If you’re a Veteran, you’ll want to read this article because when it comes to home mortgages and VA loans, there’s real money on the line, so you’ll want to know how to get the best bang for your buck when buying your next house.
1. Are You Eligible For a VA Loan?
Just because you served, doesn’t actually mean that you can get a VA loan. A lot of people don’t understand that. The first thing you’ll need to have is a copy of your DD 214 (Certificate of Release or Discharge from Active Duty). Or, you can go onto the VA website yourself, as the Veteran, and you can get what’s called your COE or Certificate of Eligibility. The COE is going to determine two things. One, do you have eligibility for a VA loan, and what loan amount are you’re eligible for. And secondly, if you’re going to be exempt from the VA loan funding fee, or it will tell you what the funding fee will be. Both pieces of information are critically important.
2. 100% Financing, Up To A Point
VA loans are one of the only very few programs available today in the lending world that allows for lending out 100% of the home’s sales price. And you deserve that as a veteran. Note, however, that while the VA loan program doesn’t impose a maximum amount that an eligible veteran may borrow, Veteran’s Affairs caps the amount it guarantees each year (for example, it’s $484,350 in 2019) for most loans. This guarantee limit impacts the amount a bank is willing to lend you without requiring a down payment.
3. It’s 100% Financing So I Don’t Need Money?
Not so quick. The 100% financing is only for the price of the house. There are still closing costs involved. You still have to insure a home. You have to set up information for repaying your property taxes. There’s going to be a title company involved and they’re going to charge you a fee. There’s a lender fee involved.
So, how do you pay those closing costs? If you don’t have the money available, you can actually ask the seller to contribute as part of the negotiation or borrow against your 401K if you have one. Whatever your circumstances, you’re going to need to plan for the closing costs.
4. Consider Different Property Types
Veteran’s Affairs actually allows for the financing of different property types. Single family homes are the most popular, but you also purchase two- to four-unit dwellings, which a lot of people probably don’t know about.
That means you can get 100% financing for up to four units. Live in one, and rent the other three out. It’s a great income stream. You can also do town homes, modular manufactured, and condos.
5. Do You Need To Qualify For a VA Loan If You’re A Veteran?
Just because you’re a Veteran, doesn’t mean you don’t have to qualify for a VA Loan. Lenders are going look at income and assets, and it’s required as part of the VA program. The VA’s very cautious of their Veterans and wants to make sure you’re not going to put in a situation may make things difficult for you down the road.
6. What Happens If You Have a Low Credit Score?
Veterans Affairs doesn’t impose limits based on credit scores, but individual lenders do. So, you’d have to talk to each individual lender, or just check out our article on the Top VA Loan Lenders for 2019.
7. Can You Buy More Than One Home Using VA Loan Benefits?
Some people think that they can’t buy another VA home because they already used their entitlement. That’s not the case. Full entitlement can be restored. So, if you have purchased a VA home before, once you sell your home, your full entitlement is restored and you can do a simultaneous closing. If you’re selling a home one day, you’ll get full entitlement by repurchasing your new property the same day, even if the new property is in another state.
8. What if you have a VA home in another state and you don’t want to sell it? Can you get another VA loan?
Yes, you can, but it depends on the loan amounts. This is another misconception that you can’t buy another VA home or use your VA entitlements again. There’s a limit to the entitlement amount so your lender will need to see your current loan to determine if you can do another 100% financing with the entitlement.
9. The VA Will Do Your Home Appraisal
Unlike conventional loans, the VA will work with your selected lender to conduct home appraisals and the VA has its own set of criteria they like to see in a home. These tend to a little bit more stringent than conventional loans.
10. Can You Refinance Your VA Home?
Yes, you can refinance your VA home. Say you moved out of your VA home that you bought as a primary residence, it’s considered a second home and an investment property. The VA will allow you to do a refinance.
So you can refinance the following occupancy types: primary home, secondary home, or investment property.
Hope you found that helpful. Here’s a video overview in case you’re interested: