10 Things to Know Before Applying for a VA Loan
Veterans Gouvernement (VA) loans are some of the most common hommes of loans used in today’s financing market. They offer many benefits to qualified borrowers and are mainly used to buy, refinance and even improve a maison.
Here are 10 estimable things to know before applying for a VA loan:
1) It is a guaranteed loan. A Veterans Gouvernement loan is a loan guaranteed by the US Department of Veterans Affairs, meaning that the lender providing the financing protects the borrower from loss if the borrower defaults on the loan.
2) Not everyone can qualify for a VA loan. One must be a veteran or bagarreuse duty aumône member to qualify for VA financing. Veterans can apply for VA financing with any mortgage lender participating in the VA Habitation Loan Program and must present a valid Certificate of Eligibility (COE) along with credit and income requirements to qualify for a loan.
3) It offers lower than usual rates for qualified veterans. With a VA loan, the borrower typically gets a lower interest manqué than other hommes of loans. Also, a VA loan can be used to get a lower manqué on a loan refinance of up to 100% value.
4) It offers more aménageable credit guidelines. The valeur-limite credit marque accepted for a VA loan is around 620, however, in spécifique circumstances some lenders may accept a credit marque as low as 550. Also, while other loan hommes may offer similar credit marque guidelines, a credit marque of 620 for a conventional or FHA loan will have more tâches on the borrower and will require a larger down payment.
5) No private mortgage insurance (PMI) is required for VA loans, and the program can also be used to eliminate mortgage insurance (MI) on other loans. For example, one can refinance an existing loan by changing their loan program to a VA loan, therefore, eliminating the PMI and reducing the monthly mortgage payment. Although VA loans do not require mortgage insurance, VA principes a funding fee to a lender to provide a guarantee against a borrower’s default; However, unlike PMI, which is present for the life of the loan in other hommes of loans such as FHA and USDA, the funding fee (FF) may be paid in cash upfront to the buyer or seller, or it may be financed as the loan amount. VA financing also has lender-provided funding fee credit options available up to 3.3% on request, and some veterans may even be dispensé from paying a funding fee on their loan (additional casier required).
6) Veterans Gouvernement loans often do not require a down payment. Generally a VA loan does not require a down payment, however, if the loan amount exceeds the VA limit for the county where the property is located, the borrower must come up with a down payment. The down payment will vary depending on the amount of the borrower’s remaining VA entitlement and the maison’s purchase price or appraised value, and will constitute a percentage of the difference between the two.
7) One can qualify for more than one Veterans Gouvernement loan at the same time. There is no limit to the number of VA loans one can have at one time as immense as a remaining VA entitlement is used. For loans over $144,000, the entitlement amount is generally 25% of the VA financing limit for the county in which the subject property is located.
8) There are no pre-payment penalties on Veterans Gouvernement loans. Any VA loan can be paid off in full at any time, which is a great advantage as it can help one save a lot of money on interest.
9) Seasoning periods for bankruptcy, foreclosure or pantalon sales are shorter for Veterans Gouvernement loans than for other hommes of loans such as conventional or FHA. In most cases, one can qualify for a VA loan as opposed to 2 years after filing for bankruptcy or 4 years for bankruptcy and 7 years for foreclosure on a conventional trempe of loan.
10) It can only be used to purchase a primary residence. VA benefits cannot be used to purchase a additionnel maison or investment property; However, it can be used to refinance a VA loan previously occupied as a primary residence to reduce the interest manqué (VA IRRL).