Veterans Administration (VA) loans are among the most commonly used kinds of loans available in the current financial market. They are a great option for the borrowers who are eligible and are mostly used to purchase or refinance a home, as well as upgrade a house. Take 10 minutes to get qualified, CLICK HERE!
Here are 10 aspects to be aware of prior to applying for the VA loan:
1.) The loan is guarantee loan. It is a Veterans Administration loan is a guaranteed loan provided by the U.S. Department of Veterans Affairs this means that the lender that provides the loan to the borrower is insured against loss in the event that the buyer is unable to repay the loan.
2.) Not all people are eligible to receive an VA loan. You must be an active duty or veteran military personnel to be eligible to receive VA financing. Veterans are eligible for VA financing through any mortgage lender participating in the VA home loan program and the valid certification of eligibility (COE) must be provided alongside income and credit requirements to be able to qualify in the application for loan.
3.) It offers lower rates for veterans who are eligible. When you take out the VA loan it is common for the borrower to receive lower interest rates than typically offered by other types of loans. Additionally it is possible to get a VA loan may be used to receive lower interest rates for refinancings that are that are up to 100% loan in value.
4.) It provides greater flexibility in credit criteria. Minimum credit scores that is accepted for an VA loan is around 620. However, depending on specific circumstances, lenders will allow an FICO lower than 560. In addition, although other loan types might have similar credit score guidelines however, a credit score that is 620 is required for an Conventional as well as an FHA loan will impose greater obligations for the borrower, and may require an additional down amount.
5) There there is the absence of Private Mortgage Insurance (PMI) needed on VA loans. The program is also able to reduce Mortgage Insurance (MI) for other loan. In this case, for instance, one could refinance a loan they have already taken out by changing the loan program to one that is a VA loan, thus cutting out the PMI and decreasing the monthly mortgage payment. While mortgage insurance isn’t mandatory for VA loans However, the VA has a funding cost for a guarantee to the lender in case of default on their mortgage However unlike PMI that is in place throughout the term of the loan in other kinds of loans like FHA and USDA The fund-raising fee (FF) could be paid out in cash by the seller or buyer or paid into the loan amount. The lender can also pay fee credit options that are available for VA loans if you request up to 3.3 percent. Some veterans could get exempted from paying a financing fee for their loan (additional documents are required).
6) Veterans Administration loans often don’t require an upfront payment. In general, a VA loan doesn’t require the payment of a down payment which makes it a no money down home loan. However when the amount of the loan is greater than that of the VA maximum for the specific county in which you live the borrower has to make the down amount. The down payment amount will be different dependent on the amount of VA entitlement amount as well as the appraisal value or purchase price of the property and will be an amount that is the sum of these two.
7) You can be qualified to receive multiple Veterans Administration loan at the at the same at the same time. There is no limit to the number of VA loans an individual can get simultaneously, as long as there’s a VA entitlement that can be utilized. For loans that exceed $144,000, the entitlement is typically 25 percent or more of VA financing limit of the county in which the property being financed is.
8.) It is possible to avoid a prepayment penalty for Veterans Administration loans. All VA loan is able to be completely paid back anytime, which is an advantage as it will help you to save huge sums of cash on interest.
9) The time frame for seasoning bankruptcy, foreclosures or short sales is less in the case of Veterans Administration loans when compared to other kinds of loans like Conventional and FHA. In the majority of circumstances, one is eligible for the VA loan after two years of filing bankruptcy or closing on their home, compared to four years for bankruptcy, and 7 years in foreclosure for the Conventional kind of loan.
10) It is only utilized to purchase the primary residence. The VA benefits are not able to be used to buy another home or an investment property, however it is possible to refinance the terms of a VA loan that was prior to being used as the principal residence in order to reduce rates of interest (VA IRR). Click HERE to pre-qualify today!