Scott Storace - Branch Manager, 100 Pacifica Drive Ste. 140, Irvine CA 92618 NMLS #226339 949.973.0141

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  • Home Loans up to $3,000,000
  • Interest Rate Float Down Option
 

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Basics and Benefits of VA Home Loans

VA home loans have helped dozens of military families get into the home of their dreams

VA home loans have helped dozens of military families get into the home of their dreams

Orange County, CA – The VA Home Loan guaranty program has been around since the end of World War II. Though it’s been through many changes it remains a phenomenal mortgage option. The VA loan does not require a down payment. And you never have to pay mortgage insurance with a VA home loan. People borrowing a similar amount through a conventional home loan would be paying an additional premium every month. The VA home loan does not have a specific short sale policy. Therefore, if you’ve had a short sale it’s possible to buy again soon after the event. Debt to income ratio requirements are quite liberal as well. These are incredible benefits for anyone. And here in Orange County, the loan limits are quite generous.

Have you served in the military and sacrificed for the US flag and country? If so, you may be eligible for some fantastic home buying benefits. Amazingly, I have met many service members who have not taken advantage of the opportunity with their VA home loan eligibility.  VA home loans have some distinct features that make them advantageous to the select few who are eligible for them. If you’re not yet sure if you’re eligible you can get started by reading our previous post. Those who are eligible can expect these benefits of a VA home loan.

Lower Monthly Payment

One of the best benefits to a VA home loan is that there is no private mortgage insurance. Private mortgage insurance can add hundreds of dollars to a monthly payment. Eliminating the private mortgage insurance can lower your payment or increase the amount of home loan that you qualify for.

For instance, with a $1,500 monthly payment at today’s rates you could qualify for $260,000.00 with an FHA home loan. With a VA home loan you would save $247.00 each month on private mortgage insurance and qualify you for a $308,000.00 mortgage.

In addition, the interest rates on VA home loans are very competitive with conventional home loans. And in many they are better, regardless of your loan-to-value.

Put these 2 factors together and you have a great 1-2 combination to lower your monthly payment or buy your family more home for the same amount.

 

Lower Cash to Close with No Money Down

The VA home loan is one of the last programs left that offers no money down on a home purchase. Conventional home loans and FHA home loans have minimum down payment requirements that must be met. With less money down on those programs borrowers can expect to pay higher interest rates and have higher mortgage insurance premiums.

In addition, there are specific fees that the VA does not allow the service member to pay, such as the escrow fee, pest inspection fee, underwriting and processing fees. In some cases, this can add up to thousands of dollars. These non-allowable fees can be paid by other parties but are typically paid by the seller. They will be written into the purchase contract and paid at the close of escrow. This will reduce the cash that you’re required to come up with at closing.

If you’re still tight on funds and can’t afford the remaining expenses associated with the purchase then you can request to have them paid by the seller. A credit towards recurring and non-recurring closing costs is common, but must be included in your purchase offer. Currently the VA allows the seller to contribute up to 4% of the sales price.

Flexible lending standards

Getting your hands on a VA home loan is no different to getting any other loan – as long as you qualify. The VA loan is only for service members and their families. Therefore, not everyone is eligible. Not all service members will qualify either. The VA has specific criteria regarding time of service and discharge status. You have to go through a normal application process, get approved and go through closing and funding. You do have to jump through some hoops, but those are nearly the same as with other mortgage options.  The VA has lending standards that are more flexible than conventional loans. The debt to ratio requirements can be very flexible when approved by an automated underwriting system.

The credit requirements for credit score and derogatory credit are more flexible too.

So, the benefits of a VA home loan are numerous. If you have VA eligibility be sure to compare it to other lending options. Each borrower is different and therefore each scenario is different. However, the combination of these benefits makes the VA  home loan an excellent option for first time buyers and seasoned buyers alike.

You’ve served and sacrificed with honor and distinction. This benefit is here for you. It’s worth taking advantage of!

Please call or email if you have any questions about the benefits of VA home loans .

Scott Storace

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