VA Loans Insider
All you need to know aboutgetting a VA mortgage.
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We’ve long believed that educated homebuyers are stronger homebuyers. For many veterans and military members a home represents the biggest purchase of their lives. Understanding the homebuying process, the advantages of VA loans and the potential pitfalls out there can ensure military buyers save time and money and maximize their hard-earned benefits.
A recent survey from real estate website Zillow illustrates why continued education and awareness is so critical.
Homebuyers didn’t know the answer to a third of the basic mortgage and homebuying questions presented to them during a Zillow Mortgage Marketplace survey. Current and prospective homeowners were misinformed on a variety of topics, from down payments and interest rates to lender fees and refinance. See More
The concept of the VA’s loan limits can be confusing not just for military homebuyers but even for people in and around the mortgage industry. You’re likely to find a lot of misconceptions and bad information out there online.
One of the most common is that the VA loan limits represent the absolute maximum amount of money you can borrow using this long-cherished home loan benefit. The fact is there’s actually no maximum loan amount on a VA loan. What those loan limits represent is how much a qualified military borrower can obtain without making a down payment. See More
The VA home loan program boasts a ton of incredible benefits, but the two biggest might be these: Qualified borrowers can purchase a home with no money down, and there’s no cap on how much a seller can pay toward your closing costs.
Unfortunately, in terms of the latter, there’s no guarantee that you’ll get a seller to agree to pay all of those costs. It’s certainly a common outcome, especially in a buyer’s market, but every purchasing situation is different. You can roll the VA Funding Fee into the loan — or not pay it at all if you have a service-connected disability — but otherwise those costs have to be paid before the loan can close.
So what happens if you’re on the hook for at least a portion of those costs?
There are a couple different potential solutions. One is that you might be able to pay those costs using gift funds from a family member or close friend. See More
The concept of Power of Attorney (POA) is a well-worn one for military members and their families. This legal instrument allows a service member to designate a person who can enter into contracts and execute other civil, financial and legal obligations on their behalf, often because of a deployment.
VA home loans are absolutely on that list. The VA ensures that deployed service members and other veterans who can’t be present to sign documents still have access to this cherished and increasingly powerful benefit. There are a couple different paths that the VA and approved lenders take, and your unique circumstances will likely dictate whether you need a General or a Specific POA. See More
VA loans come with a host of big-time benefits. The biggest one is unquestionably the ability of qualified borrowers to purchase with no down payment. But the way the VA approaches closing costs might be a close second.
Every mortgage comes with closing costs (even those advertised as “no closing cost” loans). A home loan is a product, and like any kind of good or service there are related costs. As part of its mission to help level the playing field and get veterans into homes, the VA limits what borrowers can pay in closing costs. And there are actually some costs veterans aren’t allowed to pay. What often confuses VA borrowers and even industry people is the difference between closing costs and concessions on a VA loan.
This is often misconstrued, misrepresented or outright mistaken, so let’s state it as plainly as possible: There is no cap on how much a seller can contribute on VA loan closing costs. But there is a cap on what’s known as concessions. See More
Thanks to everyone who tuned in this afternoon for our live VA loans Hangout. We had a ton of great questions coming in from all points, especially our Veterans United Facebook communities and our Google+ page.
We tried to squeeze in as many questions as we could in 30 minutes. But there were of course many we couldn’t quite get to, so I wanted to go through a few of them in this post. Remember you can always talk with a Veterans United loan specialist at 888-212-1958 or email me at chris@vu.com. See More
Divorce can be a complicated and messy part of life. It can also create some potential complications when it comes to looking for a VA home loan.
Lenders can count child support payments as effective income toward a mortgage, and that can help get veterans into the price range they want. But spouses who are paying that monthly support will have that money counted as an outgoing liability by mortgage lenders.
For prospective VA borrowers who are divorced, child support can sometimes play a make-or-break role in the loan process. See More
Every month or two, I’ll come across this question or a slight variation of it: “Does a disabled veteran qualify for a VA home loan?”
It’s a trickier question than it might first appear. Military borrowers have multiple requirements to hit in order to fully qualify for a VA loan, from meeting the service standards and a lender’s credit score minimum to residual income and acceptable debt-to-income ratio. But in some respects, the general answer couldn’t be clearer.
Disabled veterans who have VA loan entitlement are absolutely eligible for a VA home loan. Nothing about your disability rating by itself is going to negatively affect your chances. In fact, lenders can count disability income as effective income toward a mortgage, and borrowers with a service-connected disability are exempt from paying the VA Funding Fee, a mandatory cost the VA applies to every purchase and refinance loan to help cover losses and ensure the program’s continued success. See More
Being eligible for a VA loan doesn’t mean you’ll get one. But you can’t get one without being eligible.
Make sense?
Here’s the the longer version, just in case it doesn’t: Active military and veterans have to meet certain requirements set forth by the VA in order to participate in the loan program. But the VA itself isn’t in the mortgage business; it basically insures the loans made by private financial institutions. And those lenders are going to have their own requirements on top of what the VA says is necessary.
That’s why VA loan eligibility isn’t a guarantee; it’s a starting point. Qualified veterans must still satisfy a mortgage lender when it comes to things like credit score, stable employment and income and other key financial factors. Still, the first stage of the journey toward homeownership is determining whether you meet the VA’s service requirements. See More
Words mean what they mean. When it comes to the VA home loan program, one of the most confusing ones out there is “guaranty.”
A guaranty is basically when someone agrees to pay a debt for someone else in the event that person defaults. In the context of VA loans, the guaranty is the VA’s promise to repay a portion of the loan if you default. That financial pledge helps gives lenders the confidence to extend financing to qualified veterans with no money down.
But the VA guaranty doesn’t mean veterans and active military members are guaranteed a home loan. There’s nothing automatic about getting a mortgage, even for those who have proudly served our country. See More
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