Financing Our Heroes
- By Josh Turpin
Our ladies and gentlemen in uniform sacrifice a great deal to serve their country. Often leaving their families for lengthy assignments, sacrificing their own comfort, to make sure the rest of us can live in comfort back at home. The least we can do, as citizens, is to provide them some comfort when they return. And what more comfort is there than to have your own pad to kick up your feet? That is one reason veterans can receive some of the best home financing terms available. Thanks to the Veterans Administration's (VA) guaranteed home loans, which allow some really attractive terms and conditions, they can. These stellar financing terms are available whether the veteran is purchasing a home or refinancing. In fact, veterans can take cash out up to 100% of the value of their homes for things like consolidating credit card debt!
There are three primary types of VA loans available to service members. They are Zero Down Purchase Loans, VA Interest Rate Reduction Loans (IRRL - pronounced "Earl"), and Cash Out VA Loans. The first step is to determine if you qualify for a VA loan. All are described below.
Qualifying For A VA Loan
In order to qualify for a VA loan, service members must be able to obtain a Certificate of Eligibility. Just because you were in the military doesn't necessarily mean you will qualify for a VA loan. Service members must meet certain criteria. Such criteria can be found on the Veterans Administration's website. Below is a table that summarizes who may be eligible for a VA loan based upon when and how long they served.
Zero Down VA Purchase Loans
The VA guaranteed mortgage allows qualified veterans to purchase a home with little to no money out of pocket. This 100% financing is very attractive for veterans and allows them to keep money in their bank account so it can be used for other needs (such as relocating and moving expenses, closing costs, etc.) There is an option to put money down, which, can save money on the VA Funding Fee (more on that later). If you are real estate savvy veteran or have a real estate agent that is, you can even get into a house with no money out of pocket at all! This can be accomplished by having the seller pay closing costs and settlement fees. Click Here to apply for a VA home purchase loan.
VA Interest Rate Reduction Loans (IRRL)
Pronounced "Earl" these loans were created to allow veterans to take advantage of low interest rate environments like today. If a veteran has a VA loan rate that is relatively high and wants to simply reduce their rate without taking any cash out, this would be the program for them. The IRRL loan allows veterans to refinance without having to obtain an appraisal or provide any income documentation. This streamlined program is very simple to complete and can be done in much less time than a typical refinance transaction.
Click Here to apply for a interest rate reduction loan.
VA Cash Out Refinance Loan - 100%
One of the huge benefits of a VA guaranteed loan is the ability to cash out 100% of the equity in a home. With a VA loan, borrowers can use the equity in their homes to pay off other debt, complete upgrades to the home, or use the funds for nearly any other purpose (within reason of course). Unlike conventional home loans that allow borrowers to take up to 80% of the appraised value, VA borrowers can utilize the full appraised value of their home! Click Here to apply for a cash out VA loan.
Pros and Cons of a VA Loan
There are other benefits of a VA loan that haven't been mentioned yet. First off, because they are guaranteed by the VA, they prove less risky for lenders. Thus, rates on VA loans are typically lower than conventional loans.
The lending guidelines are a little looser for VA loans too. For instance the minimum credit score is typically 620 for most VA lenders, Whereas a conventional borrower with a 620 credit score would be very difficult to finance, VA borrowers with credit challenges are easier to approve. The income requirements are looser too. Whereas a borrower may only qualify with a debt to income ratio (DTI) of up to 45%, veterans can qualify with most lenders with a DTI of up to 55%! This is a tremendous benefit and opens a lot of doors for veterans.
Another attractive benefit is that unlike conventional loans that have PMI and FHA loans that have MIP (both types of mortgage insurance) VA loans do not have any mortgage insurance. This helps reduce the overall cost of borrowing for veterans. On a $200,000 home, the payment difference between an FHA loan and a VA loan would be about $142 in mortgage insurance alone! This allows for veterans to buy more house than a standard buyer.
There is one drawback of VA loans. The VA charges an upfront funding fee for most VA loans. This fee ranges from 1.25% to 3.3% depending on the down payment on purchases and whether the veteran has ever used a VA guaranteed loan before. That fee is less for people who have not used the fee and for those who put more money down on a purchase loan. According the VA website you do not have to pay the fee if you are a:
Well Deserved Benefits
From everyone at United Fidelity Funding Corp. we want to say THANK YOU to all of our service men and women who have sacrificed so much to protect our freedoms at home and abroad. If you ever need any assistance or have any questions about VA home loans, please don't hesitate to Contact Us. We're here to help!
To see if you may qualify for a VA loan, start by filling out our Quick Application. A qualified VA loan specialist will contact you immediately with details.