How VA Loans Can Help Veteran And Widow Homebuyers
The VA loan is a mortgage program for returning military service members, and is guaranteed by the U.S. federal government. It was originally created in 1944.
Because of tightening requirements among lenders, the VA loan has become an attractive option for military homebuyers, who may have trouble coming up with a down payment, or may not be able to meet strict credit requirements.
With a VA loan, you are not required to have a down payment or to purchase Private Mortgage Insurance. Interest rates tend to be competitive, and obtaining a VA loan is easier to obtain, because lenders assume less risk.
Here is an overview of how VA loans can help veteran and widow homebuyers.
Veterans, active-duty personnel, Reservists, National Guard members, and some surviving spouses can quality for a VA loan.
To be more precise, an applicant must meet one or more of the following requirements:
- You’ve served 90 consecutive days of active duty during wartime.
- You’ve served 181 days of active duty during peacetime.
- You have more than six years of service In the Reserves or National Guard.
- You are a widower of a service member who has died in the line of duty as result of a service-related disability.
Applicants are required to obtain a Certificate of Eligibility (or COE), which shows what your VA entitlement is. A Veterans United Loan Specialist can typically help you to get a hold of your COE within minutes.
Once you have your COE, you can apply for your VA home loan with any lender that participates in the program. In some cases, lenders can get your certificate on your behalf.
As already noted, the requirements for getting a VA home loan are not stringent.
Though homebuyers don’t need to reach a predetermined income threshold, they are expected to have a stable and reliable source of income to cover monthly expenses. This includes their mortgage payments.
Applicants are also expected to have excess left over on a monthly basis after major expenses have been paid. This amount is for covering everyday family needs, which may include food, gas, utilities, transportation, and other common expenses.
This residual income requirement reduces cases of foreclosures – which are rare with a VA loan – and also ensures that the borrower can meet their financial obligations and unexpected expenses on an ongoing basis.
It’s also important to know that private lenders may have additional criteria in terms of debt, income and credit scores. If you are going to be working with a private lender, make sure to keep this in mind.
Benefits Of A VA Loan
Here are several major advantages of a VA loan.
With a VA loan, you do not need to make a down payment, unless the lender requires it. In cases where the purchase price is more than the value of the property, you may need to come up with a down payment.
As already noted, there are no mortgage insurances premiums with a VA loan.
The interest rate on a VA home loan is competitive and negotiable.
Closing costs on homes are in-line with other financing types, and may even be lower.
These and other benefits make the VA loan an advantageous option, given the applicant’s eligibility.
Buying a home can be stressful and confusing. For service members or widowers who have lost their spouses in the line of duty, a VA loan streamlines and simplifies the process of buying a home. Moreover, the costs of home ownership are much more manageable compared to a traditional mortgage loan.
Is the VA loan right for you? Make sure to seek the advice of a qualified professional in determining what you needs are and how to proceed.