What is a VA home loan or mortgage? Who is eligible for VA mortgages, and why would you choose VA over conventional or FHA? These are great questions and we hope to answer them and more!
VA home loans are mortgage loans made by lenders to eligible veterans and are guaranteed by the VA. The VA does not actually make the loans, they simply guarantee them. That means you need to qualify for the mortgage loan, just because you are eligible for the VA to guarantee your loan, you still might not qualify for the loan due to credit history, income, or property related matters.
Here are the 7 advantages to VA mortgage loans:
- 1. As much as 100% financing up to the county loan limits where the property is located. If you desire to go above the county limits a down payment is required but in most cases is significantly less than the 20% down payment most jumbo loans require.
2. No monthly PMI (private mortgage insurance), FHA and conventional loans both require PMI if you put less than 20% down, VA does not. VA does have what they call a funding fee, but over a 10 to 30 year period, this is vastly less than what you would have likely paid in PMI. Some Veterans are actually exempt from even paying that.
3. Veterans with a documented service connected disability are not required to pay the VA funding fee; this can be a huge advantage.
4. No minimum credit score. This can be somewhat misleading because most lenders require that you are eligible for an automated underwriting approval. If you have poor credit with frequent late payments, it’s unlikely you will get an automated underwriting approval.
5. VA has reduced serious credit event (bankruptcy, foreclosure, etc.) seasoning requirements. For example, conventional loans require seven years seasoning from the date of foreclosure, to the date you can purchase a home again using a conventional mortgage. VA however only requires two years seasoning out of bankruptcy or foreclosure.
6. Eligible veterans can use their VA eligibility more than once. Meaning you can buy, sell, and buy again with VA loan. In some instances you can also buy with a VA loan, eventually rent that home out in the case of a move or relocation, and buy a second home with another VA loan. You will have to intend to live in the home for at least one year before you purchase, VA loans are not eligible for purchase of homes intended to be a rental from day one.
7. Up to 100% cash out refinances are available with VA home loans. That means if your home has appreciated, you could re-appraise and pull out the equity with a cash out refinance up to 100% of the current value of the home.
One of the services we provide to our veteran clients is a Total Cost Analysis. The total cost analysis is the most dynamic and detailed mortgage financing tool. It allows us to compare and contrast up to four different loan scenarios for clients and then calculate the total cost of each financing scenario.
A common scenario might be lining up a VA loan, conventional, FHA, and USDA mortgage. On one screen we can compare payments, rates, cash to close, and MORE importantly we can calculate which option is going to have the lowest overall cost for you over the time horizon you anticipate living in the home.
This tool is nothing short of spectacular and can be used for both purchase and refinance transactions.
The other dynamite tool we provide for clients is the HomeScout app. I was previously a frequent user of Zillow, Trulia, and Realtor.com until I discovered these companies were not real estate companies at all, they are media companies.
Their revenue model is to capture our private data and then sell that data to Realtors and lenders, basically sell your personal contact information to the highest bidder. I also discovered that up to 47% of their data is erroneous, it is not accurate at the time we are viewing it. Real estate companies have live feeds in the MLS (Multiple Listing Service), which is how Realtors search for homes. These media companies buy data from the MLS but it is dated, in many cases up to several weeks old data.
It’s hard to think of something more annoying than wasting time and getting tele marketed before you are ready to buy.
HomeScout changes everything, this revolutionary app is a direct feed into the MLS so you search exactly like a realtor does, and your contact information will not be sold to multiple parties. It’s really the best of both worlds.
You can download HomeScout here: https://homescout.app.link/8014033190
One more thing you should know, we exist to treat you as we would want to be treated if our roles were reversed. That is hard to tell from a website, but check out what a few of our past clients have to say about their experience working with our team:
Any questions, how can I help you? Please find our contact info below or request a consultation for more information.
*A down payment is required if the borrower does not have full VA Entitlement, or if the loan amount is greater than $424,100. VA loans subject to individual VA Entitlement amounts and eligibility, qualifying factors such as income and credit standards, and property limits. Must present valid Certificate of Eligibility (COE) at time of application.** VA loans must conform to secondary market requirements, which include the minimum 25% coverage requirement. Coverage is a combination of VA provided entitlement plus cash down payment or equity. Fairway is not affiliated with any government agencies. These materials are not from VA, HUD or FHA, and were not approved by VA, HUD or FHA, or any other government agency. The Home Scouting Report® (HSR) is a free home finding service provided directly to you as a homebuyer by HBM2, a licensed real estate brokerage services company. The Loan Officer’s role is to assist in determining a comfortable home price range for HBM2 to use when it is searching for property listings within your search criteria. The Loan Officer is neither an employee of HBM2, nor the provider of the HSR. Copyright©2017 Fairway Independent Mortgage Corporation. NMLS#2289. 4750 S. Biltmore Lane, Madison, WI 53718, 1-877-699-0353. All rights reserved. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply. Equal Housing Lender.