Call: 804-784-4364
Current Mortgage Rates: Richmond, VA
4.000% (4.038% APR) 30yrs
3.500% (3.525% APR) 15yrs
as of 11/20/17
Read More

Building on Trust™

RatePro

Getting Started with VA Loans


VA Loan

A VA loan is a mortgage loan that is offered specifically for active military and veterans and is guaranteed by the United States Department of Veterans Affairs (VA). A VA loan is issued by a mortgage lender, similar to other loan types, but is backed by the Department of Veterans Affairs. VA loans have additional benefits, making them an attractive option for buying a home if you are eligible. To purchase a home with a VA loan, you do not need to provide a down payment or purchase mortgage insurance.

Although costs are generally lower with a VA Loan, they do require a one-time funding fee of 2.15%. This fee is reduced to 1.25% if the buyer provides a down-payment of 10% or more, and is zero if the veteran receives disability. Another benefit of a VA Loan is that Veteran’s Affairs will renegotiate on behalf of the loan recipient should they run into financial difficulty.

Who is Eligible for a VA Loan?

VA Loans are specifically for United States veterans, service members, and widowed spouses of deceased service members. You are able to apply for a VA mortgage if:

  • You are on active-duty military
  • You were separated from military service in a situation other than “dishonorable discharge”
  • As a veteran or active military, if you meet specific length-of-service requirements
  • As a reservist or a member of the National Guard, if you meet specific length-of-service requirements
  • You are a qualified surviving spouse of a deceased veteran

In addition, the home must be intended as your primary residence. Also, you must have a valid certificate of eligibility from the VA.

Benefits of a VA Loan

There are many benefits that make VA loans an attractive option for those that are eligible, including:

1. You do not need to provide a down payment. Because the loan is backed by the VA, you are not required to provide a down payment. However, if you choose to provide one, your monthly payment will be reduced.

2. You do not have to purchase mortgage insurance. Again, because the loan is backed by the VA, there is less liability for the lender and you do not need to purchase mortgage insurance.

3. There is no minimum credit score. However, a lender can impose a credit score range for approving a VA loan from their firm, which is typically 620. The VA will not require a minimum mortgage score when granting approval.

4. Lower annual percentage rate. VA loans generally have a lower APR than other loan types, however, this is variable based on the lender and the type of loan.

5. You can reuse your VA loan benefit. Unlike an FHA loan, you can reuse a VA loan benefit, meaning that you may be eligible to receive a VA loan to purchase an additional home or to refinance.

6. VA loans have a lower closing cost. The VA requires loan recipients to pay a one-time lending fee, and the lender may receive a 1% origination fee that is similar to closing costs on other loans. Because of the reduced closing cost, VA loans are easier to qualify for if you do not have large savings.

Types of VA Loans

There are several types of VA loans, and each has separate qualifications.

1. Home purchase
Also called a VA purchase loan, this loan allows veterans and active military, who meet the requirements of the VA, to purchase a home.

2. VA refinance
Similar to other refinance loans, a VA refinance loan allows the homeowner to cash-out their equity in their home.

3. Interest rate reduction refinance loan
A VA interest rate reduction refinance loan, or IRRRL, lowers your interest rate by refinancing your current VA loan. This is similar to other refinance loans, and allows the homeowner to find a lower APR or monthly payment.

4. Adapted housing grants
The VA provides grants to active military or veterans that require modifications in their home in order to live with a permanent disability. These grants are not found through a mortgage lender but come from the VA directly. However, if you are seeking an adapted housing grant, it may be important to begin the process before your loan is finalized.

Shop Around

When applying for a VA loan, homeowners should still shop for the best lender that will meet their specific needs. Interest rates may vary from one lender to another.

 


Comments
(There are no comments yet)
Leave a Comment
Captcha

Mortgage Rate Meter


Testimonials
 
914817
' We found Rate Pro mortgage after working with several other mortgage companies all of whom failed to grasp our complicated financial situation and ... more '
5.0/5.0
by zac5
890518
' We just purchased our first home and went through RatePro Mortgage to do our lending. I have worked in both big and small retail banks so I have seen ... more '
5.0/5.0
by zuser20140424054854787
838849
' This was my 3rd home purchase and 3rd different mortgage company, and Rick and his staff at RatePro were by far the best. Rick was timely, honest, ... more '
5.0/5.0
by jweimer1968
RatePro