We honor those that fought for our country. And they deserve an equal chance at home ownership as anyone. This is where the VA loan comes in. VA loans were created to benefit veterans, service members and their families achieve home ownership. Because of their lack of ability to save and establish credit, Veterans were finding it hard to gain ability to fund a home, once out of the line of the duty. The demand for VA loans has increased, mostly due to historically low rates and the increasingly tough loan requirements.
Take a closer look at VA loans and why these home loans are the best options for our veterans:
Here is a detailed list of those who are eligible for the VA loan:
- Active-duty members
- Reserve members
- National Guard
- Some surviving spouses
Additional eligibility for the VA loan may be based on several things. Contact your Concord Mortgage loan officer to see if you qualify. You must have a decent credit score, sufficient income and a valid COE (Certificate of Eligibility).
No Down Payment
This is the one of the VA loans signature benefit. Qualified VA borrowers can purchase a home up to $417,000 without a down payment.
For a conventional or FHA loan, buyers typically may be able to put down a minimum of 5 percent of their down payment. For VA loans, buyers are able to put down 0%. Since veterans don’t always have time to save up for a down payment, due to being in active duty, the ability to purchase with no money down means they won’t have to spend years saving and scraping every dollar.
No PMI (private mortgage insurance)
Coming up with the money for a decent down payment is already stressful enough and just one of the many costs of buying a home. Add in mortgage insurance and you start to feel yourself getting overwhelmed. The good news is for veterans there is no mortgage insurance required. This amazing feature has saved veterans billions of dollars over the years.
Your Concord Mortgage lender will be able to go over the additional costs and fees that must go to the Department of Veteran Affairs. Veterans with a disability are exempt from the fee.
Flexible credit requirements
The purpose of the VA loan was to increase the ability for veterans to gain home ownership. The government has taken a softer approach with urging lender’s to be more comprehensive when looking at a veterans credit and financial situations.
Concord Mortgage looks for home buyers with a credit score of at least 600. This credit score comes in around the “fair” range, which is still good enough to get a home loan. The scores go up from there from “good” to “excellent”. Your loan officer will be able tell you where you fall in each category.
Potential buyers that have experienced a bankruptcy or foreclosure are able to bounce back quicker. With a Chapter 13 bankruptcy, veterans may obtain a loan just a year after and two years after foreclosure.
Forgiving debt-to-income ratios
Our Concord Mortgage loan officers want to make sure you are in a good financial standing. If you are spending more than 41 percent of your monthly income on major debts, we can work together to get this down. If you are anything less than 41% you will be good to go. VA loans allow a higher DTI ration than other loan options.
It is possible to have a DTI higher than 41% percent and still obtain a loan. These guidelines depend on the lender. The flexibility of this rule allows veterans to maximize their buying power.
Competitive interest rates
Interest rates are typically determined based on the risk assumed by the lender needed to finance your home. Since the Department of Veteran Affairs supports each loan, financing with a lender will carry less risk and can offer you lower rates than other loan options.
Combine a low interest rate with no down payment or PMI and veterans will begin to see their bank accounts reap the benefits.
Closing costs are a necessary evil, regardless of the loan. However, the Department of Veteran Affairs limits the fees veterans may pay on their closing day. Fees veterans will not pay include termite inspections, broker fees and lender document processing.
Depending on your relationship with the seller, veterans may ask the seller to pay their loan-related closing costs. That is why starting off the relationship with your seller well may benefit you when it comes time to closing.
How do I apply?
Eligible members and military families can follow these steps to obtain a loan:
- Check the website to make sure you are a qualifying candidate. The website will give you a detailed list of what is required.
- Contact your Concord Mortgage lender.
- Retrieve a Certificate of Eligibility to prove you are eligible or have your lender request on your behalf.
- Begin to steps to apply for the VA loan. Your Concord Mortgage loan officer will be with you every step of the way to answer any questions during this process.
- Have your credit in order BEFORE going through the application process. Your loan officer will use the collection information for your eligibility, so you will want to put your best foot forward.
- With our historically low rates, it makes sense to consider every option. For those not sure about the amount of time you will be in the home, consider an adjustable-rate mortgage to keep your payments lower. If you are more into making a life-life commitment and can afford a higher monthly payment, check out our 15-year fixed rate loan. You will be able to pay off your loan quicker and save money on interest paid.
- The first step to applying for any loan is getting pre-qualified. This will allow you to know your price range and save time and stress in the beginning stages of your home search. Being pre-qualified also provides you a credibility factor with sellers when putting in an offer that others may not have.
VA loans may not be what you are looking for. But, consider these government-backed loans, they offer many benefits that will allow you to gain a home and a savings plan for the future.