The patriotic glow of the July Fourth celebration is a time to appreciate our very special country. But there’s an even longer-lasting way to honor our military veterans. A VA mortgage loan is a special deal for anyone who has served in our armed forces – whether it’s used for a new home purchase, a cash-out refinance, or even the second or third time you’ve financed a home.
Even if you once had a VA loan, and paid it off or sold the house, you can get another VA loan as your eligibility never expires! Yet many vets are seemingly unaware of this good deal, so if you know a vet who is eligible, please pass on this information. More than 70 percent of our younger veterans have yet to take advantage of this low, fixed-rate 30-year mortgage — currently 4.5 percent (4.651 percent APR) with no points and ZERO down payment.
Here’s how the Veterans Mortgage Loan program works:
• There is no down payment required because of the government guarantee! So this loan is actually 100 percent financing. You’ll still have to pay for a VA appraisal, standard title insurance costs, attorney fees, and any lender processing fees or transfer taxes. A small VA funding fee is also rolled into the principal of the loan. (Lenders have creative ways of helping you cover those costs.)
• These are 30 or 15 year fixed rate loans, and many lenders require a minimum 640 credit score, unless you are refinancing a current VA loan. Spouses’ income may be used to qualify; they, too, must have a 640 score.
• Veterans must have a conservative debt ratios and fully documented income.
• These loans are sold into the secondary marketplace, much as traditional loans – but because of the VA’s guarantee they are in demand by investors, providing market liquidity.
• VA loans require no monthly mortgage insurance (PMI), as there is with FHA loans, so monthly mortgage payments are lower. Also, if you have at least a 10 percent service connected disability, your VA funding fee will be waived.
• There is a VA benefit limit which is tied to the conforming loan limit of $453,100 for single family homes, condos, and townhomes. It also applies to 2-4 unit properties. The VA loan guarantee is capped at $453,100, so a 25% down payment is only required on any VA loan amount above $453,100.
• All VA loans must be owner-occupied.
You can also use a VA loan to refinance your current loan at 100 percent loan-to-value (assuming you do not intend to take cash out), and many VA lenders will finance 90 percent of the value of the home if you need cash out through the refinance.
The first step in getting a VA loan is filling out your Certificate of Eligibility (COE), using the application VA Form 26-1880. When applying, you’ll also need the names and addresses of all employers for the previous two years, and your W2s and pay stubs. You can find the application forms and more details at www.VA.gov, or you may call the VA Eligibility Center at 888-768-2132.
I’ve written about these loans in the past, with the help of VA loan specialist (and a former volunteer military chaplain) Daniel Chookaszian at Chase Bank. He’s made it a mission to reach out to military families and inform them of how VA loans work. You can reach him at 847-648-7107. Although these VA loans are made through many mortgage lenders, it helps to have an expert guide you through the process.
Or you can start by contacting contact the VA Loan Center at 877-827-3702, Monday-Friday, 8 a.m. to 6 p.m. EST to find your nearest local office.
Our military have served to protect our country, and it’s only fair they get this mortgage benefit in return. The interest rate is roughly at the current market rate, the ability to fund the entire purchase price with no costly mortgage insurance makes a VA loan a great deal for vets.
And that’s the Savage Truth.