Veteran? A VA Loan Has Many Benefits

If you are an active military personnel or a veteran, you can take advantage of a VA home loan. This is a mortgage program that is guaranteed by the U.S Department of Veteran affairs but issued by private lenders that are approved by the department. The loan is also available military staff who work in the military but are not in active combat.

D. Shane Whitteker is the owner and chief broker at Principle Home Mortgage - Williamsport's mortgage broker. We sat down with him to discuss VA mortgage loans and why they’re a great home mortgage option for anyone who is eligible.

What sets a VA mortgage loan apart from other mortgage products?

Several things make a VA loan unique and better than the mortgage products offered by private lenders. Here are some of them.

• No down payment. You do not need a down payment for a VA mortgage loan. This effectively makes VA loans the cheapest mortgage products in the marketplace. Conventional mortgage loans generally require a 5 to 20 percent down payment.

• No mortgage insurance. The government guarantees VA mortgage loans. Instead of the private mortgage insurance necessary for conventional mortgage products, the government commits to pay a portion of the loan should you fail to pay your premiums, so VA mortgage loans require no monthly mortgage insurance.

• Few restrictions. VA loans do not charge an early exit fee or penalty in case you pay before the set period. Moreover, you are not restricted from selling your house before completion of the mortgage. You can also refinance your loan if you wish to.

• The VA loans have relaxed terms for the funding fee. This fee is an upfront cost based on the amount you wish to borrow and the size of the down payment. With VA loans, you can finance this amount with the loan that you receive and pay the amount as part of the loan. However, the fee is waived for veterans who are disabled or surviving spouses of deceased veterans.

• The loans can be assumed by the new homeowner in case you decided to sell the house before completing the loan repayment. However, the new homeowner must be eligible for a VA loan to assume the loan.

Who qualifies for a VA loan in Pennsylvania?

You must fulfill the conditions below to be eligible for VA mortgage loans.

• Accumulated 90 days of consecutive active duty service during wartime or over 180 days during peacetime.

• National Guard or reservist members who have served the service for at least six years.

• Surviving spouses of deceased service members who died in the line of duty. The spouse can’t be remarried.

• Veterans who were honorably discharged.

• Members of the U.S Naval Academy Midshipmen, U.S Public Health Service. Officers or Atmospheric and National Oceanic Administrative officers.

How do you apply for the loan?

There are three ways in which you can apply for your VA loan.

• You may use an approved VA lender.

• You can also fill a form on VA’seBenefitsportal.

• You can send the Form 26-1880 by mail.

You need to have a VA certificate of Eligibility (COE) before starting the process. The certificate shows the number of years you have been serving the military as well as your character at the service. Both of them should meet the minimum threshold for you to be eligible for a loan. The COE certificates are obtainable from the Veterans Administration. Be sure to fill the all the details in the loan application form and provide all the required documentation to prevent delays in loan processing.

Guidelines for first-time homebuyers

As said earlier, VA loans are offered by private lenders approved by the U.S Department of Veterans. As such, the government does not restrict such terms as the duration of pay and the amount you can take. Moreover, some lenders offer more flexible terms than others. It is advisable to shop around for the best rates. A Pennsylvania mortgage broker will be able to help you shop multiple lenders quickly and easily. Remember: you should only borrow what you can comfortably pay.

Before you start looking for a home, it is a good idea to get pre-qualified. Consult a local mortgage broker who will examine your application and determine how much you qualify for. They will pre-qualify you so you can start shopping. When you know the amount you qualify for, you can pick the house that matches your budget.

Credit score requirements

VA loans do not come with a minimum credit score. The government guarantees the loan, so VA mortgage loans benefit even the military personnel who have low FICO scores. However, lenders still impose some minimum credit requirements. Most lenders go with a FICO score of 620 as the minimum for loan approval. However, you can still get a loan with a score of 580.

In addition to the above, lenders may check if you have had any bankruptcies or foreclosures in the last 36 months. Others require you to have no more than one late payment in the year preceding the application.

Refinancing with a VA loan

You can take advantage of the low VA loan rates to free up some cash off your monthly mortgage premiums or get some cash against the equity in your home. VA loans offer two options for this purpose. You can choose the Interest Rate Reduction Refinance Loan option to save on the monthly premiums. On the other hand, you can go for cash-out refinance option to get some cash against your equity in the house.

As a veteran or military personnel, you can use the VA loans multiple times in the course of your life to purchase properties. There is no limitation to how many times you can take advantage of this program.

What are the prevailing VA loans rates?

The rates vary according to such factors as your debt-to-income ratio, your credit score, the current market conditions and the duration of the loan. The average APR rates for a 30-year fixed VA mortgage loans is about 4.76% while the 15-year fixed VA loan comes at an APR of about 4.46%. These rates vary from one lender to the other.

A VA mortgage loan offers several benefits to the homebuyers above and beyond those offered by conventional loans. Moreover, they are easier to qualify for and come with lower interest rates when compared to a conventional loan. If you are eligible for a VA loan and wish to purchase a home, refinance a loan, or buy a second home, give priority to VA loans over conventional loans.

Principle Home Mortgage is Williamsport's mortgage broker. They specialize in helping those eligible to shop for and secure a VA mortgage loan that’s right for them. Contact them to learn more.