If there is one subject Americans are united on, it is that our veterans deserve better treatment overall. One of the ways the United States government does this is through VA loans, which is a type of financing available only to veterans.
However, the principles of financing can be tricky and difficult to navigate, so in this article, we are going to go over how VA loans work, and how they can benefit you and your family.
What can I use a VA loan for?
In most cases, VA loans are limited to the purchase of homes that you and your family intend to live in. It can’t be used to finance a home that is meant to be a secondary residence or a property to be rented out.
Such loans can also be used to remodel or make a home more accessible in the event of service-related disabilities. The wonderful thing about VA loans is that you can take one out more than once during your lifetime.
So are VA loans better than conventional loans?
The money that goes into a VA loan does not come from the government but from its partnerships with private lenders. The U.S. Department of Veterans Affairs guarantees aid in the form of percentage guarantees, so veterans don’t have to worry about making a down payment or paying for private mortgage insurance (PMI).
PMI is an additional expense—paid monthly over several years—that is required of borrowers with a smaller down payment. This is to mitigate the risk on the lender’s part.
Conventional loans and mortgages often require a high credit score—usually a minimum of 620—before you can successfully apply for one. A VA loan is attainable even with a lower score.
VA loans can have lower interest rates than conventional loans, but it differs from lender to lender, so it is important to weigh and compare your options. 30-year conventional mortgages, for example, can be slightly cheaper than 30-year VA mortgages, but there are specific lenders with whom negotiation is possible.
In most cases, VA loans require a one-time VA funding fee at closing, which is uncommon with conventional loans. In the event that you can’t put up the 20 percent down payment usually required of a conventional loan, a VA loan might still be better.
How do I qualify for a VA loan?
Anyone who served with the Army, Navy, Air Force, Marine Corps, or Coast Guard after Sept. 15, 1940, is qualified for a VA loan. Another qualification is that you should have served for 181 consecutive days during peacetime or 90 days otherwise.
Being Dishonorably Discharged might also put your eligibility into question.
Members of the National Guard and reservists can also qualify if they have been mobilized for active duty for at least 90 days or discharged because of a service-related disability. Otherwise, they qualify after six years of honorable service.
Spouses and dependents can also sometimes qualify for VA loans if their husband or wife passed away or went missing. Spouses of prisoners of war also qualify for the loan.
You will also need to meet certain financial requirements, in that you should be capable of paying your mortgage. It is important to note that discharged bankruptcies older than two years do not necessarily disqualify a veteran.
How do I apply for a VA loan?
First, you must obtain a Certificate of Eligibility from the U.S. Department of Veteran Affairs, whether through email or through your VA lender.
Then, working with a VA loan specialist, you can go ahead and find a deal that suits you and your needs. Make sure to avoid paying higher interest rates or closing costs as denoted by your VA loan specialist.
While there is so much more we could do for our veterans, it is also important that you know what options are available to you as a loyal servant to the American people. VA loans are one way to offer financial protection and assistance to those who offered their lives to protect American interests.
For more information on how you can apply for a VA loan, send us at Lend LA a message. We are ready to cater to the needs of our veterans for a better and smoother home buying experience.