A VA loan is a special type of loan that is offered by the United States Department of Veteran Affairs. The main requirement to receive a VA loan is that you must be a veteran. American Veterans may qualify for this type of loan, as well as spouses of veterans who did not remarry. There are many benefits to obtaining a VA loan, including low costs and fees. Also, with a VA loan, veterans can purchase a home much easier; usually without a down payment. Most of the homes that qualify under the VA loan or mortgage are in small areas; including rural areas and suburbs.
Another benefit of a VA loan is that it is not required to obtain private mortgage insurance, unlike other loans. Also, they tend to be much larger than some of traditional loans such as the Fannie Mae loan. The maximum amount that one can receive on a VA loan and not expect to pay a down payment is $417,000. Keep in mind however, that this loan or mortgage depends on the county that one is in. Some counties have a higher cost of living and the amount borrowed can rise over a million dollars for those who live in a particularly high cost county. Also, with a VA mortgage, even if your credit is not perfect, you can still qualify for a lower rate than a traditional loan, which is an exceptional benefit as well.
VA loans offer additional benefits for their mortgage customers including that they are assumable and do not have a prepayment penalty. This means that if you want to sell your home or refinance, you do not have to pay a penalty in order to do so. Also, an added benefit of this type of loan is that the seller can pay all the closing costs up to an exceptional 6%. This differs from traditional loans that only allow a seller to pay 3% of the closing costs. Additionally, these VA loans can be obtained in a variety of lengths, including a 30 year mortgage loans. Also, an added benefit of a VA loan includes financing of up to $6000 for your mortgage or other loan.
Another type of refinancing available through the VA is the Streamline Refinance program, which is often noted as the IRRRL, which stands for Interest Rate Reduction Refinancing Loan. This is a plan where the person borrowing them money changes types of VA loans from one to another, while keeping the loan amount the same. Compared to a traditional loan, the refinance cost of a streamline VA is much cheaper. The purpose of this mortgage or loan is to refinance rather quickly, while avoiding a lot of the paperwork that was required by the original VA loan.
When comparing the VA loan to other loans, it makes much more sense for Veterans to go with this type of mortgage. The benefits of these brilliant VA loans are intended to help assist those who were once a very valuable part of the United States services. Remember, only once your first VA loan is completely satisfied, can you get another VA loan or mortgage. Contact your lender to determine how to go about processing your VA loan.
VA guaranteed loans are made by lenders and guaranteed by the U.S. Department of Veteran Affairs (VA) to eligible veterans for the purchase of a home. The guaranty means the lender is protected against loss if you fail to repay the loan. In most cases, no down payment is required on a VA guaranteed loan and the borrower usually receives a lower interest rate than is ordinarily available with other loans.
Other benefits of a VA loan include:
Negotiable interest rate.
Closing costs comparable – and sometimes lower - than other financing types.
No private mortgage insurance requirement.
Right to prepay loan without penalties
Mortgage can be taken over (or “assumed”) by the buyer when a home is sold.
Counseling and assistance available to veteran borrowers having financial difficulty or facing default on their loan.
Although mortgage insurance is not required, the VA charges a funding fee to issue a guarantee to a lender against borrower default on a mortgage. The fee may be paid in cash by the buyer or seller, or it may be financed in the loan amount.
A VA loan can be used to buy a home, build a home and even improve a home with energy-saving features such as solar or heating/cooling systems, water heaters, insulation, weather-stripping/ caulking, storm windows/doors or other energy efficient improvements approved by the lender and VA.
Veterans can apply for a VA loan with any mortgage lender that participates in the VA home loan program. A Certificate of Eligibility from the VA must be presented to the lender to qualify for the loan.
Southwest Funding, LP (NMLS #32139) is an equal housing lender. This is not a commitment to lend or extend credit. Programs, rates, terms and conditions are subject to change without notice. Terms and conditions apply. All rights reserved. Contact us for details. Consult your accountant about tax deductions.
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