Seeking a loan for any purpose is a long and gruelling process. This is especially true for home loans. The government recognizes people's need for easy access to credit for such purposes. For this reason, many federal and state-level institutions have programs that assist in securing a loan.Verify my mortgage eligibility (Feb 22nd, 2024)
The FHA loan is a common example of such a program. Another loan program that carries significant benefits is the VA loan program. Despite the fact that there are close to 1.3 million active service members in the U.S. military, VA loans are underutilized. Most veterans don't even know that they exist, let alone their benefits.
So, in today's guide we'll take a look at 9 things that veterans don't know about VA loans.
Things Veterans Don't Know About VA Loans
Once you learn more about VA loans, you'll wish someone had told you all these things sooner.Verify my mortgage eligibility (Feb 22nd, 2024)
1. Lower Rates
VA loans offer better interest rates than traditional loans. The difference, while not earth-shattering, adds up in the long run. So, over the course of the loan, you end up paying a lot less than you would under a conventional loan.
Everyone appreciates even the smallest amount of savings when it comes to financing a home. The payments are affordable because the VA acts as the guarantor for the loan. As such, the lender doesn't have to worry too much about the applicant defaulting.
2. Less Red-Tape
It should come as no shock to anyone that the any loan application process comes with hundreds of pages of paperwork. Not just that, but most lenders go over your finances with a fine-tooth comb. This presents a barrier to people with a poor financial history.Verify my mortgage eligibility (Feb 22nd, 2024)
Luckily, loans for veterans present far fewer hurdles. There are no specific credit requirements (though a good score will help your cause), and they allow re qualification even after bankruptcy, provided that you maintain 2 years of clean credit.
3. No Expiry
Veterans, once eligible for a VA loan, remain so for the remainder of their lives. This is why it's even more shocking that more service members don't utilize them. Whether you served 3 years or three decades ago, the option to secure this loan never goes away.
To determine eligibility, you can either visit the VA's Benefits Website yourself, or you can submit the DD Form 214 to a VA-certified lender, who in turn can procure your Eligibility Certificate for you.Verify my mortgage eligibility (Feb 22nd, 2024)
4. No Limits
Many veterans don't realize that they are allowed to use their benefit more than one time. In fact, there isn't actually a limit to how many times you can take out a VA loan. Such is the degree of leniency provided by the VA that you can qualify even if you've previously defaulted on a VA loan. There are certain conditions in such circumstances though, obviously.
The only true condition when taking out another VA loan is that the previous one should be paid off in full.
5. Property-Type Matters
A VA loan is not for investment or luxury properties. So, don't think you'll be able to buy a vacation home or a property for investment. These loans are designed for primary-residencies and allow people to secure funding for properties that are move-in ready. Single-unit, multi-unit (with exceptions), and condos all fit this description.Verify my mortgage eligibility (Feb 22nd, 2024)
6. The Name Is Misleading
Despite the fact that they're called VA loans, the VA isn't the lender. The loan is offered by private financial institutions and banks just like conventional loans. However, the main difference is that these loans are backed by the VA for up to 25% of the total amount.
This backing puts the lenders' minds at ease about any potential risks, such as bankruptcies and foreclosures. It also allows the lenders to provide the fewer requirements and conditions for approval that we've talked about previously.
7. No Down Payment, No Insurance
Most conventional mortgages are unsecured. As a result, lending institutions require some sort of security in the form of a down payment or mortgage insurance. In the case of VA home loans; there is sufficient security available in the form of federal backing. As such, lenders don't normally require a down payment or mortgage insurance from VA loan applicants.Verify my mortgage eligibility (Feb 22nd, 2024)
This allows service members to not be encumbered by supplementary payments, and secure a higher amount for their home.
8. Mandatory Fee
Of course, the VA has to fund the program well enough that future service people can enjoy the same benefits as the ones in the present. To this end, the VA asks applicants to pay a funding fee. This is a one-time payment, and a percentage of the total amount borrowed amount.
9. Spousal Privilege
The safety and care of our loved ones is extremely important to all of us. Especially for service members who would want their spouses to be well taken care of in the event that something happens to them. The great thing about VA loans is that they are not limited to veterans.Verify my mortgage eligibility (Feb 22nd, 2024)
The husbands and wives of service persons who lost their lives in action, and have not re-married, are eligible for a VA home loan with all the same benefits as a veteran. In fact, the funding fee is also waived.
Now that you know about VA loans, you can see that they're an excellent way to finance the house you've always wanted. What's more, the financing process is far simpler than conventional loans. To secure a VA loan, reach out a specialist at CMS Mortgage today!Show me today's rates (Feb 22nd, 2024)