VA Mortgage Loan
Learning about the VA Mortgage Loan
The VA mortgage loan is a very popular loan that is guaranteed by the U.S. Department of Veterans Affairs (VA) and is only accessible via qualified lenders who have been dealing with it for a long time. It was designed to offer finance to veterans and their families (spouses that do not remarry in case their veteran better half passes away). It helps out veterans that may not be eligible for private financing or can’t put down a down payment. The areas which are eligible for the VA loans are the ones that are generally not a part of the metropolitan or commuting areas.
The loans allow veterans a 103.3 percent financing without having to pay for a PMI ,and a 20% second mortgage that gives up to a certain amount that may be needed to make energy efficient improvements. The funding fee for this type of loan ranges from 9 to 3.3% and it can also be financed. When it comes to the purchase, the veterans can get up to 103.3% of the value of the home. These loans do not have a premium insurance mortgage, which means that you can place more of the payment for qualifying for the loan amount. If you are refinancing, you can get up to 100% of reasonable value and 100.5% of the loan amount in VA loan (IRRRL Refinance). The 0.5% is the cost of the required funding fees.
The funding fees have to be paid but in certain cases the borrower is exempted from it. The people who are generally exempted are the ones that get at least 10% VA disability compensation. If the veteran faces disability after making the payment of the funding fees, they can ask for a refund if the disability was faced before the closing date of the mortgage. The payment for the funding fees can be done in cash or you have the option of including it in the loan amount.
The following elements are not included in the loan:
- credit report
- hazard insurance
- loan processing fee
- recording fees
- survey charges
- title insurance
- title search
- transfer taxes
- VA appraisal
Who Is Eligible for the Loan?
The following people are eligible for the loan:
- Active-duty personnel
- National Guard members
- Reserve members
- Some surviving spouses
VA Loan Application
The VA loan has a standard application form that is known as the Freddie Mac Form 65 and was issued by Fannie Mae. If you want to apply for the VA loan, you have to submit the following paperwork:
- Copies of your W2 statements for the last 24 months because it helps with finding the gross household income
- Copies of your previous two pay stubs.
- Document for the savings account, trust funds, checking account, and any financial investments made.
- Tax returns for the past 24 months if you were self employed.
- The letter of guarantee or the DD 214.
How to Qualify For the VA Loan
You are eligible for the loan if you completed the minimum number of days of completed service. Lenders require you to have a minimum score of FIDO 620 so that you can easily qualify. If you had purchased a home before using the VA loan, you may still be entitled to purchase another home. If you have to calculate the Maximum Entitlement available, you should consider the following things:
- If the new owners paid off the loan of the previous home that you owned with the help of the VA loan.
- If sold your home and the new owner assumed the VA loan.
- If you own the home but are renting it out.
Benefits of the VA Loan
The benefits of eth VA loans are:
- Assumable mortgage option
- Closing costs can be paid by the seller
- Flexibility of refinancing with the VA funding fees
- Great interest rate
- No down payment
- No private mortgage insurance premiums needed
- Repaying mortgage without any penalty fee