What Are You Waiting For?
Yesterday, we honored our Veterans with a Memorial Day holiday. It served as a reminder of all Americans that we owe a special gratitude toward our Veterans. In lieu, the American people through the Federal Government provide many beneifts.
Clearly one of the best programs available to those who were honorably discharged from the US military is the VA’s mortgage loan program. It really does stand out as one of the few government mortgage programs that not only works well, but is a great deal for those who are eligible.
Generally, a VA home mortgage loan requires no down payment and carries a low 30-year fixed rate. That rate today is a bit over 4.5 percent.
Now there a few conditions to getting a VA mortgage loan but millions of Americans who are eligible are not even aware of this amazing deal. There is no age restriction on qualifying for a VA mortgage loan and you can get a new loan even if you had one many years ago.
The surviving spouses of veterans with benefits also qualify if they have not remarried. Plus there are good VA loan deals for those seeking to refinance an existing loan.
Here’s the basic requirements to get a VA Mortgage Loan:
- must have been honorably discharged from the U.S. military.
- must be able to demonstrate steady income or a two-year history of self employment or a stream of retirement benefits. Spousal income can help you qualify.
- total debt payments cannot be more than 41 percent of your total income.
- no unpaid liens or judgments.
- must have a Certificate of Eligibility
- credit score must be above 640.
- must wait two years after a bankruptcy to apply and cannot have any subsequent late payments.
If you’re a veteran with a higher rate or adjustable-rate mortgage, this is the time to lock in low fixed rates so it’s worth contacting a VA Certified loan company.
You can qualify for VA home loan benefits no matter how long ago you were honorably discharged. And even if you took out a VA loan many years ago you remain eligible for another VA loan if the first loan was paid off.
The VA loan program is not intended for speculators or investors so the property you buy must be owner-occupied. In other words, you need to buy it for you to live in and not for you to invest and rent out!
Here’s the numbers
The maximum amount of the full VA no-down payment mortgage loan is $417,000. Now, if you purchase a higher priced home and need to borrow money above that amount, you must put down 25 percent of the amount above the $417,000 limit and pay a slightly higher rate to get the larger mortgage.
So, for example, if you want to purchase a home below that limit, you get a no-down-payment mortgage for the entire amount at a fixed rate of around 4.50 percent for 30 years. The monthly payment on a $417,000 mortgage at 4.505 percent would be $2,044 plus property taxes and insurance.
If you wanted to purchase a $500,000 home, you must put down $20,750, which is 25 percent of the difference between $417,000 and the purchase price. The VA loan will cover the remaining $479,250, and your interest rate will be about a quarter percent higher (4.75-4.875 percent).
When you take out a VA loan, the closing costs (not more than $1,500) are rolled into the new mortgage. There is also a VA funding fee, typically 2.15 percent of the loan amount, also rolled into your loan. And you’ll pay $425 for an appraisal as you start the process, but you should not have any other out-of-pocket costs. Now if you are a 100% disabled Veteran, the VA funding fee is waived
A VA loan can also be used to refinance your existing mortgage. In the case of a refinance, you can borrow up to 90 percent of the appraised value of the home taking out cash to pay off other debts if there is equity available.
As with a new VA loan, you will have to pay $425 up front for an appraisal although there should be no other fees required to apply for the loan. For a refinance, the VA funding fee is 3.3 percent rolled into the loan. This applies if you convert a conventional mortgage to a VA mortgage. But if you are refinancing an existing VA mortgage, the funding fee is only one half of 1 percent.
Whether you are taking out a new-purchase loan or refinancing an existing loan, there is no monthly mortgage insurance (PMI), so payments are lower than comparable standard loans that require PMI when there is less than 20 percent equity in the deal.
If you’re a US Veteran and you think you may benefit from a VA Loan, just contact VA Home Loans Today.