Is Applying for VA Loans Difficult?

Since its inception, more than 20 million people have utilized the VA guaranteed home loan program to help them afford a home loan at favorable rates. If you’re wondering how to get a VA loan and whether these loans are difficult to acquire, read more about this helpful program for veterans:

The VA Does Not Provide the Home Loans

The Veterans Administration does not provide the funds for home loans. Rather, the loan money is provided by many types of lenders, who participate in the program and know its requirements. If you are looking for a mortgage for a new home, always ask the lender if they participate in the VA guaranteed home loan program. Many institutions have special departments or specially-trained personnel to help apply for these loans. They can ensure that you understand the steps involved in acquiring the loan.

A Certificate of Eligibility Is Required

VA loans require a Certificate of Eligibility that documents your past or current military service. Lenders with trained personnel that work with the VA home loan program can easily acquire this document. However, in some cases, the applicant must fill out a DD form 26-1880 or other form online or by mail to receive the document.

You Must Have A Reasonably Good Credit Record

Lenders generally require applicants for the VA guaranteed home loan program to have a credit score of 620 or above. This requirement is to ensure that you are able to repay the loan and have a record of repaying your debts.

Certain Income Requirements Apply

You will have to provide documentation regarding your income in order to assure the lending body that you can repay the loan. This information can be in the form of W-2s from your place of employment, two years of past income tax forms if you are self-employed, as well as receipts from your military pension or other sources of income.

You Will Pay A One-Time Funding Fee

A one-time funding fee is required to help pay for the VA home loan program. Currently, the funding fee is 2.15 percent if you have a zero down payment. This fee goes down to 1.25 percent if you put a 10 percent down payment on the home. These fees can vary, depending on the type of military service and how often you use your entitlement benefit.

A Down Payment Is Not Always Required

Your military service allows you a certain entitlement toward the amount of the loan. That is, the government will guarantee payment of the loan calculated using the amount of your basic entitlement, which is currently set at $36,000. However, a bonus entitlements may also apply that may allow you to get a home loan up to $417,000, or more, depending on the area. Generally, you can acquire a loan without a down payment up to this amount.

The Home Must Be Appraised

An appraiser must physically visit the property and determine its market value, based on the structure itself, as well as other homes in the area. The VA provides a list of minimum property requirements that must be included in the appraisal report. These requirements include adequate living quarters; whether it is a residential and not commercial property; electrical and water systems in good working condition and other details. If the property does not appraise at the value of the selling price, the buyer may have to re-negotiate the sale.

How to Pre-Qualify for a VA Loan

The VA Guaranteed Home Loan Program has helped acquire home loans for veterans for over 70 years. The program has maintained its popularity, because it offers a number of benefits for military veterans and active duty service people. The process of applying for a VA home loan is slightly different than that of a conventional mortgage, but applicants can expedite the process by pre-qualifying for a loan amount.

What Is Pre-Qualification?

Pre-qualification is a process in which your loan qualification information is taken in advance of the purchase of a home, in order to determine if you meet initial requirements for the lender and how much you can afford. Although it does not guarantee that you will get a home loan from a lender, it means that you are qualified and are highly likely to be approved for the mortgage.

Benefits of Pre-Qualification

Being pre-qualified for a home loan offers prospective buyers a number of benefits, such as:

  • The price range you can afford is determined – This feature can save time by allowing you to only look at homes within your price range.
  • Being pre-qualified makes you a more desirable buyer – Sellers who have multiple offers often accept the offers of buyers they know have already been approved.
  • Removes uncertainty for buyers – Knowing you are pre-qualified for a loan can ease the stress of finding and buying a home.
  • Pre-qualification allows you to negotiate better terms – The certainty of having approval for a loan can allow you to negotiate small issues with confidence.
  • Pre-qualification can help to streamline the closing process – It reduces the likelihood of “surprises” that can delay the closing on the sale.

How To Get Pre-Qualified for A VA Loan

Applicants for a home loan through the VA program will be asked to provide a number of documents for pre-qualification:

    • Provide information about your military service – A Certificate of Eligibility is required to apply for a VA guaranteed home loan. This document can be acquired by filling out the appropriate form. However, you can start the process of pre-qualification before you receive the Certificate. In many cases, the lender will help you to file for the required document.
    • Credit information – The lending institution may ask permission to look at your credit score. If there any problems with your credit record, they may suggest that you resolve past debts or correct information, in order to receive pre-approval.
    • Employment information – The lender will ask to see proof of your current employment and previous employment. Generally, lenders prefer to see two years of consistent employment. However, gaps in your employment record do not necessarily disqualify you for a loan.
    • Bank statements or investment statements – The lender will also want to know about your financial health in regard to how much money you have saved and any investments you may hold. This information would also include any real estate on which you hold the deed.
  • Divorce and spouse/child support documents – Lenders generally also want information on divorce decrees and any support payments you are required to pay that could affect your ability to repay the loan.

Pre-qualification for a VA home loan can be an advantage that can help homebuyers get the best house for their needs at a price that is affordable. Consider getting pre-qualified when you begin to hunt for your new home.

The Different Types of VA Loans

The honor and prestige that the hallmark of US war veterans displays, adds to the glorious history that the country projects with pride. The government has always stressed on several welfare development programs and plans to make the lives of veterans and servicing armed force people comfortable in the best way. A Veteran Affairs Loan program is one such initiative, designed by the Department of Veteran Affairs to help these brave men and women get access to easy home loan at low-interest rates, to fund their home ownership dream. In this context, we would like to bring into notice the varied types of VA loans that veterans can hope to consider to make the affair less tedious and more fruitful.

VA Purchase Loans – This type of VA loan is especially beneficial for veterans whose earnings fall within a minimum qualifying income bracket to buy a primary residence. One would not need putting any amount of money towards the sale price of the home, as long as the sale price stays within the appraised value of the loan. The buyer also does not need worrying about the closing costs of the loans, as the seller is bound to pay the closing costs after proper negotiation. Though 100% financing is a possibility for one who opts for this loan, there are other advantages as well:

• The loan’s closing costs would be limited which means you would not be asked to pay after a certain limit.

• For a qualified VA loan applicant, you can assume the amount of a VA home loan.

• You are always having a VA loan behind you, if you are having any problems while making your home loan payments in future

• Veterans can prepay a VA home loan without penalties under any circumstances.

VA Refinance Loans – After one has started living in their purchased houses, there are many examples where people need extra cash. If you are looking for more expenditure for a quick house renovation, you can always hope to raise more funds by keeping your home as a source of equity for future borrowings. You should have ample information about the terms, conditions, and timings. This loan requires people to pay their current real-estate debts from the proceeds of a new VA mortgage. This is why this loan is also termed as ‘cash-out’ refinance. Loan takers should gather information about its various discrepancies before signing up for one.

VA Streamline Refinance Loans – The VA Streamline Refinance Loan or the IRRRL is a great way for current VA homeowners to bring down interest rates on repayments with the help of little or no out-of-pocket costs. Your mortgage refinancing at a lower interest rate than what do you have paid. This refinance loan is available for only those veterans who wish to refinance their original VA home loan by using their original eligibility. Easy and faster sanctioning with little need for paperwork is a surety for these types of loans.

Veterans now have an excellent opportunity to secure guaranteed VA Loans if they are eligible for it as is here with the best technical assistance and guidance that is required in the entire loan application to approval process.

Do You Qualify for a VA Loan?

We all know that most of us need a mortgage in order to buy a house. We go to a lender and complete all necessary paperwork and then we can purchase the house, paying back the mortgage money that was leant to us in monthly installments.

A VA loan, then is a mortgage loan that is guaranteed by the US government and for the use of American vets, military members, currently serving members and select surviving spouses of members. Veterans can then use this mortgage to purchase a single family home or a condominium, multi unit properties, manufactured homes or a new construction property.

While it the office of Veterans Affairs that financially guarantees the loans that qualify and who set the rules for who can qualify and when, and makes the guidelines the money doesn’t actually come from the government, but instead from any qualifying lender (bank or other financial institution).

The intention of these VA Loans is to supply funding for a home for service members and their families without the worry of having to come up with a down payment like you do with other mortgages. If you don’t have to come up with a down payment, then more of your money can go towards paying back the mortgage and that’s the idea of the loan.

The original act passed Congress back in 1944, after World War II and since then over 20 million VA home loans have been issued. After a few amendments over the years, the scheme has been expanded and increased to allow more service members to qualify and include more housing options for those members.

If you qualify for a VA loan, you are allowed 103.3% financing without private mortgage insurance which is a huge savings over a traditional mortgage. You can also get 20% for a second mortgage and up to $6000 for energy efficient improvements for your home. Furthermore, a VA funding fee of between 0 and 3.3% can be added on, again, a lot better than a traditional mortgage.

Being in the military is not an easy job, and it’s nice to know that once you are a veteran there is help out there for financing your property. Whether you are still serving, are a proud vet of the spouse of a fallen hero, the government has you covered with perks when it comes to financing your home.

10 Must-Know Things Before Applying for a VA Loan

Veterans Administration (VA) loans are some of the most common types of loans used in today’s financing market. They offer many benefits to eligible borrowers and are mainly used to buy, refinance, and even improve a home.

Here are 10 important things one should know before applying for a VA loan:

1) It is a guaranteed loan. A Veterans Administration loan is a guaranteed loan by the U.S. Department of Veterans Affairs, which means the lender who provides financing to the borrower is protected against loss if the buyer fails to repay the loan.

2) Not everyone can qualify for a VA loan. One needs to be a veteran or active duty service personnel in order to qualify for VA financing. Veterans can apply for VA financing with any mortgage lender that participates in the VA home loan program, and a valid certificate of eligibility (COE) must be presented along with credit and income requirements in order to qualify for the loan.

3) It offers lower-than-usual rates to eligible veterans. With a VA loan, the borrower usually receives a lower interest rate than is ordinarily available with other loan types. Also, a VA loan can be used to obtain lower rates on refinances up to 100% loan to value.

4) It offers more flexible credit guidelines. The minimum credit score accepted for a VA loan is about 620, however, depending on unique circumstances some lenders may accept a credit score as low as 550. Also, even though other loan types may offer similar credit score guidelines, a credit score of 620 for a Conventional or FHA loan will have more obligations to the borrower and will require a larger down payment.

5) There is no private mortgage insurance (PMI) required on VA Loans, and the program can also be used to eliminate Mortgage Insurance (MI) on other loans. For example, one can refinance an existing loan by changing their loan program to a VA loan, therefore, eliminating the PMI and reducing the monthly mortgage payment. Although mortgage insurance is not required for VA loans, the VA charges a funding fee to issue a guarantee to a lender against borrower’s default on a mortgage; however, unlike PMI, which is present for the life of the loan on other types of loans such as FHA and USDA, the funding fee (FF) may be paid upfront in cash by the buyer or seller, or it may be financed into the loan amount. There are also lender-paid funding fee credit options available on VA financing if requested up to 3.3%, and some veterans may even be exempt from paying a funding fee on their loan (additional documentation required).

6) Veterans Administration loans often do not require a down payment. Usually a VA loan does not require a down payment, however, if the loan amount exceeds the VA limit for the county where the property is located, the borrower will have to come up with a down payment. The down payment will vary depending on borrower’s remaining VA entitlement amount and the purchase price or appraised value of the home and will constitute a percentage of the difference between the two.

7) One may be eligible for more than one Veterans Administration loan at the same time. There is not a limit on how many VA loans one can have at once as long as there is a remaining VA entitlement to be used. For loans above $144,000, the entitlement amount is usually 25% of the VA financing limit for the county where the subject property is located.

8) There is no pre-payment penalty on Veterans Administration loans. Any VA loan can be paid in full at any time, which is a great advantage since it can help one save tremendous amounts of money on interest.

9) The seasoning period for bankruptcies, foreclosures, or short sales are shorter for Veterans Administration loans when compared to other types of loans such as Conventional or FHA. In most cases, one can qualify for a VA loan after 2 years of filing for bankruptcy or foreclosing on their house in contrast to a period of 4 years for bankruptcy and 7 years for foreclosure on a Conventional type loan.

10) It can only be used to purchase a primary residence. The VA benefits cannot be used to purchase a second home or an investment property; however, it can be used to refinance a VA loan that has been previously occupied as primary residence to lower the interest rate (VA IRRL).

Advantages of the VA Loan

Protecting our nation is one of the most heroic things an American can do. And it’s not an easy task. To be in the military means you have to sacrifice a lot for the good of the country, which is why servicemen and servicewomen, as well as veterans, deserve to be compensated for their bravery and courageous efforts to serve our nation.

To give back to these brave men and women, the US government offers a special VA loan, which is a great opportunity to afford the American Dream and be a homeowner. VA home loans are exclusive to those who bravely served our country and are available to those who have served our country and offer a number of advantages. Here are some of those benefits.

1. No Down Payment

When you purchase a new home, you are required to come up with a certain amount of money for the down payment. This can range depending on the total price of the home and can often be an expense that is quite costly. Many families have to save up for years to afford a new home’s down payment. But with a VA home loan, that down payment is waived in the majority of cases. This means a veteran can become a homeowner with no money down, allowing them to have a piece of the American Dream a lot easier. It’s the only loan available today with no down payment!

2. Lower Interest Rates

Another benefit of this loan is that the borrower usually gets a lower interest rate than what’s ordinarily available with other types of loans. This translates to lower monthly payments and the borrower will be able to pay down the amount of their loan a lot faster than others with a higher interest rate.

3. No Private Mortgage Insurance (PMI)

As a result of the housing recession that happened some years ago, banks are now insuring themselves in case anything like that happens again with the addition of private mortgage insurance, which is an added fee to loans that don’t have the needed 20% down payment of the appraised value of the home. This insurance protects the lender if you ever default on your monthly payments. Since military men and women don’t need a down payment, they are not required to have PMI and this results in lower monthly mortgage payments.

4. Added Features

In addition to the aforementioned advantages, a VA home mortgage also offers benefits like: the right to prepay the loan without any penalties; the mortgage can be taken over by the buyer when the home is sale; and special counseling and help to veteran borrowers who are having financial difficulty.

There are some VA home loan requirements that a veteran will have to meet before they are eligible for the loan. Contact American Hero Mortgage (serving the Dade, Broward and West Palm Beach areas) to find out more information and to see if you qualify for the loan.

Morry Newman, a expert finance adviser, is professionally qualified and experienced for over 19 years. He specializes in VA home loans, loans for nurse, mortgages for police and firefighter mortgages in Florida. You have many choices when selecting a mortgage company. We try to make your choice simple by offering value, great service and integrity.