VA Home Buyers Capitalize On Little Known Secrets
The most common question new home buyers often ask which type of loan is going to best suit them. FHA (see Federal Housing Administration) loans can offer some of the lowest down payments, with other loans even allowing home buyers to qualify based on income from all the working members of the household.
If you have ever served in the military, the best loan option is known as the VA home loan. It’s the only home loan that has zero down payment, zero mortgage insurance, and rates that run lower than the conventional rates do.
A VA mortgage loan will incorporate some special features not offered in any other kind of loan. Many of these features can be quite unfamiliar to a new home buyer, but you really don’t need to be an expert on VA loans to enjoy the benefits.
Either way, starting to understand some of the facts about eligibility, VA home loan entitlement, and funding fees will prepare you for the tricky process of buying a home.
VA Home Loan
First enacted by Congress in 1944, it was setup to provide a long-term home financing plan for American veterans and also for their spouses. VA home loans just keep on rising in popularity, with over 20 million being granted during the history of this program’s history.
VA loans are not actually provided by the federal government. And barely any contact with the VA is needed on the veteran’s part. The private lenders will oversee the entire loan process, as well as getting any of the government backing that is needed for loans that are granted under a VA loan. This guarantee will actually allow a lender to offer loans at better rates than they would be able to without it.
If you’re a veteran and you are wanting to buy a home you can actually now benefit from both the use of your VA benefit, and a streamlined customer-service process that are now being provided by many private companies.
Understanding these 3 VA Mortgage home buyers secrets can really streamline your experience if you keep them in mind.
1. The Eligibility Check Only Takes Minutes
Anyone looking to buy a home, whether they are a veteran or not, has to first fill out an application to qualify for a home loan. Qualification is the process of looking at the borrower’s income history, their current debts and their credit score in order to determine whether an applicant will have the ability to eventually pay off mortgage. Except that VA home buyers will need to go through another step before the qualification process, they must first check their own VA loan eligibility. This process only takes a few minutes. The lender will simply request a Certificate of Eligibility from the VA and they will typically get it almost immediately.
How the VA will determine your eligibility status is based on your military service.
You are generally eligible for a VA loan if you meet one of the following criteria:
- If you have served a total of 90 days active duty service during wartime
- If you have served a total of 181 days active duty service during peacetime
- If you have served a total of 6 years in the National Guard or in the Reserves
- If your spouse died in the line of duty or from a disability received in service
But even if you don’t think that you will meet the service requirements, you should still check your eligibility status. Ordering your COE is a free service that is offered by each lender. You have no idea how much money that other qualified people have been able to save over the years by simply just taking advantage of these benefits that they’re entitled to.
2. The Funding Fees Are Not Paid Upfront
VA mortgage lenders can offer VA loans with such lower fees and competitive rates because of the backing by the VA. Not a dollar of these benefits is paid for by taxpayers. Instead, the program is financed in part by the fees that VA home buyers will have to pay when they receive their loan, known as your VA funding fees.
Generally, VA home buyers pay will have to pay 2.15 percent of the amount loaned to pay for your new home. This is the fee for military veterans who pay nothing down. Although, this fee can be different depending on your military service, down payment amount, and whether this is your first VA loan. Expect them to range between 1.25% and 3.3%. If you suffered a service-related disability, you will be exempt from paying a funding fee.
If you are required to pay this fee you won’t need to come up with the money right away. As a veteran, you are not required to pay funding fees upfront like this. The funding fee will simply get financed as a part of your loan amount. And when you consider it, the fee is barely anything compared to the massive savings the loan will provide you.
3. VA Loan Entitlement Can Be Restored
Veterans are given an entitlement when they fulfill their required service. The amount for full entitlement is $36,000. This isn’t a lending limit, but will makes you eligible to buy a home with zero down.
If you have never used your VA home loan benefit you will still be entitled to your full entitlement. And if you have purchased a home before you still have to option to restore your entitlement, and then purchase another home. The way to get your entitlement restored is by selling your current home and paying off your VA loan completely. Or you also have the option to refinance your home into another non-VA loan. But you can only do this once.
VA home buyers ready to get pre-qualified? Click here to compare VA loan rates