A Comprehensive Guide To Securing VA Loans For US War Veterans
US Mortgage Corporation (NMLS ID#3901). Corporate Office is located at 201 Old Country Road, Suite 140, Melville, NY 11747; 631-580-2600 or (800) 562-6715 (LOANS15). Licensed Mortgage Banker-NYS Department of Financial Services- AK, AL, AR, CA, CO, CT, DC, DE, FL, GA, IA, ID, IL, IN, KS, KY, LA, MA, MD, ME, MI, MN, MS, MT, NC, ND, NE, NH, NJ, NM, OH, OK, OR, PA, RI, SC, SD, TN, TX, VA, VT, WA, WI, WV, WY State Banking Departments/Regulators. Rates, fees and program guidelines are subject to change without notice. Certain restrictions may apply. Some loans arranged through third parties. First mortgages only. Not all products and/or programs are available in all states.
Table Of Contents What Is A VA Loan?... Page 01 Qualifications And Eligibility For A VA Loan - FAQs... Page 03 The Appraisal Process Of VA Loans... Page 05 How Can You Benefit With VA Loans?... Page 07 Where Can You Use A VA Loan?... Page 09 VA Loans - Interest Rates, Pertinent Stats And Costs... Page 11
What Is A VA Loan? VA loans are mortgage programs created to help military veterans secure a home with easier lending. This program was established by the US Department of Veteran Affairs in 1944 for returning military personnel and has helped over eighteen million veterans since then. The VA Loan Guarantee Program allows veterans to seek loans for homes, businesses and farms by several leading financial institutions. Until the year 1992, VA loans were offered to active duty veterans serving during specific time frames. However, the program was later extended to reservists, national guards and other such personnel serving honorably for six years or longer. It is interesting to note that the Department of Veteran Affairs is not responsible for VA loans directly. Instead, it simply establishes the rules and dictates terms of lending for qualified lenders. This means that the eligibility of the borrower is established by the lender and not the US federal government. The DVA is also responsible for insuring all loans by default, creating a more secure platform for lenders. To help veterans realize their dream of home ownership, VA loans are offered with 100% financing on your home s value. VA loans are designed for long term home ownership for US veterans and their surviving families. When private financing does not offer the best choices for military veterans, VA loans allows them to purchase homes with zero down payments. Owing to their purpose, VA loans are one of the most flexible lending options in the US market today, with competitive lending rates and versatile payment options. 01 www.usmortgage.com
Over 18 million Veterans Helped Since 1944 www.usmortgage.com 02
03 www.usmortgage.com Qualifications & Eligibility For a VA Loan - FAQs
VA loans are flexible, powerful and convenient after receiving approval. However, it is this convenience that makes the selection process stricter and more stringent. If you are hoping for a VA loan to finance your new home, following a few established steps can help increase your chances. The first step to getting a VA loan is filing for the Certificate of Eligibility. How Do I Apply For The Certificate Of Eligibility? Veterans can apply for the eligibility certificate by filling up the VA Form 26-1880 as provided by the US federal government. This form is easily available for download online at the VA government website. After filling out the form, you should present the form to the VA Eligibility Center. Ensure that you carry all essential military documents when handing over the form to speed up the processing time for your form. If you do not have the necessary documents with you, seek help from the DVA to help establish your service with the armed forces. Alternatively, you can go through your lender to determine your eligibility for a VA loan. Keep in mind that you need all military service documents to receive the loan. Potential lenders can access your Certificate of Eligibility online to process your request faster and determine whether or not you are eligible for a VA loan. It is important to remember that on occasion, it is also possible that the DVA may or may not pass your request through the lender. What Qualifications Do I Need For Approval? All active duty veterans serving the United States Armed Forces post World War II are eligible for the benefits offered by the VA loan. However, it is important that they completed their term with an honorable discharge. Active duty veterans and those serving during wars should have a minimum involvement of ninety days on record. Veterans serving during peacetime should have at least 180 days of active duty, including military personnel. personnel should have completed at least six years with honorable discharge to become eligible for VA loans. Spouses of deceased personnel killed on duty are also eligible for the VA loan. What Requirements Should I Fulfill For A VA loan? One of the most important documents you should obtain for VA loan approval is a valid eligibility certificate to prove your qualification. Apart from the certificate and necessary military documents, you should have a valid reason for the loan i.e. a house, condominium or townhouse. If you are not securing a loan for home ownership, you should have a government approved reason. When applying for the loan, you should have an intention of occupying the home within a specified time period. Additionally, a satisfactory credit score and steady income are prerequisite to pay back the monthly mortgage. Can I Apply For A Second VA Loan? If you have already taken a VA loan before, you may be eligible for a second one. To become eligible for a second VA loan, you should have already repaid the original loan amount by selling your home. Other instances include paying back the loan amount in full including interest while retaining your home. Alternatively, you can secure a second loan if another veteran assumes your loan or transfers the entitlement to you. In the past few years, an increase in entitlement amounts has increased chances of second loans. Service veterans enlisting after 1980 and officers serving after 1981 should complete at least two years in the Armed Forces to become eligible for VA loans. Additionally, National Guard and Selected Reserve www.usmortgage.com 04
The Appraisal Process of VA Loans 1. After you have received the Certificate of Eligibility, your application is given a VA case number. This number is used to locate your application and can be used by lenders to determine information like personal data, property verification, income documentation, employment records and other assets. 2. A lender then cross checks your application data for discrepancies, inaccuracies or typing mistakes. If any inaccuracies have been traced, you will be contacted for verification. 3. After considering the VA loan application, the eligibility of the borrower is determined. Before seeking approval, the lender verifies your veteran status, the size of the family, qualified income, and loan delinquencies if any. After these details are confirmed by the lender and the eligibility is determined, they are sent to the underwriter. 4. The mortgage application is then sent to the Loan Prospector system for assessment where essential data is transferred to preapproval screenings. If any data is found missing or incorrect, you are again contacted by the lender. 5. Your application is then reviewed with merged credit reports, documentation checklists and a full feedback certificate. 6. If your application is pre-approved, it is then sent to the underwriter for paperwork, verification and final approval. 05 www.usmortgage.com
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How Can You Benefit With VA Loans? 07 www.usmortgage.com
With rare loan programs offering similar lending options, the VA loan guarantee scheme is a great opportunity for war veterans wanting to purchase a home. It is a known fact that a majority of VA loan applicants would not qualify for a conventional home loan. Generally, VA loans boast flexible underwriting standards as well as requirements in comparison to conventional home loans. Needless to say, one of the biggest benefits of securing a VA loan is obtaining the ability to purchase a home with no down payment. VA loans have no PMI (private mortgage insurance). Veterans can save this monthly expense that is otherwise levied on all borrowers of conventional loans. This expense is waived off only when applicants pay at least 20% of the original loan amount as down payment. VA loans boast competitive interest, with rates significantly lower than conventional loan interests. VA loans have streamlined refinancing, requiring no extra underwriting. These loans have no attached prepayment penalties while allowing higher debt to income ratio for applicants. VA loans allow sellers to pay up to 6% of concessions and closing costs. While the eligibility requirements make loan securing easier for war veterans, few have reaped the benefits of the scheme. With over 25 million military personnel eligible for the VA loan guarantee program, significantly low percentages have taken advantage of the offer. The main reason behind low turnout is unawareness and misinformation, with one out of five veterans completely ignorant of VA loans. A significant section of the veterans also believed that they were not eligible for the loan as they did not know about the procedure in detail. www.usmortgage.com 08
Where Can You Use a VA Loan? While VA loans are generally offered to help war veterans purchase homes, they can be used for slightly different purposes. So far, these loans have been commonly used for purchasing single homes and buildings. However, some veterans have also opted for VA loans to improve current living situation and to save money on a monthly basis through refinancing. 09 www.usmortgage.com
VA loans can be used for various reasons as shown in the following list: Refinancing to withdraw cash Refinancing existing direct loans or VA loans to bring down present interest rates Despite its varied applications, it is important to note that VA loans cannot be used to purchase property for investment. The VA loan guarantee program is mainly aimed at helping veterans become homeowners and not entrepreneurs or landlords. Purchase and renovate a home simultaneously Renovate, repair, improve or alter existing home owned by the applicant Perform energy efficient renovations through the energy efficient mortgage in collaboration with a VA loan Purchase modular or pre-manufactured homes Purchase farm residences that are to be occupied and owned by the applicant Purchase residential units in VA approved condo developments www.usmortgage.com 10
11 www.usmortgage.com VA Loans - Interest Rates, Pertinent Stats And Costs
If you are considering securing a VA loan to purchase or improvise your home, you will have to consider several figures before making a decision. Details like lending limits, interest rates, and other pertinent costs should be considered when applying for a VA loan. Funding Fee The funding fee for a VA loan differs with regular military personnel, National Guards and members of the Reserves. This fee helps cover costs for the VA loan guarantee program and is levied on all veterans applying for the loan. Regular Military Personnel National Guard and Reserves No down payment 5% or higher 10% or higher 2.15% 1.50% 1.25% 2.40% 1.75% 1.50% VA Lending Limit While many believe that VA loans have a specific limit, the truth is that there is no real limit. The maximum amount approved by the lender depends greatly on your personal finances, credit and other factors. If you are a qualified applicant, you can take loans up to $417,000 without down payment. In more expensive counties around the United States, these loan limits can be extended up to $625,000 and higher. If you are looking for cash-out refinancing loans, military personnel are required to pay a funding fee of 2.15% while National Guard and Reserves personnel pay 2.4%. www.usmortgage.com 12
Corporate Office 201 Old Country Road, Suite 140 Melville, NY 11747 On US: 800-Loans-15 Info@USMortgage.com www.usmortgage.com 1994 2014