If you’re a veteran of any of the branches of military service in the US, then you deserve thanks for your years of service to the nation and your willingness to protect our country. You also deserve to capture the dream of home-ownership, and there are several programs in place to ensure that veterans can obtain the home loan they deserve.
At TwinCity Lending, we are proud to have helped many veterans buy a home. We are knowledgeable about the many incentives and programs that will help you get there. Give us a call today, and we will get you qualified for a veterans administration home loan and soon you’ll be flying your flag over the roof of your own home.
What Are VA Loans?
The Department of Veteran’s Affairs guarantees loans to US veterans, but it does not lend the money itself. You can obtain your mortgage through any lender who specializes in VA loans, such as TwinCity Lending. You may have heard of Veterans United Home Loans, which is a mortgage lender who only does loans for vets. While they offer excellent service to help vets buy homes, you can instead choose the lender you prefer to work with for your VA mortgage loan.
There are several benefits to being able to utilize a VA Loan. Most notably, you do not need a down payment to buy a home.
Also, unlike other mortgages which require and charge Primary Mortgage Insurance (PMI) to borrowers who have less than 80 percent equity in the house, VA loans have no PMI. This benefit saves you substantial money every month.
There are no limits to the amount you can borrow with a VA loan, and they have more lenient income, credit, and debt ratio requirements than conventional loans. Plus, they generally have significantly lower interest rates, which saves you more money over the life of your loan and let you potentially pay down your principal more quickly.
You can only use VA loans for your primary residence, so you cannot use them to finance a vacation home or a rental property. The benefit is renewable, however, so just because you used a VA loan to purchase a home before doesn’t mean you can’t get another VA loan when you relocate. You can even buy a duplex or multi-unit property with your VA loan and rent them out, as long as you live in one of the units.
How to Get a VA Loan
You need a Certificate of Eligibility (COE) to apply for a VA loan. You are eligible for a COE if you meet one of these conditions:
- You served 90 consecutive days of active service during wartime;
- You accumulated 181 days of active service during peacetime;
- You have been an active member of the National Guard or Reserves for six years or more, or you were called to active duty and served 181 days of active service;
- You were married to a service member who died in the line of duty or as a result of a service-related disability.
The COE doesn’t mean you will automatically qualify for a VA loan, but it’s the first step. Take your COE to your mortgage lender who offers VA loans, such as TwinCity Lending, and one of their representatives will walk you through the qualification process. You will still need to meet standards for income, credit score, and debt ratios but remember that these are easier to obtain with VA loans than they are for conventional loans.
You’ll remember that there is no down payment required for a VA loan, but you are welcome to put money down to reduce the amount you are financing. Doing so can lower your monthly payment or allow you to qualify for a house with a higher sales price.
The amount of your down payment also affects your VA Funding Fee. Generally, a higher down payment lowers your fee, as the fee is there to help pay for the program and its risks. Your fee is lower if you make a down payment because your loan is less risky than others.
Let’s examine the VA Funding Fee for a moment. You’ll recall that we said above that VA loans do not require a down payment, nor do they have Private Mortgage Insurance (PMI) that is paid monthly until your loan reaches at least 80 percent of the value of your home. Both of these benefits are substantial and make home buying easier for veterans.
A VA loan isn’t wholly without fees, however. All VA loans have a VA Funding Fee, which is assessed when your loan closes. This fee goes directly to the Department of Veteran’s Affairs for the administration of the program, and your mortgage lender cannot waive or alter the funding fee.
You can find the amount of your funding fee on your Certificate of Eligibility (COE) that you get from the VA. The amount you must pay will depend on whether you were active duty or in the Guard, and whether you are using the VA loan benefit for the first time, or subsequently, or for a purchase or a refinance.
Don’t worry though. Just because this fee is due at closing and is required to obtain your loan doesn’t mean that you have to come up with thousands of dollars to purchase a home. You can ask the seller of the property you wish to purchase to pay the fee on your behalf at closing, or you can also roll the cost of the fee into your loan and pay it over time. Your mortgage lender can walk you through this decision and work with you to determine the best option.
TwinCity Lending is Here to Help Veterans Buy A Home
If you’re a veteran looking to buy a home, the experts at TwinCity Lending are here to help. We understand the VA loan program and can walk you through your credits to determine how much home you can afford. Bring your COE, and we will get you pre-qualified for a loan so that you can go shopping for your dream home. We’re proud to serve our veterans and stand ready to make your journey to home-ownership easier than you would expect. Give us a call today and let us help you get started.