If you’re a veteran and you don’t know about VA home loans, don’t be surprised. Despite being one of the best benefits available to veterans, only 6% of qualified veterans have used a VA home loan in the past six years. Many veterans worry that they don’t qualify for the benefit or worry about long, arduous application processes because they don’t know very much about it, but that can be easily remedied! If you, a friend, or a family member are a veteran looking to buy a new home, here’s what you need to know about VA home loans and how you can qualify.
Eligibility for the VA home loan depends on length of service, as well as how long ago you served. Veterans who served as long as 50 years ago may still qualify for the loan, however, so don’t feel too worried if you or someone you know served in the Vietnam War and is interested in a VA loan. To determine eligibility, the veteran must first obtain a DD Form 214; once they have acquired that document, they should find a VA-approved lender who can request their Certificate of Eligibility, or they may request it directly from the VA eBenefits website.
Additionally, VA loans don’t deny borrowers with low credit scores, and bankruptcies and foreclosures do not disqualify you from obtaining a VA loan. Of course, if you do have a low credit score, you should first consult with a VA member or VA-approved lender before requesting the loan to ensure that it won’t further hurt your creditworthiness.
2. Why It’s Great
Unlike most loans, the VA home loan requires no down payment whatsoever. Most loans require at least 3-5% down payment, which can mean more than $5000 up-front on a $150,000 loan. With the VA home loan, however, you can buy right away instead of saving for that down payment. Even better, with the VA home loan, you don’t have to worry about steep mortgage insurance prices; in fact, you aren’t required to purchase private mortgage insurance at all, so you can afford to buy a more expensive house without raising your monthly payments.
3. Your Benefit Never Expires
Let’s say you do get the VA loan and purchase the house of your dreams, but ten years later, that house isn’t a dream anymore. Maybe you’ve had children, or you need to move for a new job, or you’ve decided to take a much-deserved retirement to California or Florida—whatever the reason, if you’re looking for a new house, your original VA loan benefit has not expired, provided you’ve paid off the original loan completely. Once the VA loan is paid back in full, your entitlement is restored and you can re-use the benefit to purchase your new home. Alternatively, you can apply for a one-time restoration (after paying off the original loan), keep your original home, and buy the new home.
4. Surviving Spouses May Be Eligible
If you’re deploying soon or worried for health reasons, or simply a cautious person, you can be rest assured that your VA loan won’t expire in the case of death and leave your family with more expenses and less options. In 2015, over 2000 surviving spouses purchased a home with their fallen partner’s VA loan benefits. However, only un-remarried husbands and wives may be eligible for the benefit; that requirement being met, they can purchase a home with zero down-payment and without purchasing private mortgage insurance. Of course, this alone cannot make up for the loss of a loved one, but it may help in the grieving process.
5. Lower Loan Rates, and Better Refinancing
VA loan rates tend to be about 0.25% lower than typical loans, and the VA backs mortgages, which makes them a lower risk for lenders and more friendly towards borrowers with low credit. Even better, VA loans have some of the lowest foreclosure rates available, so veterans have more affordable payments and lower risk when applying.
The VA loan is also versatile—you can use it to purchase a home, of course, but it can also be used to refinance an existing mortgage, whether or not that mortgage is a VA loan itself. With a VA loan, veterans reduce their payments and rates with an Interest Rate Reduction Refinancing Loan, which streamlines refinancing and gives veterans easier access to low refinancing rates. And even if you have not qualified for a VA loan, you can probably qualify for a VA refinance.
If you are a veteran, or know a veteran wanting to buy or refinance a home, definitely look into the VA loan program. It offers amazing benefits, and said benefits are well-deserved for the brave men and women who have served this country. If you’re not sure how to get started, feel free to consult Prime Credit Advisors—we’re in touch with the VA and VA-approved lenders, and we can get you or your loved ones on the road to a better, more financially secure future! We even offer a 20% discount to all veterans as a thank you for your service to our country!