6 Reasons to use your VA Benefits

When it comes to finding a home for you and your family, getting the best possible mortgage sets you up for success. For those who are eligible, a VA (Veteran’s Administration) mortgage loan offers a number of enticing benefits that may make sense for your home purchase. Here are some of the biggest advantages of VA loans:

1. No money down required. Coming up with a large down payment is a huge barrier for many home buyers. For a $200,000 home, a standard 20 percent down payment is $40,000. That is a lot of money for most families to save up. With a VA loan, so long as the purchase price doesn’t exceed the appraised value of the home, no down payment is required.

2. No private mortgage insurance (PMI) required. With traditional loans, if you require financing for more than 80 percent of a home’s appraised value, you’ll most likely be required to pay PMI monthly, which protects the lender if you default on the loan. This can cost many borrowers an extra $100 to $200 a month though some lenders have options that do not have a PMI requirement. VA loans, on the other hand, do not require PMI, even when receiving a loan for the entire appraised value of a house.

3. Strict limits on closing costs. Closing costs for traditional mortgage loans can add up quickly, but with a VA loan, strict limits are imposed on what closing costs are allowed.

4. Lower interest rates. Because VA mortgages are partially guaranteed by the VA, lenders are encouraged to offer more favorable terms than conventional loans. This can often translate into lower interest rates than those for conventional mortgages.

5. Potentially lower minimum credit score to qualify. The VA doesn’t set a minimum credit score requirement, although many VA lenders have guidelines for minimum credit scores for qualification. Your lender may look past your credit score to see your unique financial situation to help get you the best VA loan possible.

6. No prepayment penalty. Traditional mortgages may penalize you for paying off your loan early, but with a VA loan, there is no penalty for eliminating your mortgage ahead of schedule. If you’re able and decide that you want to pay off your mortgage, you’re not forced to keep unnecessary debt.

Ready to get started on your path to home ownership? Start with getting pre-approved for a mortgage that fits your needs and goals.

Article provided by Navy Federal Credit Union. When shopping for a VA home loan consult your local REALTOR for information on which lenders provide the best and quickest service for you and your family. Your working REALTOR has experience with multiple lenders and can provide you with a wealth of information on the lenders loan servicing time and their clients overall satisfaction with the lenders.

Rates are rising: Lock in your 2016 rate with your $0 down VA loan benefit

The VA loan benefit makes it easier for qualified borrowers to get a home loan of up to $417,000, buy a home with $0 down or streamline refinance to a lower rate.

• Qualified borrowers:
• Buy a home with $0 down
• Refinance to lower monthly payments
• Never pay PMI payments
• Get competitive interest rates

Don’t wait for rates to rise…. Contact me today for a list of VA lenders our clients have used.

 

VA loan approval may be easier than you think.

Understanding the VA requirements can help borrowers know what to expect during the VA home loan process.  

The VA publishes a lender’s handbook as a guideline for companies that originate and fund VA loans. In the handbook are four basic loan approval requirements that VA-approved lenders use when considering loan applications. A veteran who understands the basic approval guidelines is better able to consider whether they are likely to qualify for a VA mortgage. Here are four keys to VA loan approval:

 

Key #1— VA Entitlement

Borrowers must, first and foremost, be eligible for VA home loans. This means they must have satisfied the service requirements and have enough “entitlement” available to be considered for a VA loan. Entitlement is a word used to refer to the amount the VA will guarantee for a particular veteran borrower. “Full” entitlement is usually enough for a VA home loan of $417,000 (or even more in high-cost counties).

Key #2 — Property Eligibility

The lender’s handbook states that VA home loan benefits are to be used mainly for owner-occupied properties. The VA lists single-family homes, VA-approved condos, townhouses and multi-family homes (up to four units per borrower) as properties generally eligible for VA financing. (There may be additional qualifying requirements.) The VA also guarantees the financing of manufactured homes if they are attached to a permanent foundation; but not all lenders offer VA loans for modular homes.

Key #3 — Owner Occupancy

By law, VA borrowers must occupy the homes they finance. VA borrowers must verify that they will occupy their homes within a reasonable time. For most, this means within 60 days after closing. Borrowers who are deployed away from home may receive an extension of up to 12 months. A spouse is the only relative that can satisfy the occupancy requirement in a VA-eligible borrower’s stead. VA Streamline refinance loans require only that the borrower occupied the home in the past.

Key #4 — Income & Credit

VA-eligible borrowers must qualify for the loans they obtain. Veterans (and co-borrowers, if joint) must have steady and ample income and satisfactory credit. Lenders are given some flexibility to decide whether a borrower is a safe credit risk within VA guidelines. VA-approved lenders may set their own credit score minimums. The VA recommends borrowers have no more than 41% debt-to-income ratio and at least enough residual income to cover typical living expenses. VA Streamline refinance loans may not require income and credit re-qualifying.

While other qualification requirements may apply, depending on the loan program and lender, when the four basic loan approval requirements are met, the applicant(s) will usually qualify for their VA loan. Loan amounts can vary based on each VA-eligible borrower’s entitlement and ability to pay.