What do you know about the VA loan program? In 1994, the US Department of Veterans came up with a way to help service members, veterans and their families own a home through the VA loans program which we shall be discussing in this post. If you are eligible for the VA loan, you have a chance to get a government-backed mortgage loan without any down payment.
The VA does not lend money with VA loans, what it does is offer you a guarantee. You borrow money from a private VA mortgage lender and the government guarantees to pay part of your mortgage. If you default on the loan, the government will pay the lender back.
However, it can be used to buy a home, refinance a mortgage, or make energy-efficient changes to your home, however, the loan can only be used to buy your primary residence, the program does not cover investment or vacation properties. The program is such that you don’t necessarily have to be a first-time homebuyer to use the loan, you can use it multiple times given that it is a lifetime benefit.
What is a VA Loan Home?
The term “VA Loan Home” might be used to emphasize the focus of the VA loan program on helping eligible individuals purchase homes. It’s a way of specifying that the loan is primarily for the purpose of buying a residential property.
However, the key features and eligibility criteria remain the same, regardless of whether you refer to it as a “VA Loan” or a “VA Loan Home.” The specific use of the term may vary depending on how it’s presented in documentation, advertisements, or discussions related to home financing.
How It Works
A VA loan, designed to assist veterans, active-duty service members, and certain eligible individuals in buying or refinancing homes, operates through a unique system. In this process, eligible applicants begin by contacting a VA-approved lender to initiate their loan application. Verification of eligibility is crucial, which is done by obtaining a Certificate of Eligibility, either with the lender’s assistance or independently.
Subsequently, applicants complete the VA loan application, providing essential financial documents such as W-2s and tax returns. Once under contract for a home, the process typically takes 30 to 45 days, although timelines can vary.
Importantly, applying doesn’t commit applicants to a specific lender or compel them to proceed with the home purchase, offering flexibility in the early stages of the process.
What Is VA Loan Rate?
The VA loan rate, also known as the interest rate on a VA loan, can vary depending on several factors, including the current market conditions, the lender you choose, and your individual financial profile.
Current VA Loan Rate
The rates are set by private lenders, such as mortgage companies and banks. However, the VA department does not set the rate but backs a portion of each loan against default.
The rate of the loan changes daily based on market conditions. However, below are the current rates to check out:
|VA Loan Type||Interest Rate||APR||Points|
|30-Year Fixed VA Purchase||6.375%||6.791%||1.2500 ($3687.50)|
|20-Year Fixed VA Purchase||6.375%||6.924%||1.2500 ($3687.50)|
|30-Year Fixed VA Jumbo Purchase||7.375%||7.817%||1.2500 ($9375.00)|
|30-Year VA Cash-Out Refinance||7.500%||7.858%||0.3750 ($1106.25)|
|30-Year VA Cash-Out Jumbo Refinance|
(Based on a $750,000 loan amount)
|30-Year Streamline (IRRRL) Refinance||7.500%||7.729%||0.7500 ($2212.50)|
|30-Year Streamline (IRRRL) Jumbo Refinance|
(Based on a $750,000 loan amount)
However, there are factors that influence VA loan rates, they include credit score, loan type (purchase, IRRRL, cash-out, jumbo, etc.), Loan duration (15- or 30-year), and current market conditions.
20203 Requirements/Eligibility Of VA Loan
The requirements for obtaining a VA (Veterans Affairs) home loan can vary depending on the specific loan program and the lender you choose. However, there are some general requirements that applicants typically need to meet to qualify. These requirements are set by the Department of Veterans Affairs. Here are the key requirements:
- Served 90 days in a row during wartime.
- Served 181 days during peacetime.
- Did 6 years in National Guard or Reserves, or served 90 days (with 30 days in a row) under Title 32 orders.
- Be the spouse of a service member who died during service or due to a service-related disability.
- 6 years in the reserves or National Guard.
Veterans and surviving spouses of veterans who have remarried are not eligible for VA loans. Individuals who served with any of the following organizations can also apply:
- Cadets at the U.S. military, Air Force, or Coast Guard academies
- Midshipmen at the U.S. Naval Academy
- Merchant seamen with World War II service
- S. Public Health Service officers
- Officers of the National Oceanic and Atmospheric Administration
The VA loan is made available to active duty service members, veterans current and retired members of the national guard or reserve, and the surviving spouses of members that died in action.
How to Apply for VA Loans
Veterans and service members don’t need to confirm their eligibility for a VA loan upfront. The first crucial step is getting preapproved for the loan, which will help determine if you qualify.
The process typically takes around 30 to 45 days after you’ve entered into a contract to buy a home. However, the exact timeline can vary based on individual circumstances. It’s important to note that applying for a VA loan doesn’t commit you to a specific lender or force you to proceed with buying a home.
Here are the three main steps to applying:
- Contact a VA Lender: Start your application by reaching out to a VA lender either online, over the phone, or in person.
- Website to apply: https://www.veteransunited.com/
- Verify Your VA Loan Eligibility: Obtain your Certificate of Eligibility, either through your lender’s assistance or on your own.
- Complete Application: Finalize your loan application and submit all the required documents to your lender, including items like W-2s, tax returns, and additional financial information.
Via Loan Benefits
- No Down Payment: However, it often requires no down payment, making homeownership more accessible.
- Competitive Interest Rates: It typically offers competitive interest rates, potentially saving borrowers money over the life of the loan.
- No Private Mortgage Insurance (PMI): It do not require PMI, reducing monthly mortgage costs.
- Flexible Credit Requirements: It have more lenient credit score requirements compared to conventional loans.
- Limited Closing Costs: The VA limits certain closing costs, helping reduce the financial burden on borrowers.
- Assistance for Disabled Veterans: Disabled veterans may qualify for additional benefits, such as funding for home modifications.
- Streamlined Refinancing: VA offers streamlined refinancing options, making it easier to refinance existing VA loans.
- Portable Loan: it can be used to buy a primary residence, even if you move to a new location.
The Best VA Plan
When applying, you should choose the best VA plan and go for the best mortgage lenders, When considering this, look out for the following:
- Customer service
- Interest rates
- Product offerings
- Eligibility requirements
- Closing costs
With these five factors, you are on your way to choosing the best VA plan.
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