What You Should Know About VA Loans
November 10, 2020
There are more than 485 million veterans and 1.3 million active-duty military personnel in the United States. If you number among them and want to buy a home, what are your options?
There’s one mortgage option designed specifically for veterans – the VA loan. However, many veterans do not use VA loans to purchase their homes. Are you wondering if it is the best option for you? We are here to help you break it down.
What Is a VA Loan?
What exactly is a VA loan, and how does it differ from a regular mortgage loan? A VA loan is a mortgage loan issued by a private lender and backed by the US Department of Veteran Affairs. VA loans were introduced as part of the GI bill in 1944. The loan’s primary purpose is to help US veterans, active duty service members, and widowed military spouses buy a home.
How Does the Loan Work?
VA loans are non-conventional loans. This loan type dictates that the government will agree to repay a portion of the loan to the bank if you don’t make your payments, known as going into default, or if you face losing your home, known as foreclosure. The Mortgage Firm North Central Florida offers VA loans for both purchasing and refinancing a home.
What Are the Benefits of a VA Loan?
No Down Payment
One of the most significant advantages of a VA loan is you do not need a down payment. With a VA loan, you can buy a home sooner than you would be able to if you needed to save up.
There is a misconception that your VA Home loan can only be used once. However, you can use it as many times as you want! Let’s say you purchase a home with a VA loan, but now you have outgrown it. You can sell your home and pay the loan off completely, and then you can use your benefit to buy another home. Additionally, you can receive a one-time restoration when you pay off the VA loan but keep the home. This is typically refinanced as a VA mortgage with a non-VA loan.
In these cases, you can keep your home and enjoy the benefits of VA home buying one more time. As long as you pay it off each time, you can use the benefit again and again.
Your Benefit Never Expires
Those military members who served 20, 30, or 50 years ago can all be eligible for benefits. Eligibility is based on the length of time served and the period in which you served.
To check eligibility, you should first obtain your DD Form 214. With that document, The Mortgage Firm can request your VA Certificate of Eligibility for you.
Surviving Spouses May Be Eligible
There is no way to repay a fallen hero’s spouse, but this benefit helps them purchase a home. Unremarried husbands and wives of service members killed in action can buy a home with zero down payment and no mortgage insurance. And, the VA funding fee is waived.
VA Loan Rates Are Lower
VA loan rates are generally 25% lower than those of conventional loans. The VA backs the mortgages, making them a lower risk for lenders.
No Prepayment Penalty
This means you won’t be fined if you pay off your loan early.
Bankruptcy and Foreclosure Won’t Permanently Affect You
A bankruptcy or foreclosure will not deny you a VA loan. You can still qualify for a VA loan after two years have passed from the date of the bankruptcy or foreclosure.
Receive Additional Refinancing Benefits
Refinancing with a VA refinance loan gives mortgage owners additional benefits. In addition to lower rates and no down payments, VA refinancing loans have:
- No appraisal or appraisal fee.
- No out-of-pocket costs if you choose to roll the closing costs into the new loan amount.
Do I Qualify?
If you’ve served or are serving in active duty in the US military, you may be eligible for a VA home loan. This includes service in the American Air Force, Army, Coast Guard, Marine Corps, Navy, or the National Guard. You’ll need to get a Certificate of Eligibility from the VA and plan to occupy the property as your primary residence, as investment properties are not eligible under the VA Loan.
Generally, you’re eligible if you fall into one of these three categories:
- You’re an active duty service member or an honorably discharged veteran who has 90 consecutive days of active service during wartime or 181 days of active service during peacetime.
- You have served more than six years in the National Guard or the Selected Reserve.
- You’re the spouse of a service member who died in the line of duty.
Apply for A VA Loan with The Mortgage Firm
If you are a military veteran looking to buy, refinance a VA loan, or want to learn more about VA homeownership benefits, our loan officers at TMFNCF can answer your questions about eligibility or any other needs you may have. We are honored to serve those who have served our nation.