VA Mortgages have many advantages over other types of home mortgage options. If you are an ex-serviceman with the necessary service eligibility, here are some of the benefits you get by opting for a VA guaranteed home loan:
Conventional Home Loans Vs. VA Loans
Buy or refinance a home for up to $417,000 with no down payment. Non -VA loans require down payments over 20%. Conventional loans with little or no down payment require you to have near perfect credit and charge higher interest rates. VA loans are not based on credit scores, they are based on the borrowers overall ability to repay the loan.
Mortgage insurance or 80/20 loans can add hundreds of dollars to your monthly payment. There is no additional monthly cost on VA loans, this is the major advantage when comparing VA and conventional loans.
Conventional loans can have prepayment penalties and negative amortization; this is not the case with VA loans. The Veterans Administration insures these loans because they want to provide a good deal for qualified veterans and active servicemen. They do not want to make a loan that is restrictive or will cost extra money down the road, they want to make loans that make sense.
Underwriting on VA loans is more flexible than conventional loans. Credit scores, income to debt ratios, general credit history all come into play when qualifying for a home loan. However with VA loans the requirements allow for higher debt ratios and less than perfect credit history compared to conventional loans.
If you sell your home the new buyer can assume your VA loan which will make it easier to sell your home.
The Veterans Administration protects the borrower from excessive junk fees. The lender must cover the cost of any underwriting, processing, notary fees and escrow fees.
Even if you have refinanced in the past there is no limit to how many times you can take advantage of the VA loan program.
The VA loan process generally takes about 30 days
Is a VA Mortgage Right for Me?
With a VA Home Mortgage Loan you may be able to borrow as much as $417,000 toward the purchase of a new home or use that money to refinance an existing home mortgage loan.
Some other uses for your VA Home Mortgage Loan:
- Building a home, buying a manufactured home (whether it includes a lot or not)
- Renovating a home
- Refinancing a previous VA Home Mortgage for a lower rate
- Refinancing a manufactured home in order to purchase a lot.
These are just a few of the things you can do with a VA Mortgage, call your local VA approved lender to find it is right for you.
VA Mortgage Loan Programs
100% Purchase Financing:
With VA eligibility and other qualifying factors, a borrower can finance 100% of the purchase of a new home up to the county’s VA loan limit or the property’s appraised value, which ever is less.
90% Cash-Out Refinance:
With VA eligibility a borrower can cash out up to 90% of the property’s appraised value. This money can be used for any purpose like debt consolidation, home improvements, and cash.
100% Streamline Refinance (IRRRL):
Rate and Term reduction on 100% of the existing VA loan balance. Closing costs may be rolled into final loan amount (No money out-of-pocket). No credit check. No appraisal needed. The only requirement is that the current mortgage has been paid on time for previous 12 months. The VA must guarantee existing VA loans. Note: No cash back permitted with this type of loan.
VA Loan Limits by Area
Depending upon the county in which your house is located, you can qualify for up to $729,750 in zero downpayment VA loan. Again depending upon the county in which you live, you may also qualify for a loan of up to $1,000,000, although that so called Jumbo will bring with it a modest downpayment requirement including payment of the funding fee in cash, up front. It’s still a bargain and for a million dollar loan the best deal by far in the market. Briefly, that Jumbo loan involves your payment of the funding fee, usually up to 2.15% or 2.4% depending upon your status, plus 25% of the difference between $1 million and the maximum loan allowed at $0 down payment in your location.
The VA lending guaranty limits vary depending upon location and if you are over the top, you are likely to be attempting to purchase or refinance a splendid property. Next, unfortunately there is no waiver process. Since the usual and customary maneuver of tacking on a second mortgage is not possible with a VA loan, you will need to change the price, add cash of your own, lower the loan if it is a refinance, or abandon the house if it’s a purchase.