home that sits on federal trust land.
Veterans and current service members can also seek VA loans for rehab or renovations. These loans cover the costs of home improvements on an existing home.
This option is also known as “VA Streamline Refinance.”
Using an IRRRL is a great way for qualifying service members to refinance their existing mortgage. It allows veterans to take advantage of lower interest rates—thus reducing the monthly mortgage payment.
This option may not even require an appraisal or credit underwriting. However, it’s important to note this loan strictly reduces interest rates and therefore does not allow for withdrawing cash held in home equity.
A VA cash-out refinance loan is another option to refinance an existing mortgage. It allows for extracting equity out of the home, unlike the IRRRL option. It also provides for the flexibility to turn a conventional loan into a VA loan.
What Are the Qualifications for VA Loans?
With such generous benefits to VA purchase loans, there are also specific guidelines. They include the length of service requirements for each type of service and an “Honorable Discharge.”
They are to benefit those that have risked their lives in support of the United States. As such, it’s only available to those that can prove their service.
Generally speaking, VA loans are available to those who can obtain a VA Certificate of Eligibility (COE). These can be obtained through the VA website, by mail, or directly through your mortgage lender.
From there, eligible buyers will also receive their “Entitlement.” The “Entitlement” is the value for which the VA guarantees a loan. However, lenders can sometimes loan up to four times this amount.
Eligibility is narrowed down to service members who were honorably discharged and have their Form DD214. In place of this, active-duty military members can provide a signed statement of service.
This statement includes:
Furthermore, service members must meet one of the following classifications:
As for the applicant’s financial situation, VA loans can offer more flexible terms than a traditional mortgage. Even those with bankruptcy or foreclosure on their credit report can still be eligible for these opportunities (as long as two years have passed).
Plus, there is technically no minimum credit score requirement for this option. However, lenders still tend to look for a minimum score of 620 in most cases.
There are various benefits to obtaining a VA mortgage for your home.
Because they are federally guaranteed by the VA, there is much less risk than a traditional mortgage. As such, there are favorable terms offered to buyers that might not receive the same treatment as with traditional mortgages.
Whether it be a new VA purchase or refinancing an existing loan, there are a variety of benefits that can save qualified buyers some serious cash.
If you are a former or active duty service member looking for a low-stress, low-cost mortgage when buying a home or refinancing, Blake Mortgage, is happy to walk you through the VA loan process to get you the best rate and deal. Contact Blake Mortgage today to learn more about this incredible home loan benefit.At Blake Mortgage we are thrilled when we can help military families and veterans qualify for a VA loan because of the many advantages this loan program offers over other mortgage options. It’s our honor to assist those who have bravely served our country save money on their home mortgage.
Here are the top 10 reasons to consider a VA loan for your home purchase, plus 2 refinancing benefits:
Unlike other borrowing options, in most cases, a VA loan does not require a down payment. Therefore, you can free up your cash to use for other items or move in without saving for a down payment which can be an obstacle for home-ownership for many people.
One factor that sets apart VA purchase loans is the lack of a down payment requirement in most cases. This creates an easier cash flow for other home-buying and moving-related costs that can otherwise pose a barrier for some buyers.
VA loans offer consistently lower rates than traditional bank financing loans because the VA home loan program is federally backed by the U.S. Department of Veteran Affairs (VA). VA loans also save the buyer significant money over the life of the loan. This is because these loans usually offer lower rates than a traditional mortgage.
The good news is to qualify for a VA loan credit and income requirements are much more lenient than conventional loans. You also don’t have to be a first-time buyer to qualify.
It can be significantly easier to qualify for a VA loan than other types of mortgages. The credit and income requirements are much more lenient than what may be required from a bank.
VA loans are available anywhere in the United States and are not limited to first-time buyers. Any qualifying veteran in the US can obtain a VA purchase loan for their home.
Private mortgage insurance, or PMI as it’s commonly known, is required for most types of loans when the buyer does not have 20% down. The PMI protects the lender should one not be able to make a payment on their loan. So not only do you not need a down payment for a loan, you do not need coverage for not having 20% down. Avoiding PMI is a great benefit it can save you anywhere from .5 to 2% of your original loan amount a year.
Under traditional mortgage circumstances, homes purchased without at least 20 percent down require private mortgage insurance (PMI). This insurance is designed to protect the lender if the buyer is unable to make payments on the mortgage.
VA loans do not have this requirement. This is yet another example of how VA loans can save the buyer important costs that sometimes go overlooked throughout the process.
Because the VA guarantees the loan, lenders are willing to offer more favorable terms than a conventional home loan.
The Veteran Affairs Department will even go as far as vetting communities before a buyer moves in so that the community is suitable for servicemen and women with disabilities.
A VA loan may also have reduced or no closing costs. Another way to save money through a VA loan is with reduced closing costs. Sometimes these loans might even have no closing costs at all.
Should you choose to make extra payments to reduce your principal balance or pay off your loan early, you will not pay any extra fees or pay a prepayment penalty.
Sometimes, lenders penalize those who wish to pay off their mortgage early. This is because the lender will not receive the same total interest amount in the long run.
VA loans are unique in that they do not carry any prepayment fees or penalties.
The VA provides insurance to lenders in the case that you cannot make a payment on a loan. Additionally, there are services that may be offered to veterans in danger of defaulting on their loans.
Whereas traditional homebuyers might be required to purchase PMI and pay monthly mortgage insurance premiums to cover the risk of not repaying their loans, the VA guarantees the loan through a one-time Funding Fee, and there are no monthly premiums!
Furthermore, the VA provides resources and services to those service members who are in danger of defaulting on their mortgage.
No matter where you live in the U.S., you can access a VA loan by contacting a VA-approved lender.
VA Loans are not just for new homes but can also save money when refinancing.
An interest rate reduction refinance loan (IRRRL) is an excellent tool for veterans to refinance to lower their monthly mortgage payment with a reduced interest rate. Blake Mortgage can investigate whether we can get you a rate lower than the one you currently have. What is great, is you may not need an appraisal nor credit underwriting to apply for an IRRRL. It’s also possible to refinance without having to bring any money out of pocket to closing.
Need cash from your house? While it’s not possible to get money out from an IRRRL, a VA-backed cash-out refinance loan allows you to take cash out of your home equity. Additionally, it gives you the flexibility to refinance a non-VA loan into a VA-backed loan.
Let us at Blake Mortgage help determine your VA loan eligibility. Or you can get your VA Certificate of Eligibility (COE) here.
VA home loans are generally available to those who have their Form DD214 and have:
Served more than 180 days during peacetime OR
Served 90 consecutive days of active service days during wartime OR
Are active members of the National Guard for at least 6 years OR
Have served in the Gulf War for 24 months
Are surviving spouses of servicemen either killed or missing in action or due to a service-connected disability
Blake Mortgage offers VA backed loans through various lenders and can walk you through the process. To see what a monthly payment looks like or to apply for a VA loan, schedule your free one-hour consultation with Harry Panosian, Certified Mortgage Consultant and Certified Financial Planner.
Just before Christmas 2020, Congress passed legislation that further widens the pool of potentially eligible applications for a VA mortgage.
The bill still awaits the signature of the president before it can become law. However, it’s important to celebrate the accomplishment of bipartisan agreement on the measure.
The bill provides additional support for domestic-based service members. It is also known as the Veterans’ Health Care and Benefits Improvement Act.
With its passage, VA loan eligibility has been made available to full-time National Guard and Reserve members deployed domestically. National Guard members who supported response operations for COVID-19, natural disasters, or social unrest inside the country can now apply this service towards VA loan qualifications.
A Certificate of Eligibility (COE) is the first step in your VA home loan application journey. The COE will verify that you meet all eligibility requirements for this type of financing program backed by the U.S. Department of Veterans Affairs (VA). You can request it from the VA online or through an approved lender like a bank or credit union as part of your mortgage process.
Visit https://www.va.gov/housing-assistance/home-loans to learn about VA loans and the steps for applying for one. Read what documents are required to prove qualification, and check your eligibility at: news.va.gov/116290/request-va-home-loan-certificate-eligibility before officially applying.
Requesting a Certificate of Eligibility (COE) is the first step to getting help from the VA with your home loan. However, if you’re using one of three main types of loans: purchase, cash-out refinance, “Interest Rate Reduction Refinancing Loan” (IRRRL,) or Native American Direct Loan (NADL), you’ll need some additional documents before starting this process.
A COE verifies that you meet the minimum service requirements for a VA loan and lets lenders know how much entitlement remains available on your behalf.
Gather all relevant military discharge paperwork, such as your DD214, to get started. Additionally, have handy financial information, including income sources and two months’ worth of recent bank statements with payments/deposits. This way, everything will be in order when submitting all the required forms.
Finally, review any credit reports before applying, as timely payment history usually makes up 35% of the scores most mortgage lenders use during approval processes.
If you have an online account, requesting a Certificate of Eligibility is as easy as signing into your profile. Once logged in, select the “Certificate of Eligibility” option from the menu and answer a few questions regarding where to send it.
If you’d like to receive it electronically by mail or email, indicate that preference when prompted. The VA requires applicants to submit proof of eligibility. But those documents are usually already uploaded during the signup process, so there should be no need for additional paperwork if that was done upon registration. First-time users will input their military service information on each page they visit in the future.
On average, most people who use this method receive their COE within 72 hours after submitting their request, though sometimes processing can take longer depending on certain factors. In addition, particular circumstances surrounding different cases may also affect delivery time.
It’s a good idea to keep track of your COE when you receive it, as well as electronic print copies or establish online access for future reference. Setting online access means you will have 24/7 real-time access to view and store your documents in one secure location. This can be done by enrolling in the VA eBenefit portal, which offers comprehensive benefits management services, or using the Document Repository Upload System.
It’s essential that once the Department of Veterans Affairs issues your Certificate of Eligibility, you take it to any lender offering VA loans, as they will review the certificate and begin their standard underwriting process before giving a “Conditional Approval” for your loan.
We’re here to help close your VA Loan. Please feel free to call us at 480-699-1055 or schedule an appointment here and we’ll be happy to answer your questions about VA home loans.
As a veteran, there are several ways to get help with questions from the VA (Department of Veterans Affairs):
The VA offers several ways for veterans to get help with questions and concerns. Whether you prefer to speak with someone over the phone or in person or access information online, resources are available to help you.
Here are the URLs for the sources mentioned above:
As with any mortgage, the process of applying for a VA loan can be tricky to navigate. It’s important to consult with a trusted mortgage expert with years of experience in the industry to find the best possible loan for your situation.
In the Phoenix, AZ metropolitan area, Blake Mortgage is here to cover all of your VA loan needs.
Blake Mortgage is dedicated to helping military and veteran families obtain a VA purchase loan. With over two decades of experience, they are ready to serve you.
To inquire about VA loans or to request a mortgage quote, contact Blake Mortgage today!
We’ve been helping customers afford the home of their dreams for many years and we love what we do.
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