Veterans know that if they plan to use the VA Home Loan Guarantee Program to purchase a home that they are taking advantage of a valuable benefit that they earned from their service. This benefit allows veterans who are eligible to purchase a home with easier qualifying guidelines that traditional lenders.
Some of the reasons it is easier for a veteran to purchase a home through the VA Home Loan Guarantee Program include:
• The VA guarantees the loan. When a lender sees that a portion of the loan is guaranteed by the VA, they know they have a low risk investment. Even if the veteran does not pay the loan, the lender will still get some of their loan money back and the property to sell. This makes the loan more secure that traditional borrower’s loans and is one of the reasons why it makes it easier to qualify for applicants.
• Their eligibility can be determined within minutes. All a veteran needs to do is go into a VA approved lender and they can determine through the ACE system on the computer if the veteran is eligible to use the VA Home Loan Guarantee Program.
• The VA helps veterans who are in jeopardy of losing their homes. Lenders feel more secure knowing that the VA is behind these borrowers because the VA will help find solutions to problems in the case a veteran has financial difficulties. As a result of this, the borrower is less likely to default on their loan and the lender is more confident that they will be repaid by the terms of the mortgage contract.
• If you are still active in the service, then your employment is easily verifiable. One road block many people face is proof of income and employment. If you are an active service member then your income and employment are verified by the Federal Government.
• You are purchasing a home with no down payment, but it is treated as if you have a down payment. Even if you have $0 down, the lender considers the VA guarantee to be similar to a down payment. All a down payment does is ensures the lender that you are invested in the home purchase and will not walk away without paying back the loan. It also allows them to have some equity in your home in the case they need to sell it so that they can make their money back. With the VA guarantee the lender is already certain they will get their money back, so a down payment is not necessary.
If you are a veteran considering a near future home purchase, you should take advantage of the VA Home Loan Guarantee Program in order to have an easier time qualifying for a loan. For more information on the VA Home Loan Guarantee Program go to www.va.gov
Under certain circumstances you do not have to pay the VA funding fee or can get a discount. The VA Home Loan Guarantee Program is great for veterans who are in the market for a new home. One of the most important questions is: how much do you have to pay to use this benefit? Some people can get a discount, or even have the fee waived entirely depending on your circumstances.
To qualify for a discounted funding fee you must:
• Be a reservist who is eligible for the VA Home Loan Guarantee Program.
• Be currently active. Reservists pay a higher funding fee that active members, and if you are currently active you may be eligible for a discounted fee.
• You must have served the full amount of time that you were called to active duty unless discharged due to a service related injury or disability.
• You can begin using your benefits and discounts after 90 days of active service.
In order to qualify for having the entire funding fee waived you must:
• Be an eligible veteran and be receiving payments or compensation from the VA due to a service related injury or disability.
• Be an eligible veteran who would be receiving service related disability compensation if you were not retired and receiving retirement benefits.
• Be considered or rated as eligible to receive service related disability compensation, even if the payments have not begun yet.
• Be the spouse of a veteran who died from service related disabilities or in active service.
It is important to know that in order to have the funding fee waived or discounted your lender must take the proper steps. Make sure your lender knows that you qualify for the fee waiver or discount so that they can verify your status and give proof of this status to the VA. If you have paid a funding fee to the VA and feel that it was an error and you should have been exempt, then you should contact the VA and your lender. A correction can be made that could get you some or all of the funding fee refunded to you.
If you are a veteran who is interested in using your VA Home Loan Guarantee benefit, then you should know that you can purchase a home with no down payment. Not having to wait the years it could take to save money for a down payment on purchasing a home is one of the best benefits of the VA Home Loan Guarantee Program. Even though you do not have to have a down payment to purchase a home through the VA Home Loan Guarantee Program, you do have to follow the rules of the program to use this no down payment benefit. One of the main rules to not needing a down payment is that the purchase price of the home must not be higher that the value of the home. Here are the steps you should take to determine the value of your home and make sure that you do not need a down payment to purchase your home through the VA Home Loan Guarantee Program:
• To determine the value of a property you must have an appraisal which is required by the lender and the VA. An appraisal is required when you are purchasing a home so that the lender is certain that the home is worth the amount of the loan. Since you do not have a down payment you are borrowing the full value of the home. This is only allowed by the lender because the VA guarantees a portion of the loan which is equal to a large down payment and is why you are not required to place your own down payment on the home at the time of purchase.
• An appraisal will estimate the fair market value of the home and the price should be based on this value. The fair market value is determined by an appraiser by looking at the other homes in the same area that have recently sold that are similar to the home you want to purchase. The homes are compared by square footage, attributes, bathrooms, bedrooms, property size, and other amenities, and then the sale prices are compared to determine about how much the home that is being appraised would sell for on the real estate market at that point in time.
• If you have agreed to pay a higher price for the home that its appraised value you should consider re-negotiating the purchase price of the home. Most sellers will accommodate a lower selling price rather than breaking the deal because the lender will not lend you more that the appraised value of the home.
• If the seller is willing to let you walk away from the deal rather than allowing the sale price of the home to drop, then you do have other alternatives. Some sellers believe that they can get more that the appraised value for their home, or they may owe more that the appraised value for the home, and therefore can not sell the home for less.
• You can request a reconsideration of value for the appraisal of the home. To do this you have to notify the VA in writing to the office of jurisdiction. This is whatever VA Home Loan Service Center is in control of the area in which you are in. A re-appraisal may be done, or a reconsideration depending on information that you may give the VA on property amenities that the appraiser may not have been aware of, or new improvements or additions to the home.
The best way to avoid potential problems with the no down payment option of purchasing a home through the VA Home Loan Guarantee Program is to try and inform the appraiser of all the features of the home in order to make sure that the appraisal value of the home meets or exceeds the anticipated purchase price. It is the responsibility of the seller to inform the appraiser of the homes perks, amenities, and recent improvements, but as the buyer you should make sure that the seller understands that the lender will not allow you to borrow any amount over the appraised value which makes it in the seller’s best interests to keep the appraiser well informed in order to make sure the appraisal is successful and meets the needs of all parties involved.
When veterans use the VA Home Loan Guarantee Program one of the benefits is the lower and limited closing costs. Because the Home Loan Program is regulated by the VA there are only certain fees that are allowed to be charged to borrowers. The VA has a list of approved lenders that must be used by borrowers because they know these lenders will abide by the fee rules.
Even though the fees for a VA loan are comparable to other traditional lenders, some of the fees that are not allowed by the VA include:
• Application fees
• Pre-payment penalty fees
• Processing fees
• Escrow account fees
• Fees to attain lower interest rates
• Closing costs are comparable with other financing types (and may be lower).
There may be more fees that the VA does not allow. The rules of the VA Home Loan Guarantee Program change frequently. To get the most update information on the Va home Loan allowed fees for borrowers go to http://www.homeloans.va.gov/ or consult your VA approved lender.
If you are a veteran who plans to use your entitlement in the VA Home Loan Guarantee Program or who is currently using this benefit, there are some facts you should know. Many veterans use their entitlement in the VA Home Loan Guarantee Program without knowing the details of their entitlement and how they can use this valuable government benefit. Here are some important facts every veteran should know about their VA Home Loan Guarantee benefits:
• You can re-use your VA loan benefit entitlement. As long as you adhere to the VA guidelines and rules of entitlement, the VA allows you to use the home loan guarantee benefit as many times as you want.
• You can not re-use your VA loan benefit entitlement if you allow someone to assume your mortgage. Once your entitlement is tied into a specific mortgage loan, the entitlement stays with that loan until the balance of the mortgage is paid in full. This means that you are unable to re-use your home loan benefit until the person or people who assumed your mortgage loan pay off the loan.
• You are not able to re-use your VA loan benefit if your mortgage loan is foreclosed upon. Once you have experienced a foreclosure with a mortgage loan that the VA has guaranteed, your entitlement is lost and you can not use the program again.
• The VA will help you avoid foreclosure. The VA understands that circumstances can arise that cause people to have difficult financial times. Loss of employment, divorce, illness, and disability are just a few of the reasons why some veterans may have a problem paying their mortgage loan, and go into loan default. Before foreclosure occurs, you should contact the VA. They will help you communicate with your lender and find a solution to the problem in order to avoid foreclosure so that you may be able to keep your home and your entitlement in the VA Home Loan Guarantee Program.
• The VA also has grant and loan programs for disabled veterans. If you are having trouble paying your mortgage loan or are in default as a result of a disability, you may be entitled to additional benefits from the VA that will help you keep your home.
If you are a veteran who is considering using the VA Home Loan Guarantee Program you should thoroughly review the VA benefit and entitlement policies before proceeding. The VA offers buyer counseling for veterans before using the program, and has housing specialists available in case there are any questions about the VA loan process. A VA approved lender will also be able to give you valuable information about the VA Home Loan Guarantee Program.
I use google alerts so that I don’t miss a beat in the mortgage market. If you haven’t used google alerts you should definitely check it out, it’s handy! Anyway, it popped up a few days ago with the press release from the VA Mortgage Center. This video gives a good overview of the benefits of VA loans and it’s really very impressive. If you are in the market I’d recommend watching this video (then come back here to get your loan!). Click here for the VA loan video or watch below:
I thought I would give you a little listing of some nice VA benefits sites. It’s really surprising to me how many veterans don’t pursue their benefits to the fullest extent. You served you country so don’t hesitate in asking your country to serve you!
Here’s a nice little video on the basic differences between VA loans and FHA mortgages. It’s a regional production so some of the material is localized but there’s definitely some good information. Take 4 min to watch it and learn a bit about the differences between these two financing methods.
A VA loan is just a normal mortgage except it is guaranteed by the VA.In short, this means that you can get great financing terms because the lender can accept a lower down payment and offer a better interest rate because the government is protecting against the risk of non-payment by the borrower.
I have a down payment, why should I get a VA loan instead of a conventional mortgage?
VA mortgages are relatively easy to qualify for and generally they offer a better rate than conventional mortgages.Also, some veteran’s consider financing more of the home price and investing their cash instead of making a large down payment.
How much of my VA loan will be guaranteed?
In the lower 48 states, 25% of your loan will be insured. That amounts to a maximum of $104,250 (25% of $417,000). In Hawaii and Alaska, $156,375 can be insured which is 25% of $625,000.
How can I get a Certificate of Eligibility?
As long as you were discharged honorably, the process is very easy. Your lender will be able to help you with the process of obtaining a Certificate. If you were discharged dishonorably, the process is somewhat tougher but an experience loan officer can still help you.
Can I only get on VA loan in my life?
Your VA eligibility is good for an unlimited number of loans, assuming your credit is good and you made payment on the previous loan and you live in a different property.
Can I use a VA loan for real estate investing?
Unfortunately, VA loans are for owner occupied homes only.
How much can I afford?
The VA program accepts a debt ratio of up to 41%. This means that your monthly mortgage cannot make up more than 41% of your monthly income. Be sure to consider the ramifications of the length of your mortgage on your monthly payment.
That should answer a few of your basic VA home loan questions. Be sure to keep reading and we will continue to educate you on the ins and outs of your VA benefits.
Hello! Thanks for stopping by to check out our new VA loan blog. Our goal is to educate Veterans about their benefits and how to utilize them to the fullest extent. We will mainly focus on mortgages but we will also cover general vets issues as it’s all (hopefully) relevant to you!
Please leave a comment if you have any suggestions for the blog or any specific VA loan questions/topics. Thanks again for reading and we’re looking forward to being your source for veteran home financing information.
