If you are a veteran, don’t miss this article about VA home loans! You’ll soon find out today that you’re a candidate for this benefit. After all, this is one of the ways the US government rewards your hard work.
You may think you will enter a spiral of endless errands and paperwork, but no. That’s why at Insiderbits, we’ve prepared ourselves on the subject to make the process easier for you.
What are VA home loans, and who qualifies?
If you are unfamiliar with this type of mortgage, we will explain it in detail. The US has a government section known as the Department of Veterans Affairs.
This office of the American government is in charge of looking after retired officers of the country’s military. A program created to benefit you is the allocation of loans so that you can buy your own home.
This department is in charge of dictating the rules and terms that regulate each program stage. In addition, this section must carry out the proper follow-up to ensure compliance with each approved loan.
What do I need to access VA home loans? Before starting your mortgage application, you must determine whether you are eligible.
To do this, you must know the requirements and conditions that you must meet to qualify for the benefit. We will present them to you below.
VA Home Loans Candidates
With the above point clarified, we can move on. Next, we will tell you who qualifies to receive the mortgage.
- Retired veterans of the armed forces.
- A minimum of 6 years as an active National Guard or Reserve member.
- Have a minimum of 90 days or three consecutive months of active service.
- A minimum of 181 consecutive days in service during periods of peace.
- Surviving spouses of military members who died during service.
- Surviving spouses of military personnel who died as a result of a disability caused by service.
If you feel frustrated because you do not meet the requirements set out above, we have good news for you. If you were discharged for the following reasons, you can still get your Certificate of Eligibility (COE).
- For the convenience of the government. With a minimum of 20 months of a two-year enlistment program.
- Early discharge from service. Completing at least 21 months of a 2-year enlistment.
- Order of reduction in military service.
- Medical conditions.
It is also possible to qualify for the benefit if you suffer from a disability discharge. Fortunately, it works this way. If you have any difficulties due to your military service, you will be supported by the program.
List of required documents for VA Home Loans
We will verify the documents required to apply for your VA Home Loans. They vary depending on the applicant’s status:
- Certificate of Eligibility (COE).
- Complete bank statements for the last 3 months.
- Bank statements for retirement, money market, stock, inheritance, and 401k accounts.
- Spouse’s bank statements with a contact number (if applicable).
- Most recent transactions on your credit cards. Account numbers and minimum payment amounts must be visible.
- Statement of accounts for spouse’s credit cards (if applicable).
- Paid rent receipts for the last 12 months. If you do not have them, you must provide your landlord’s contact information, such as name, address, and phone number.
- You must present the latest utility bills if you do not have credit cards.
- Documents proving bankruptcy status and liability waivers (if applicable).
If you act as guarantor, you must present copies of the front and back of unpaid checks from the last 12 months. You must present a copy of:
- Driver’s license.
- Work permit or residence card. (If applicable).
- Social Security card.
Documents supporting divorce, including copies of pensions to the former spouse. (If applicable).
If you apply for refinancing, you will be asked for copies of promissory notes, invoices, and policies. Likewise, remember that when your file is reviewed, you may have to present additional documents.
Top benefits of using a VA loan for veterans
Since the American Department of Veterans Affairs was founded in 1944, more than 20 million grants have been awarded. Learn about the program’s differentiating benefits.
Zero down payments
We start with an exclusive benefit of VA mortgages: acquiring your home without paying any down payment. Service members and veterans are exempt from paying down payments regardless of the size and type of home to be purchased.
Typically, down payments range between 3% and 10% of the total loan value. Most veterans and military personnel do not have this amount when starting the purchase.
Preferential interest rates
The VA Home Loans granted through the program offer the lowest interest rate in the real estate market. This benefit allows veterans to opt for higher mortgages.
In addition, preferential interest rates imply a way to save. This reduction or savings will be reflected in the monthly payments and, therefore, throughout the loan.
Flexible Policies
The section in charge of VA mortgage loans is usually more flexible regarding requirements. The conditions imposed are few compared to other similar loans.
As if that were not enough, no parameters limit the amount of debt based on income. In addition, the waiting periods for a failed credit are minimal.
Conscious closing costs
In VA mortgage loans, lenders cannot exceed charges when creating and processing the application. This is another big difference since traditional mortgages involve endless commissions and closing costs.
You do not need insurance policies!
Unlike traditional mortgages, VA home loans do not require mortgage insurance. This benefit allows you to save a significant amount of money that you can use to expand your purchasing power.
A step-by-step guide to applying for VA home loans
Like all credit management, there are a series of steps that you must follow. There are five essential steps for VA mortgage loans. We will describe them below.
Selecting the property to purchase
Take time to find the home of your dreams. Then, contact the real estate agent or direct seller of the property. Once you have agreed to the transaction, sign the purchase contract, subject to mortgage approval.
Choose your lender
A reliable and well-qualified lender will review your financial situation and credit history and inform you of the maximum amount you can aspire to. It is always essential to select a VA-approved lending institution.
Submitting your application
The lending institution representing you will submit your mortgage application and all the necessary documents to the VA. Next, you must request an official appraiser from the Department of Veterans Affairs to set a reasonable value for the property.
After the appraiser’s review, you will obtain a Certificate of Fair Value. Appraisal and credit report fees may be charged to your account unless the property seller assumes them.
Loan Results
Your contracted lender will notify you of the result of your application. You must attend the loan closing meeting with your spouse. At this meeting, the lender will explain the conditions, requirements, payment dates, and other aspects of the loan.
Next, you will sign the mortgage, the promissory note, and additional papers. When you complete the purchase, you will receive the following legal documents:
- Promissory note. It must contain the approved amount, applied interest rate, and repayment conditions.
- Deed of trust. As collateral for the mortgage loan and the promissory note.
- Closing Disclosure Form. The CD contains the expenses incurred to obtain the loan on the first two pages.
When the real estate agent signs and verifies the mortgage documents, they begin the financing stage. You will receive the money to purchase your home either by bank transfer, check, or as a security deposit.
Closing Disclosure (CD)
This is the final stage of VA home loans. The Closing Disclosure sets the financing rate that concludes the loan process.
- Beneficiaries must pay a fee of 2% of the loan’s total value. However, the VA establishes exceptions or reductions if the user meets the following conditions.
- If you make a first payment of at least 5%.
- You receive compensation from the VA for being disabled due to military service.
- You are eligible for disability compensation but receive a retirement payment due to your military service.
You may be eligible for special financing if you are a surviving spouse of a veteran who died during service. It also applies to surviving spouses of veterans who died after becoming disabled while they were active members.
Common mistakes to avoid when using VA housing benefits
Military veterans are not exempt from falling into the traps that can arise when buying a home. Let’s look at some common mistakes and how to avoid them.
- Ignorance on the subject. You can form wrong ideas or miss out on good opportunities if you don’t understand the benefits. Thoroughly research all the existing material on VA home loans.
- Budgeting failures. Be honest about your finances before choosing your ideal home. Consider all the associated expenses besides the property’s price, such as services, maintenance, insurance, etc.
- Lack of knowledge of the real estate market. In each locality, home prices vary considerably. If you don’t study your local market before your purchase, you could pay a premium or miss out on a better option.
- Skipping inspections. In the excitement of finding a home you like, you’ll want to skip the inspection stage. This is a mistake that can be costly. You don’t know what hidden flaws the property has.
- Not thinking ahead. If you are a veteran, you should think about your future needs. Consider possible changes of residence and special conditions that the property must meet so that you can live peacefully for years to come.
- Not seeking professional help. A real estate agent with experience in mortgages for veterans is more than necessary. They will guide you, negotiate for you, and help you find the best options in your area.
We recommend reading, researching, inquiring, and seeking advice before deciding. For more information, consult the VA Home Loan Guaranty – Buyer’s Guide.
A new home, a new beginning
With VA home loans, you can start your new life in your new home and enjoy the benefits that are there for you. It is just a small reward for your work and labor for your nation.
If you want to explore the topic of loans more thoroughly, we recommend reading our article, The Ultimate Social Housing Application Checklist.
Don’t rush when buying your home. Remember that you are not purchasing a basket of perishable foods. This is the home of your dreams! At Insiderbits, we are happy to provide information on many topics.
