VA Home Loans
The VA Loan was originally created to offer long term financing to eligible veterans or their surviving spouses. The VA loan offered financing opportunities for Veterans in locations where financing was not readily available. By guaranteeing mortgages, VA opened up lending in more rural communities that needed it most. The original Servicemen’s Readjustment Act was passed by congress in 1944 and offered a variety of benefits to America’s veterans. One benefit was the authorization of the VA to guarantee or insure home loans. By guaranteeing home loans, the banks were not taking risks by offering 100% financing to eligible veterans. By having a common-sense approach to underwriting, VA has the least amount of defaults out of all the offered loan programs. I personally attribute this to the sense of responsibility acquired as a member of the military and the great clients we get to work with.
In 1970 the Veterans Housing Act of 1970 removed timeline restrictions for Veterans to apply for a VA home loan and also opened up VA financing for manufactured homes, as long as the property had a HUD-approved slab and was permanently fixed to the foundation. There has been a lot of confusion about VA loans in the past. Many thought that VA lends money directly. VA is not a bank and does not lend money. It only guarantees bank loans so that mortgage lenders and banks are more likely to offer the no money down home loan to Veterans.
What Are The Eligibility Requirements for VA Loans?
In order to qualify for a VA Home Loan, you must meet the basic service requirements as published by the Department of Veterans Affairs. When talking to your mortgage lender, have your DD-214 available. This will help the lender determine if you are eligible. The final decision is made by the VA and the issued certificate of eligibility. A qualified VA lender should be able to obtain your certificate of eligibility for you. Sometimes it is easier for the bank to obtain the certificate of eligibility than it would be to get it yourself.
VA Loan Requirements
- You have served 90 consecutive days of active duty during wartime
- You have 181 days of active service during peacetime
- You have more than 6 years of service in the National Guard or Reserves
- You are the spouse of a service member who has died in the line of duty or as a result of a service-related disability
We can help you find out if you are eligible for VA financing by using our access to the VA lenders Portal. There, we are able to input your information and upload your DD-214. In most cases, we receive an answer immediately. In other, more unique cases, it can take up to forty-eight hours to receive a response.
VA Funding Fee
When you obtain a VA loan, you may be required to pay the VA funding fee. This fee may be waived in certain cases. One example is a disabled veteran. The funding fee can be as high as 3.15% of the loan amount. The VA funding fee can be financed into the loan and does not increase the amount of money you will need to close. While the VA funding fee may seem high, most government-backed loan programs has a similar fee and VA is the most affordable home loan available.
What are the Benefits of VA Home Loans?
A VA home loan is, in my opinion, the best loan option available today. Outside of the well known No-Money Down advantage, there are many other benefits that get less publicity.
No Mortgage Insurance/PMI
VA home loans do not require that you pay PMI/MIP (Mortgage Insurance) in your mortgage payment. Other low down payment programs require that you pay a monthly fee called mortgage insurance. This fee is included in the mortgage payment. Because the VA loan does not require mortgage insurance, you will receive a lower total payment than other Government-backed loan programs. In some cases, a VA loan can be hundreds of dollars less than a comparable loan program. When comparing different loan programs, be sure to ask about mortgage insurance and how it affects your mortgage payment. An FHA loan would require that you pay the mortgage insurance monthly for the life of the loan even if you have twenty percent to put down.
Low Interest Rates
Another great benefit of VA home loans is the interest rates offered. VA has interest rates comparable to FHA, another low down payment program. The interest rates are typically lower than average market rates and allow the Veteran to obtain the best loan terms possible. By eliminating the risk involved in lending with the VA guarantee, the bank can offer the best possible interest rate.
No Money Down / No Down Payment Required
A VA Loan does not require a down payment. VA allows for 100% financing of the purchase price plus financing of the VA funding fee. I am a big believer in less money down due to the lower interest rates offered today. For many homebuyers, the money used for a down payment is all of the savings they have. That money could be used for home repairs, utility costs, or other unexpected housing expenses. Many first time home buyers end up with a repair expense after moving in. The home inspector and appraiser do the best that they can to find items that need repair but some things do get missed. If you move in and find something that requires repair, will you have enough to fix it? VA also allows closing costs to be paid by the seller. This can be negotiated in the sales contract and in some cases, a Veteran would need nothing out of pocket at closing.
Damaged Credit Okay
VA loans do not require perfect credit. VA is a program that allows minor blemishes on the credit report. VA will allow open collections and even recent late payments in some cases. Every credit situation is different and there are many factors that play a role in approving an applicant but compared to other loan programs, VA is an easier program to be approved for. Start a free credit consultation and find out if your credit qualifies.
Apply for a VA Home Loan
Applying for a home loan is easy. You can give us a call at (518) 324-5544 or click here to find out if you are eligible. Our VA loan specialists will guide you through the process and put you in the best possible position to be approved.
MLB Residential Lending takes great pride in serving our veterans. We thank you for all that you have done. If you have any charities or other groups to support veterans, we would love to hear from you.
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