U.S. military servicepersons may be quite familiar with the benefits available to them through the VA loan program, but in celebration of Veterans Day, here are a few important advantages loanDepot VA loans offer worth reviewing:
• VA loans are guaranteed by the U.S. Department of Veterans Affairs – This enables lenders to provide more favorable terms.
• VA purchase loans come with a low or even no down payment options – A veteran can take advantage of his or her VA benefit immediately without the delay of sometimes years it can take to save up large down payment.
• The programs offer flexible qualifying guidelines and attractive interest rates – Qualifying servicepersons can be assured they are getting the best possible terms available, which can save potentially thousands of dollars over the life of the loan.
• The borrower never has to pay monthly mortgage insurance (PMI) –There are many factors that go into calculating PMI, but usually it is between 0.3 and 1.2 percent of the total loan amount, per year. That can add a significant amount to a monthly mortgage payment if a borrower puts down less 20 percent on their loan.
Beyond those basics, there is still a lot more to know – and love – about VA loans.
Here are six more reasons to love VA loans:
VA loans are not just for vets
Active-duty and honorably discharged military service members can be eligible for a VA loan. But they aren't the only ones. Others who may qualify include:
• Surviving spouses of vets who died while on active duty or from a service-related disability.
• Reserves and National Guard members
• U.S. Military, Air Force or Coast Guard Academy cadets
• U.S. Naval Academy midshipmen
• National Oceanic & Atmospheric Administration officers
VA loans are not just for single-family residences
A VA loan can be used to purchase a single-family house. But that's not the only property type that can be purchased by a VA loans. Other options include condominiums and multifamily properties with two, three or four units, only one of which must meet the owner-occupancy requirement. Both resale and new construction homes are allowed, so you can buy directly from a builder with a VA loan.
A VA loan can be used to purchase a single-family house. But that's not the only property type that can be purchased by a VA loans. Other options include condominiums and multifamily properties with two, three or four units, only one of which must meet the owner-occupancy requirement. Both resale and new construction homes are allowed, so you can buy directly from a builder with a VA loan. Manufactured homes, which were previously not eligible, are now allowed.
They are not just for one-time use
Once the VA loan benefit is used to purchase a home, it gives the veteran the ability to use the program to refinance their current VA loan – on the same house. However, the veteran can get that VA loan benefit restored to purchase another home if the current property has been paid in full and the VA loan has been paid in full, or another qualified veteran (buyer) assumes the outstanding balance on the loan and agrees to substitute his or her own VA loan benefit. For additional information regarding this process, please contact one of our licensed lending officers.
VA loans are great for refinances
A VA loan can be a purchase-money loan. But it can also be used to refinance. The VA Interest Rate Reduction Refinance Loan (IRRRL), also called a streamline refinance, doesn't require an appraisal. Relevance or benefit to borrower? If you have enough equity, you might be able to take cash out. If you don't have enough equity, you can still complete a full doc refinance to lower your monthly payments up to 100 percent of your home’s value. The VA never charges a prepayment penalty to pay off or refinance a VA loan.
You’re not limited to one home
You can't use a VA loan to buy a property you don't intend to occupy as your primary residence. But you can pay off your existing VA loan or refinance into a non-VA loan, and then buy another primary home with your VA benefit once restored. You can keep your other home for another use such as vacation or rental property.
Not just good, but better
For a veteran or service member, a VA loan is often a better option than a conventional mortgage or an FHA loan, (FHA loans are insured by the Federal Housing Administration). The VA loan program allows zero or low minimum down payment and you might get a lower rate. Not all lenders are VA-approved so make sure to find one that is and ask about all the options available to you.
To make sure you’re getting the most of the benefit you’ve earned through your service, click here to get the latest on loanDepot’s VA loan programs. Or call for more information.
Republished Nov. 8, 2017