Expert Guide To VA Mortgages In Pennsylvania

You worked hard and sacrificed to serve your country; in return, your military service entitled you to many benefits. One of the most important benefits that you earned was eligibility for a Veterans Administration, or VA mortgage. You should look into this benefit if you are considering buying a home in State College – or any other town in Pennsylvania. 

We sat down to discuss VA loans with State College mortgage broker D. Shane Whitteker. He’s the owner and chief broker at State College mortgage brokerage Principle Home Mortgage. 
 

What is a VA Mortgage? 
The VA mortgage program provides several favorable mortgage terms to eligible veterans such as no down payments, prepayment penalties or mortgage insurance. In addition, you could also save money on closing costs. You should know that the VA itself does not provide mortgage loans; this program provides you with favorable loan terms by guaranteeing your mortgage loan issued by a bank or mortgage company.  
 
“The Department of Veterans Affairs (VA) offers veterans an option to obtain a VA mortgage insurance program so to speak,” Whitteker explains. “The VA doesn’t actually lend the money but they give the lender a guarantee which is similar to mortgage insurance. This allows the lender to offer very aggressive terms that would typically be prohibitive based on risk assessment.” 
 
The best feature of VA mortgage, especially for first-time homebuyers, is the option to make no down payment. Most conventional mortgages require buyers to put down a substantial down payment. This requirement can be a major problem for many potential buyers. 
 
The biggest misconception about VA mortgages is that they are a one-time benefit, which is simply not true. You can use your VA mortgage entitlement multiple times as long as pay down the financed loan down before taking out another mortgage. For example, if you purchased your first home with a VA mortgage, you can use it again when you sell and move up to a larger home, providing that you pay off the original loan. 
 

Who is Eligible for VA Mortgage? 

According to Whitteker, the first step is to be serving in the military – or to have been honorably discharged from the military in the past.  

“You must be a veteran to start,” Whitteker says. “You must be currently serving in the military, national guard, reserves, or have been honorably discharged. There are requirements for term of service or deployment based on whether the veteran was in the army, navy, air force, coastguard compared to national guard or reserves.” 
 
The eligibility rules for VA mortgages are complex, but as a general rule, you are eligible if you served 90 days active duty during wartime, served 181 days active duty in peacetime, 6 years of service in the reserves or National Guard, or 4 years in the Army, Navy, Airforce, or Coast Guard.  If you served before September 1980, the service requirements may be less.  In general a dishonorable discharge will exclude a veteran from qualifying for a VA mortgage. 

According to Whitteker, the guidelines for getting a VA mortgage if you’re in the National Guard are a little different from the regular VA rules. 

“Yes, National Guard members are eligible for a VA mortgage loan, but the requirements are different than they are if you were a regularly enlisted person in any of the branches,” Whitteker says. “Give our office a call to discuss your specific situation.” 
 
If you are a veteran that does not meet any of these time requirements, you may still be eligible if you were discharged for medical reasons or due to no fault of your own such as a reduction-in-force or hardship. You may also be eligible as a surviving spouse of a deceased veteran. Your eligibility may be based upon the veteran's death due to a service-connected disability. 
 

What is a Certificate of Eligibility (COE) and How Do I Get One?  
A COE is an official government document issued by the VA that certifies that you have met the service requirements and are eligible for VA mortgage benefits. You need to have a COE to apply for a VA mortgage. If you don't have a copy of your COE, you can get one either by asking your lender or requesting it directly from the VA. 
 

Can I Use My VA Mortgage for Refinancing or Renovations? 
Another attractive feature of VA mortgages is the ability to refinance your existing mortgage. There are two options available - cash-out and streamlining. 

“Using a VA mortgage to refinance a home is an option and a good option for many veterans,” Whitteker says.  

Using a VA loan to renovate a home is less common. Certain lenders do offer this but it is not common. This option is also quite limited,” Whitteker says. “Typically no structural work is allowed to be done which limits the viability of this mortgage option.” 
 
The cash-out refinancing option provides you a larger loan so you can access your equity. Cash-out refinancing can provide the funds you need to pay off debt or make improvements to your home. 
 
If you are looking to reduce your interest rate, the IRRRL option may be right for you. The interest rate reduction refinance loan allows you to either get a lower rate on your fixed-rate loan or convert your adjustable-rate mortgage to a fixed rate. 
 

If you’re in Williamsport and considering getting a VA mortgage loan, contact the experts at Principle Home Mortgage at (814) 308-0959. They specialize in Williamsport mortgages and helping their clients through every step of the home buying process.