If you are among the 29 million veterans and service personnel who are eligible for a Veteran Loan, you may find that a VA loan gives you the resources needed to buy or refinance the home of your dreams, while ensuring you get the best rates. Veteran home loans can save you a great deal of money by giving you an excellent rate, with no monthly mortgage insurance (even with no down payment). Plus, it is easier to qualify for a VA (Veterans' Affairs) military loan as compared to a conventional mortgage. It's worth the time to look into!
If saving money on interest isn't enough, there are other benefits to a VA loan if you are a veteran:
- If you get a VA loan, there is zero down payment required when purchasing a home.
- With a VA loan, even if you have bad credit, you can get the same low interest rates for veteran home loans that are available to those with great credit, as long as you have been improving your credit history for the past year. Improving your credit history is as easy as making your current utility, rent, loan or credit payments on time. (Be sure that this change in your payment history is accurately reflected on your credit report.)
- Even with a Loan-to-Value of 100%, there is no monthly Mortgage Insurance required for a VA home loan. This alone can save you considerable money every month.
- The VA mortgage loan is guaranteed with no money down for any loan up to $359,650. All you have to do is qualify for the size of mortgage that fits within your budget.
- VA mortgage loans are often assumable. This means that you can transfer this mortgage to the new owner of the home when you sell. It can be a significant selling point, since VA loans have very competitive interest rates.
- VA has released a hybrid ARM product. Veterans now have a choice of a fixed rate or an Adjustable rate VA mortgage. So you have the choice of mortgage product that you want, even with a VA loan.
While VA loans are very attractive, there is a "Funding Fee". The Department of Veteran Affairs requires this fee, and it varies between 0 and 3.3 percent of the amount of the loan depending on your current Veteran Status. While the fee could be hundreds or thousands of dollars, depending on the size of your loan, it is generally added into the total loan amount, so you are not required to pay this out of pocket. This makes the fee manageable for most, and the lower interest rates frequently more than pay for the fee over time.
In some cases, this fee will be waived. Benefits for disabled veterans dictate that if you are 10% or more disabled due to active military service, you will not be required to pay a funding fee. So if you have been disabled during your military service, the VA loan will likely save you even more money.
Are you one of the individuals who will have to pay a funding fee? You can lower it by putting some money down on your VA home purchase. The more money you put down, the more your fee will be reduced.
So, how do you get a VA loan? You will need a certificate of eligibility to qualify. Whether you are a first time user of the VA loan system or you have used your eligibility in the past, you must have your certificate. If you don't have a certificate, you'll have to get one first. Contact your local Veteran Affairs office if you need to get a copy of yours.