Yes, it’s true that interest rates are up, and home inventories are down, but that doesn’t mean you should be among the many Veterans and active-duty servicemembers who shy away from taking advantage of their hard-earned and most powerful VA benefit – the VA Home Loan. Unfortunately, of the millions of Veterans and active-duty military personnel living in the US, only a small fraction buy homes using VA Loans.
There are many reasons why eligible servicemembers pass on their benefits. Sometimes people don’t venture toward the unknown because they’re unaware of what they’ll find. That’s where the power of knowledge comes into play. The more you know, the less apprehension you’ll have.
The following is a list of frequently asked questions about the VA Home Loan program that should not only help to familiarize you with the process but also make you forget about conventional home loans.
What are the main advantages of using a VA Home Loan?
There are three enormous advantages to VA Home Loans. First, unlike conventional or FHA loans, a VA Home Loan doesn’t require a down payment for Veterans and active-duty servicemembers with full entitlements – not a single dollar. Using a VA Loan means you don’t have to spend years saving money for a down payment before buying a home. When you find the home you want, it can be yours right away.
The second advantage that will save you money is that a VA Home Loan requires no mortgage insurance or PMI. Typically, for a conventional loan, a lender arranges PMI, which is often required when the borrower makes a down payment of less than 20% of the property’s purchase price. Depending on the down payment and the price of the home, PMI premiums can add several hundred dollars to your monthly mortgage. By eliminating PMI, your VA Home Loan benefit saves you money on the front end and packs more buying power.
The third advantage is that 30-year VA Loan rates are typically 0.25% to 0.42% lower than 30-year traditional loans.
These advantages spell out more affordable monthly mortgage payments for those using their VA Home Loan benefits.
Does my VA Home Loan benefit expire, and can I use it more than once?
Another major plus with the VA Loan is that when you’ve earned eligibility, the benefit doesn’t expire. So, let’s say you’ve been eligible for a VA Home Loan for 35 years but never used it. Don’t worry about it disappearing. As long as you’re eligible, you can use your VA Home Loan benefit as many times as you like. For example, you bought a home using your VA Loan, but you’d like to move to another part of town or a different area altogether. Simply sell your current home, pay off the loan, and then you can use your VA Home Loan benefit to purchase another property because your entitlement is now restored in full. As long as you pay off the VA Loan in full, you can begin the process all over again – as many times as you like.
Download your free VA Mortgage Guide.
Are you ready to take the first step towards homeownership? This comprehensive booklet is filled with expert advice and helpful tips to guide you through the VA Home Loan program and the homebuying process. From understanding your benefits to finding the right home, our guide covers it all. Don’t wait – click below to download your copy now and start your journey towards homeownership!
How do I know if I’m eligible for a VA Home Loan?
Checking on your eligibility is reasonably straightforward. If you’re not an active-duty servicemember, you’ll need to get your DD Form 214. Active-duty personnel will use VA Form 26-1880. With that in hand, you can have a VA-approved lender pull your Certificate of Eligibility (COE). Any of our experienced loan officers at Aligned Mortgage can help you with this. You can also get your COE online from the VA eBenefits website.
Can I use my VA Loan to buy a second home and keep my first home?
It’s true that the best way to build generational wealth is through real estate investing. And although the VA established the home loan benefit program to give a leg up to military members and allow them to purchase homes without down payments, VA Home Loans were never meant to buy rentals or vacation homes. That doesn’t mean there aren’t exceptions that can help you invest in your family’s future.
The VA provides a one-time restoration of entitlement that lets eligible Veterans and active-duty servicemembers pay off their loans fully, keep their homes and purchase another. You can even refinance the original VA Loan with a traditional loan to pay off the first property before using your benefits to buy the second.
Am I eligible for another VA Home Loan after foreclosure?
The good news is that VA Home Loans have lower foreclosure rates than conventional loans. That doesn’t mean a servicemember can’t get into a financial bind that leads to a dreaded foreclosure. Sure, it’s a big deal, and foreclosure can affect your VA Loan entitlement if the VA suffers losses. However, if the foreclosure is more than two years old and you’ve maintained good credit, you might qualify for another VA Home Loan.
Can I refinance a traditional loan using a VA Home Loan?
Absolutely. VA Loans aren’t just for purchasing homes. They’re also used to refinance existing mortgages, even if they’re not VA Home Loans. For example, eligible homeowners who don’t have a VA Loan can use the VA cash-out refinance loan. This loan can tap into your home’s equity, allowing you to take out cash. The process is simple – you must take out a larger loan than you currently have. You then collect the cash difference at closing. You can usually take up to 100% of your home’s value. Better still, there are no restrictions on how you spend the proceeds. So, you get to choose whether you need a new car, want to pay off some student loans or revamp your kitchen.
Of course, you don’t have to take any cash out; instead, you can use the proceeds to pay off your conventional loan.
Can I buy a manufactured home or condo with a VA Loan?
VA Home Loans aren’t just for purchasing standard single-family homes. Plenty of condominiums are less expensive than single-family homes, and they’re ideal for many first-time buyers. But you also can buy a house with up to four units, a duplex, or a manufactured home. However, note that if you’re shopping for a condo with your VA Loan, you’ll have to select a community from a VA-approved list or have your lender apply for approval. The list is extensive, and the VA wants to ensure the complex is up to its standards, which benefits both the government and the buyer.
As a Veteran or active-duty servicemember, you’ve sacrificed plenty for your country. Through its VA Home Loan benefit, the VA can begin to thank you for your service. But if you don’t take advantage of the benefit you’ve worked so hard for, it can’t help you to build a better future for your family. Aligned Mortgage is a VA-approved lender. We’d be proud to have one of our dedicated loan officers speak with you about using your VA Home Loan benefit to its full advantage.