Demystifying VA Loans

Happy July!

In this month of celebrating our freedom and those who make sure it stays intact, this is the least I can do to honor those in service to our great country. In whatever way you can honor those members, do it. They deserve it more than anyone I know. They have the most hazardous, rigorous, stressful jobs on the planet. Give back to them. In the smallest of ways, I can give this back.

 So I am gonna break it down for you.

What is it?

A mortgage loan for the purpose of purchase or refinance of a primary property. The funds from a VA loan do not really come from the VA, (Veterans Administration). Lenders, (like myself :)), extend a loan to the borrower according to the all of the requirements set forth by the VA. As long as the borrower and property meet the requirements, the VA, basically, insures the loan for the actual lender of the money. Make sense?

Who is eligible?

• Active Duty Military
• Veterans
• Reservists and National Guard members
• Spouses of military

Do you meet this requirement? Check that box!

How do you get a VA Loan? 

•  Apply with your favorite neighborhood lender. Be prepared with your Certificate of Eligibilty, (COE), and your Discharge papers, (DD214). These are accessible through the VA website or I can certainly help you get it. 
• Or you can help yourself here: I NEED MY COE!

What are the benefits of a VA loan? Does it matter? 

• Yes, it matters. This loan allows you to purchase a home with NO DOWN PAYMENT! Yep. I said it. 100% financing.

• It is the only loan that allows you to purchase or refi up 100% of the value of the home… WITHOUT MORTGAGE INSURANCE! That is a BIG DEAL. I will do a whole separate posting about mortgage insurance, however, just know that in this case, it saves you MONEY $$$!!!

• The VA, kind of in lieu of mortgage insurance, charges a Funding Fee. It is a one time fee that can either be financed into the loan or paid as part of the closing costs. 

• No Pre-Payment penalty

• It is assumable. This means that you can procedurally and legally transfer this mortgage to another qualified buyer. 

• Rates are generally lower than the conventional mortgage rates. 

• This loan is available in 30 yr, 20yr, 15yr, 3ARM, 5ARM, and 7ARM.

• You can PAY OFF DEBT at closing to qualify for this loan! How crazy is that?

As with any loan program you still have to qualify as a borrower. Most of the qualifying parameters are similar to other loans. there is some forgiveness in terms of debt to income ratio and credit score. 

Some of the things you should know. 

The property has to evaluated by a VA certified appraiser. For the borrower this is great news. If this is a purchase then you have a contractual option to get out of the loan if the property does not appraise for the contract value, (or pay the difference). 

There are loan limits per county, as well as some concentrated areas. These limits are based on the housing market in your area. Your lender will know.

So, I really urge you to talk to a lender if you think you are eligible. This is the best mortgage loan out there. Some things the government gets right and this is one of them. Making housing accessible to service members and their families is a huge deal. Take advantage of it.