THE VA LOAN CARRIES MANY BENEFITS
Home ownership data shows that 80% of vets own a house. That compares to 65% for the general population.
The benefits of VA loan financing, however, are not well known. Here is a list of the primary reasons for considering VA financing…
- No down payment required. With zero down, you can borrow up to $417,000.
- Lower interest rates. The saving could range from 0.5% to 1.0%.
- Credit requirements are less stringent. A 620 credit score may get you there.
- The VA uses a 41% cap rate on the total debt to income ratio. This is higher than conventional and FHA loan hurdles.
- Lower closing costs.
- No mortgage insurance.
- Active military.
- Served at least 90 consecutive days on active duty during war time, or
- Served at least 181 consecutive days on active duty during peace time, or
- At least 6 years National Guard or Reserve duty.
- National Guard or Reserve deployment for as little as 90 days may make you eligible, too.
- Spouces of service members who died in line of duty or as the result of service-related disability.
WHAT YOU WILL NEED TO APPLY FOR YOUR VA LOAN
- A Certificate of Eligibility (COE). This can be obtained through the VA approved lender, the ebenefits portal on the Dept. of Veteran Affairs website, or mail by submitting VA Form 26-1880.
- You can initiate the loan process without the COE in hand, but you will need your DD214 proof of service.
- 2 years tax returns.
- Pay stubs for the last 30 days.
- Bank statements.
- Valid ID.
While there is no mortgage insurance required on a VA loan, there is a “funding fee” attached and added to the loan. The fee is a function of the downpayment and whether the loan is first time or subsequent loan. The fee for a first time borrower with zero downpayment is 2.15% of the loan amount. The loan officer will advise you on the different fee levels.
The veterans administration requires that the property being financed meets certain standards for safety, structural integrity, and sanitary conditions. This is the “MPR” (minimum property requirement). If you are buying a condomimium, the entire building must meet VA MPR standands and be VA approved.
There are two major misconceptions regarding VA financing.
- You can use a VA loan multiple times. Furthermore, you can have more than one VA loan outstanding at the same time, provided you meet debt to income and other requirements.
- The VA appraisal process is not a deal killer.
EXECUTION–RIGHT REALTOR & RIGHT LENDER
Every veteran should assess the advantages of employing VA financing to buy their home. Many times, VA financing is not the best option. Other times, it is. The determination of “best option” can be significantly aided by using a Realtor who knows intimately the situation of veterans and their families and the protocol of the VA system and application process. Furthermore, the need to utilize the services of a lender who knows well all the aspects of the VA loan process is vital.