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Eligibility and benefits of VA loans

Eric Kandell — Tue, 07 Sep 2010 16:52:33 +0000

The government tries to provide some benefits to members who serve the country. Among the other benefits that are available, is the department of veteran affairs loan program for home buyers. VA loans are mortgage loans that are designed to offer long term financing to all eligible veterans or their surviving spouses. In case you want a loan from a private lender and things are such that you can’t pay your lender then VA stands behind and guarantees that the lender’s money will be paid.
Not all are eligible for the VA loan. You will be required to have a certificate of eligibility to get a VA loan. The people who are eligible for a VA loan are as follows.

Active duty personnel
Veterans of different fields
Some National Guard members
Surviving spouses of persons who have died while on duty
The spouses of personnel who are missing in action or taken captive

The VA loan has several advantages over the conventional loan. Some of the benefits of VA loans are as follows :
1. No down payments: Under this program there has to be no money down. The eligible buyers can finance 100 percent of a home’s price without making any down payment. Conventional loans have very high down payment requirements. They at least require 20 percent of the value of the house as down payment. Thus, a lot of people can not afford to take out these conventional loans. The advantage in case of VA loans is that they do not require any down payments.

2. Processed faster: If you are a potential buyer then you must submit your application and request for an appraisal of the property. This should be done before obtaining a VA loan. Some lenders, who have the VA approval for processing automatically, can finalize a loan. They do not need to wait for VA to review the application or the appraisal.

3. Protection of the lender: The VA guarantees that it will provide repayment of the loan in case the borrower can’t. Thus, the lender is safe from any loss in the event of the borrower not being able to pay. This attracts the lenders and so they help veteran buyers in getting better loans.

4. Lowers cost of the buyer: In case of the VA loan the funding fee is approximately between half and 3.3 percent. This may be included in the loan or is supposed to be paid out–of–pocket. The loan is designed in such a way that it is meant to reduce the cost for the buyer.

5. Flexible loan: These VA mortgage loans are not only for purchasing homes. They can also be used to build a new house or buy land. You may also take the loan out to make improvements to an already existing house. Thus, there is flexibility when it comes to VA loans.

Top 5 reasons my past VA loan clients have enjoyed a VA loan

Eric Kandell — Sat, 23 Jan 2010 23:20:31 +0000

Here is one loan officer’s Top 5 list of reasons why veterans enjoy the VA loan.

I have helped hundreds of veterans either refinance or purchase homes using their eligibility. I think the main attraction to my clients is low interest rates. Government insured loans on average our more competitively priced than conventional. In the last year we have seen rates as low as 4.25% fixed.
No mortgage insurance, unless you have a loan that is under 80% of the appraised value, you will pay PMI (premium mortgage insurance). this is not the case on a VA insured loan, VA homeowners do NOT pay PMI no matter what your loan to value is.
The ability to do a streamline refinance on a VA loan is a great sense of security, knowing you can refinance if rates drop without income qualifying and even more important no appraisal, this means if home values drop in your area you can take advantage of current market rates.
100 percent financing, With today’s struggling economy and banks tightening their lending criteria it is nice to know you can experience the American dream of owning a home with no money down.
Another great component of the VA loan is the fact it’s an assumable loan, this can be great help when selling your house.

Reusing VA eligibility: Can I obtain another VA loan?

Eric Kandell — Tue, 17 Nov 2009 15:00:16 +0000

The short answer is yes. Basically, once you’ve established eligibility, it’s sort of like establishing a credit limit. Your eligibility is for a specific maximum entitlement; some individuals may be able to purchase a home without using his or her full entitlement. In that situation, it is possible to put the remaining entitlement towards financing a second property. Additionally, it is possible to restore the full entitlement amount by meeting certain requirements and applying for restoration of entitlement with form 26-1880. The simple version of the restoration requirements are that the loan is either fully paid or transferred to an eligible veteran. There is a one-time-only option for restoration of entitlement if the original property secured with the paid-in-full-loan is still in the veteran’s possession. Once again, your loan officer will be able to handle all this for you.

Eligibility: How Do I Know If I Even Qualify?

Brian Frederickson — Fri, 09 Oct 2009 00:22:51 +0000

There are some basic rules of thumb―currently on active duty for at least 180 days, 90 days of war service, 180 days of peacetime service before the 1980’s, or 24 months of continuous service after the 1980’s, or 6 years in the Guard or Reserves, or the surviving (un-remarried) spouse of service member who died on active duty or due to a service related disability. Of course these requirements assume an honorable discharge, but disability or hardship discharges are also acceptable. Just because you don’t fit these categories doesn’t mean you aren’t eligible either. There are other categories of acceptability, like cadets of Coast Guard , Military or Air Force Academies, midshipman from the Naval Academy , or officers from the National Oceanic and Atmospheric Administration. I admit I had to look that one up…try Googling NOAA. The complete list of eligibility is hard to find.

Once you think you meet the eligibility requirements you need to get an eligibility certificate. The easiest way is to let your lender file for it electronically, but this only works for those who are in the VA records system. Basically, you have to file VA form 26-1880 with proof of service and mail it to the eligibility center in North Carolina. Unless you are the surviving spouse, then use form 26-1817. I couldn’t find a separate form for the special categories, but you might have to call the VA Loan Eligibility Center at 1-888-244-6711 for more information.

Don’t be overwhelmed; if you have a good loan officer they’ll make it easy. It’s his or her job to know all this, not yours. Next time: Reusing VA eligibility, Can I obtain another VA loan?

Resources: http://www.homeloans.va.gov