Guaranteed by the Veterans Administration (VA) to veterans of the US Armed Services these mortgages are obtained through banks and other private mortgage companies. The VA guarantee protects the lender's investment should the borrower default thereby providing incentives for lenders to qualify veterans.
Contact the VA as You Weigh Your Eligibility for a Loan
There are various options to be deemed eligible for this benefit by the VA. Wartime veterans who served at least 90 days and were not dishonorably discharged qualify. Peacetime service veterans need to have served at least 181 days if they served prior to Sept 7, 1980 or at least two years after that date and were honorably discharged. Those who have served in the Reserves and National Guard for at least six years and are still serving or have been honorably discharged may also be eligible. Surviving spouses of qualified persons who died as the result of service or service-related injuries who have not remarried may also be eligible. (Contact your local VA office for other questions regarding eligibility.)
Prior Certificate of Eligibility from the VA Not Always Necessary
Many veterans will be able to get an Automatic Certificate of Eligibility (ACE) through their lender via the internet. The VA has entered sufficient information about some veterans in their database, which make the ACE possible. If your records are not entered, visit the VA website and get the VA Form 26-1880. You can fill it out and send it in or along with your DD Form 214 which documents your service record, if you served in the military after 1979. Check the website to show documentation for prior service. Having this certificate does not guarantee the bank will approve your credit application, you must still qualify financially according to their requirements.
Restrictions on VA Loans
A VA home loan must be used to finance your personal residence within the United States or its territories. They can also be applied to home refinances as well as some types of home improvements.
There is a Funding Charge
A fee of two percent of the loan amount or 2.75 percent for reservists must be paid when you close your VA loan. This can be incorporated into the loan. Also, if you can make a down payment of at least five percent, this fee will be reduced.
VA Loan Benefits
Normally, veterans can get a loan for the entire purchase price of the home with no down payment needed. Since VA loans are guaranteed no Private Mortgage Insurance (PMI) is required which can be a huge monthly savings depending on the amount of the loan. There are no penalties if you pay ahead on the loan. You will find competitive interest rates are available as well. In addition, qualifying financially for a loan may be slightly less difficult than obtaining conventional loan. Lenders who offer FHA loans, usually also give VA loans.
Disadvantages of VA Loans
Sellers may be cautious about working with a buyer who is acquiring a VA loan as they used to take longer to process than traditional loans. However, getting a VA loan today takes only a little longer than a conventional loans. Sellers are often asked to pay a portion of the closing costs, so be aware of that when negotiating the sales price of the home. The guaranteed maximum amount allowed may make this not feasible in some markets.
If you qualify, a VA loan may enable you get in the house of your dreams.
Solana Beach CA Real Estate
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