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Getting a VA Loan – What You Should Know

Lending standards have become difficult to meet in recent years, and the situation could be changing, but no one really knows for sure until the dust clears with the CFPB transitions. This leaves potential home buyers looking for any opportunity to get they loan they need at a price they can afford. Fortunately for military veterans, the VA loan program is still around. In fact, these particular loans are more popular than ever, and with good reason! If you have served in the past, Seattle Mortgage Brokers is ready to help you get set on the future path to a VA program.

There are however, many misconceptions about Veterans loans. Being in the mortgage industry for Washington State, Steve Gilbert with Seattle Mortgage Brokers have assisted in securing VA mortgage loans on many occasions. They are an excellent mortgage product for those who have or are serving in the military. Unfortunately, some real estate agents have negative feelings about Veteran mortgages which is too bad.

There some remarkable facts about VA loans that I thought was worth sharing. The truth be told many real estate agents just aren’t educated enough on VA financing.

Hopefully, this information can straighten out any confusion you may have with this popular loan product. From what I have found many home sellers get confused about VA loans and don’t look at them as a straightforward loan option. Nothing could be further from the truth. Some real estate agent don’t help the cause because they lack the necessary knowledge as well.

Things you should know about VA loans

They are no down payments. One of the biggest advantages to a VA Loan is the fact you don’t need to put any money down. Yes you read that correctly! A VA mortgage is one of the few loan products where you can do 100 percent financing. This is great news for borrowers who do not have a ton of cash saved.

They are flexible. There are few if any lending options available that can beat a VA mortgage. Long gone are the days when most people could walk up to a bank and get a loan for a home with no money down. That is, except for those that qualify for VA loans. With a VA loan you can still get a house for no money down – often even if you have previously been foreclosed on or filed for bankruptcy. This could be true even if it were a VA loan that was foreclosed on. This makes preparing to get a mortgage a lot easier for a borrower who has less than stellar credit.

There is a fee. All good things come with a cost. Although you can save a lot of money through securing a VA mortgage, you will have to pay a fee to get the loan. Known as the VA Funding Fee, this payment is used by the VA to keep the program running strong for the long haul. Typically charged at about 2 percent of your total loan amount, this fee can be rolled into your total loan, so you do not have to pay it out of pocket. If you have disabilities related to your service you may be able to get the fee waived.

You avoid paying mortgage insurance. For most borrowers that take out a mortgage with less than 20 percent down, there is an additional cost to ownership – private mortgage insurance. This is an added cost that many lenders demand to protect their investment. When you use a VA mortgage loan, you are already guaranteed by the VA. Therefore you do not have to pay for the mortgage insurance.

The VA is the guarantor, not the lender. It is important to understand that the VA is not the entity loaning you the money. You will get your loan from a standard lender like everyone else does. The difference is that the VA – with the backing of the Federal Government – guarantees up to a quarter of the amount you are borrowing. This makes lenders rest much easier – so easy that they are often still willing to loan to veterans with no money down.

They are meant for your main home. The prospect of no-money-down real estate transactions is enough to get some people overly excited about purchasing a property. However, you should rein in any fantasies of building a real estate empire. VA loans are intended for service members to purchase their primary residence – not a vacation home or a restaurant. There are few exceptions, but not many.

You are more likely to get a loan. This is a benefits program intended to help those that have served their country. Yes, you will have to meet a minimum set of requirements to get a loan. The lender will still want to know that you can repay what you borrow. However, you are more likely to get a VA loan – even with less than stellar credit – than you would be able to otherwise. As a bonus, the VA will often negotiate with lenders for you if you get behind on your payments.

Theses are some of the more relevant facts regarding Veteran loans. So here are a couple of takeaways you should consider. If you are a seller and have received an offer from a buyer who would like to purchase your home using VA financing, don’t discount this as being a non-desirable way for a borrower to procure funding.

Yes the downside is that the borrower does not typically offer much in the way of an escrow deposit. This is a risk a seller will need to take but the risk is usually worth it.

The VA is a solid loan program that is no less desirable than conventional financing. If you are a buyer and are eligible for a VA loan, it is certainly something you should be considering!

 

*This article does not represent legal interpretation or advice. This is not a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet LTV requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines, and are subject to change without notice based on applicant’s eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over life of loan. Reduction in payments may reflect longer loan term. Terms of the loan may be subject to payment of points and fees by the applicant. NMLS: LO# 305371 MB# 761615

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