VA home loans are mortgage loans offered by the U. S Department of Veterans Affairs and doesn’t require any down payment from the buyer and it usually has a low-interest rate as compared to the normal loans. Such loans assist the qualified citizens to buy, build or remodel a home under preferred conditions.
VA Home Loan Eligibility To be eligible for a VA home loan, one must be a veteran, on active duty, or a qualifying surviving spouse. Specific eligibility criteria include:
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Served at least 90 consecutive days of active duty in a period of war
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Served at least 181 consecutive days of active duty in a time of declared peace.
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This class is limited to officers currently on active duty.
- Be the surviving spouse of a veteran who died in the line of duty or as a result of a service related disability
Besides compliance with one of the above services requirements, creditworthy and sufficient income to repay the loan are required. A VA loan mandates a full verification of the borrower’s capacity to pay for the loan.
VA Home Loan Benefits VA loans offer several advantages over conventional mortgages, including:VA loans offer several advantages over conventional mortgages, including:
No Down Payment – VA loans can be obtained without any down payment needed, which is a huge barrier for most potential homeowners. This means that borrowers are allowed to borrow money to cover the purchase price and also the closing costs.
Lower Interest – Interest rates on VA loans are set by Congress and are usually . 5 percent to 1 percent lower than the conventional lending rates. This results in saving a significant amount of interest charges over the period of the loan.
No Mortgage Insurance – Federal loans require mortgage insurance for loans that are less than 20 percent down payment and the insurance adds to the monthly payment. The VA loans are unique in the sense that mortgage insurance is not required irrespective of the down payment.
Favourable credit score – VA guidelines benchmark the applicant’s debt to income ratios more leniently than conventional loans. It also means more qualify buyers are likely to get approved.
No Prepayment Penalties – VA loans can be prepaid or refinanced without any penalty and this means that if rates go down then the borrower can refinance.
VA Loan: How Does It Work? The VA Home Loan Process If youre eligible, getting a VA home loan involves four main steps:If youre eligible, getting a VA home loan involves four main steps:
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Applying for a Certificate of Eligibility The first one requires the lender to apply for a Certificate of Eligibility (COE) on your behalf. It originates from the VA and serves as an affirmation to the lender that you meet the requirements of the loan program.
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Shop for Your Home Discuss with the agent the type of house that is preferred and which among the options available fits the budget. The VA borrowers enjoy the benefits of making an offer without considering down payment and closing costs as is the case with other regular loans.
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Find a VA-Approved Lender Contact various mortgage lenders in your region and identify one that deals with VA loans. Ensure that they are allowed to close VA loans for approval by the VA. Interest rates are also fixed at the point of contract.
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Close on Your Home Ensure that you present all the documents that will enable your lender to assess your income, assets and eligibility for the loan before approving it. Schedule your closing date in conjunction with your lender, real estate agents, and the title company. Go to the closing to sign the papers to finalize the purchase.
A VA Loan Term, Rate, and Closing Costs As for VA mortgage, the terms include 15-30 years fixed-rate mortgage loans, 5/1 ARM, and 7/1 ARM. The most common is a 30-year fixed rate.
Interest rates depend on the financial markets, but it will offer the lowest rates on the market. VA borrowers pay closing costs including:VA borrowers pay closing costs including:
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Origination fee – capped at 1% of the loan amount
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Discount points – those that are paid to bring down interest rates
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Appraisal fee
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Credit report fee
- Legal fees and recording fees should be paid by the candidate or his/her heirs as a result of filing the lawsuit.
VA Loans for Refinancing Apart from the purchase of homes, the VA loans can be used to refinance an existing mortgage at a lower interest rate or to obtain cash from the available home equity. A streamline refinances makes it possible for eligible borrowers to refinance without going through the tiresome paperwork and appraisals.
In order to ensure military borrowers are able to afford the homes, VA loans come with specific features. By having no down payment, reasonable interest rates, and relaxed terms these loans enable the veterans to buy homes without any down payment.
