As we approach Memorial Day weekend, we want to thank those who have sacrificed for the freedoms we enjoy. In real estate, we do so by helping our vets get into great homes with great programs that are available ONLY to vets!
The VA loan, or Veterans’ Affairs loan, has many advantages for the eligible veteran, usually resulting in the lowest possible monthly payment and smallest amount of cash needed. In order to be eligible, you must have a valid certificate of eligibility (COE). If you don’t have a copy of this, don’t worry! Most lenders are able to easily obtain this online, via the VA automated service. As for a credit score, there is technically no minimum! However, most lenders DO require a score of 620 or higher and require that the housing payment does 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
Guess how much you need for a down payment? As little as $0! You are freed from paying mortgage insurance (which can be $100-200 per MONTH!). VA has reduced interest rates, yes even now! The seller is allowed to pay 4% of closing costs as opposed to the usual 3%. You save on a few closing costs AND you are allowed up to $6,000 to be added onto your loan for “energy improvements”. Also, if the veteran is disabled, there are 3 additional grants that they can apply to make necessary modifications to the home. Lastly, if rates drop even more, a streamline refinance can generally be done for .5% of the new loan amount.
DISADVANTAGES
The good news is, there aren’t many! This loan can be used ONLY for your primary residence, it cannot be used for the purchase of an investment home or a second “lake home”. There is VA funding fee that is an upfront cost. It can be negotiated whether it is paid for by the sellers or buyers, but if it is the buyers, it can be rolled into the mortgage but ranges from 0-3.3% of the loan amount. Lastly, the 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. We’ve helped many vets get into homes using these programs, can we help you too?
How do you honor our vets?
Real Estate | Your@HomeTeam 