As Memorial Day weekend has come and gone, we want to continue to thank those who have sacrificed for the freedoms we enjoy. “As we express our gratitude, we must never forget that the highest appreciation is not to utter the words, but to live by them.“ – John F. Kennedy
One of the benefits of your service is a VA loan. The VA loan has many advantages for the eligible veteran, usually resulting in the lowest possible payment and smallest amount of cash out of pocket.
In order to be eligible, you must have a valid certificate of eligibility (COE). If you don’t have a copy of this most lenders can obtain this easily online, through the VA automated service. The VA doesn’t set a minimum credit score, but most lenders require a score of 620 or higher and require that the housing payment not exceed 41% debt to income ratio. The VA loan is a government backed loan and because of that the lending criteria may be less stringent than that of a conventional loan.
ADVANTAGES· 0 DOWN· No mortgage insurance· Reduced interest rates, usually lower than either FHA or conventional· Seller can pay up to 4% seller assisted closing costs as opposed to 3% for a conventional loan.· Slightly lower closing costs, since there are fees that the buyer cannot pay.· Money for energy improvements up to 6,000.00 can be added into the loan.· Since it is a guaranteed loan lender often have more relaxed criteria for the buyer.· If the veteran is disabled, there are 3 different grants that can be applied for to make necessary modifications to a home.· If rates go lower, a streamline refinance can usually be done for .5% of the new loan amount.
DISADVANTAGES· Can be used only for a primary residence not for an investment property or lake home.· VA funding fee is an upfront cost. It can be rolled into the mortgage but ranges from 0-3.3% of the loan amount.· Home needs to be livable, so it does not work for a home needing a lot of repairs.
If you meet the eligibility requirements, it is a phenomenal program to keep your out of pocket expenses and monthly payment as low as possible.