5 Things You Might Not Know About VA Loans
VA loans becoming more and more popular as market changes have brought to light the features of this loan that make it so incredible.
It’s not that VA loans have not been used in the past, they are being used. Before the mortgage meltdown, lenders used higher paying methods for reaching 100% financing, that were not in the Veteran’s best interest.
Now that the dust has settled, and mortgages are what they are today, the VA loan stands out as a clear winner and the obvious choice for anyone that is eligible to take advantage this benefit.
Who’s Eligible for a VA Loan?
A Veteran is eligible for VA loan benefits if he or she served on active duty in the Army, Navy, Air Force, Marine Corps, or Coast Guard after September 15, 1940, and was discharged under conditions other than dishonorable after either:
- 90 days or more, any part of which occurred during wartime, or
- 181 continuous days or more (peacetime).
2-year Requirement: A greater length of service is required for veterans who:
- enlisted (and service began) after September 7, 1980,
- or entered service as an officer after October 16, 1981.
These veterans must have completed either: 24 continuous months of active duty, or the full period for which called or ordered to active duty, but not less than 90 days (any part during wartime) or 181 continuous days (peacetime).
If you are uncertain about your eligibility, we can do the research for you and determine if you qualify for a VA guaranteed home loan.
Well Known VA Benefits
There are a number of benefits that most people know about when qualifying for a VA loan. The 2 most popular and well known benefits include:
- 100% Financing, No Money Down up to County Loan Limit
- No Monthly Mortgage Insurance
Unfortunately, many real estate professionals have an unfavorable bias toward buyers using a VA home loan due to bad experiences in the past, slower turn times due to inexperienced lenders, and tighter underwriting guidelines, which no longer exist.
Even though it is well known that VA home loans are valuable and beneficial to America’s military, the negative perception of VA financing by Real Estate Agents is also well known.
5 Things About VA Loans You Might Not Know
It always comes down to the details that separate the professionals from those that do not have the resources, or experience to provide the highest level of accuracy, efficiency and information about your VA home loan benefit.
1. Shorter Waiting Period after Bankruptcy, Foreclosure or Short Sale
VA loans require a much shorter waiting period of 2 years after a Bankruptcy, Foreclosure, Short Sale or deed in lieu of foreclosure.
I have seen even shorter waiting periods in situations where the Veteran had circumstances happen outside their control.
VA is very flexible, and tends to listen to special circumstances, and side with the Veteran if extenuating circumstances can be detailed and documented, and make sense.
2. VA Loan Amounts are Higher than FHA limits in many California Counties
The maximum loan limit in Orange and Los Angeles Counties is $687,500. This exceed even high balance financing offered by FHA and Conventional.
An eligible Veteran in San Francisco, Contra Costa, Alameda, Marin or San Mateo can purchase up to $1,050,500 with no down payment, and very little closing costs comparatively.
3. You can use your VA Home Benefit more than once
If you have used your VA Home Benefit in the past, and paid off the loan, your entitlement may be completely restored so that you can use it again.
In some cases, the one time VA Funding Fee is higher for subsequent use. If you contribute as little as 5% down payment on a VA Home loan, your subsequent use Funding Fee is cut by 54%!
4. Funding Fee is Waived with Service Related Disability
VA loans do not require mortgage insurance if your loan is greater than 80% of the value of the home. In lieu of mortgage insurance, VA requires that the Veteran pays a Funding Fee that can be financed into the loan.
If you have a service related injury, you may be exempt from paying the VA Funding Fee.
This not only saves you money when purchasing the home, it reduces your monthly loan payments because your loan was not increased to finance the Funding Fee.
5. Reduce Interest Rate if payments are made on-time
A Streamline Refinance is a special feature available with FHA and VA loans that do not require all of the paperwork, cost, and verifications of a typical refinance.
If interest rates have gone down, and you have made all of your payments on your VA loan on-time for at least 12 months, you can reduce your rate without an appraisal, very little paperwork, and significantly reduced cost.
Ask an Expert
VA loans can be approved using automated underwriting. Unlike Conventional loans, VA loans can also be manually underwritten if you are unable to get an automated approval.
This is a topic that I am very passionate about. There are simply too many inexperienced or lazy loan officers out there that do not know how, or are unwilling to fight for a loan approval.
We are here to help. If you have any questions about qualifying for a VA loan, ask here first! Especially if it seems like there might be some challenges.
Ask a question or leave a comment below and I’ll get back to you quickly!