20 May VA Loan Benefits & Eligibility for Veterans
Created in 1944, VA home loans have helped millions of Veterans receive homeownership at affordable costs. These loans are available to active/retired military members, reservists, and their family members. With no down payment, private mortgage insurance or pre-penalty charges, here’s a list of some unmatched VA loan benefits-
No Down Payment Option
Most conventional mortgages require a downpayment of at least 3.4%-5%. This 5% can go up to $10,000 for a $200,000 mortgage. It can take service members years to save that much money.
However, unlike these conventional loans, VA mortgages are a true no-down mortgage opportunity that allows applicants to finance up to 100% of the purchase price.
No Private Mortgage Insurance (PMI)
Among other VA loan benefits, these mortgage facilities also come with no PMI option. Conventional loans require an applicant to either pay a 20% down payment or Private Mortgage Insurance (PMI). While paying PMI isn’t mandatory with VA loans, they might require you to pay a small funding fee.
Easy To Qualify
One of the most striking VA loan benefits is that you don’t need to have an outstanding credit score to qualify. You can apply even with a minimum score of 620. Moreover, the department also provides these VA loan benefits to applicants who have had a foreclosure before.
Lower Interest Rates
Though private lenders provide VA home loans, the department makes sure that the interest rates are the lowest in the market. The VA guarantees a part of the mortgage, meaning if a borrower defaults in any way, the VA will pay back a significant amount to the lender. This lets lenders provide loans at lower rates.
Types of VA Loans
The VA provides purchase loans, streamlined and cash-out refinancing loans. You can borrow a loan for home renovation. Moreover, you can even use these VA loan benefits to tap into your home’s equity and pay off any existing debts.
VA LOAN PROCESS
To reap VA loan benefits, you must apply for the Certificate of Eligibility (COE). Here’s how to apply for a VA loan and take one step forward to homeownership-
- Confirm your eligibility- VA mortgages are offered to U.S. military staff, Veterans, members of the reserves, and their families. Applicants must meet certain guidelines to qualify for VA loans.
- Applying for COE- The COE is the most important document as it validates your eligibility to the lenders. Veterans can apply for COE by filling out DD Form 214. Active military members need a statement of service signed by their commander to get the COE.
- Connect to a VA lender- Different VA lenders might provide different interest rates. So, it is best to browse as much as you can and qualify for the lowest possible interest rate.
- Getting pre-approved- After choosing your VA lender, you must submit the required documents to your lender so that they can get you pre-approved for the loan. Pre-approval determines your expected loan amount.
- Find your dream home – After getting an estimate of the approved loan amount, you can shop for homes that fit your budget. Moreover, you must get in touch with a real estate agent who is experienced with VA loans.
- Signing the purchase agreement and getting VA appraisal- After selecting your home and signing the purchase agreement, your private lender will forward your application to the VA for getting an appraisal. An appraisal will ensure that the home price stated on the purchase agreement matches the property’s actual value.
- Loan closing- The last step requires an applicant to sign all documents and pay the closing fees. Additional VA loan benefits like no closing costs might be available to eligible Veterans.