If you are a member of the armed forces or has served in the past, you may be eligible for a VA loan. With a VA loan, you can make your dreams of home ownership come true. This article will help you learn how to apply for one.
Bonus read – How to Apply for a Cash Advance
Understanding the VA Loan
VA loans are mortgage loans for those who have served in the military, past or present. If you are the surviving spouse of a veteran, you may also be eligible. These loans can be obtained through a variety of sources.
Limits and Amounts
Anyone eligible for a VA loan will have a loan entitlement. This is a set amount of money provided by the U.S. Department of Veterans Affairs to a bank or other lending establishment. Entitlement begins at $36,000 if the loan amount does not exceed $144,000. Added entitlement is possible and is determined by taking $144,000 away from the loan amount and multiplying it by 25 percent. Entitlement is based on the condition of an applicant for a loan meeting all the necessary conditions to satisfy the lender.
What Types of VA Loans Are There?
- Purchase loans: Purchase loans are ones that allow for the purchase of a home based on meeting conditions satisfactorily. Moreover, if a military member is determined to earn enough money and have a strong enough credit rating, they should be approved for a purchase loan without any problem.
- Refinance loans: Refinance loans are ones that allow for a homeowner to obtain equity through their home. Also, equity is determined by subtracting the amount left on your mortgage from the current value of your home.
- Streamline refinance loans: Streamline refinance loans are ones that a homeowner takes out to lower their monthly payments for their home. Therefore, through these loans. the interest rate for your original loan can be lowered. It means that you would pay less for those monthly payments.
How to Apply for a VA Loan
1. Determine that you are eligible. The U.S. Department of Veterans Affairs has specific guidelines for how long one must have served in the military and the conditions for surviving spouses.
2. Obtain a certificate of Eligibility. Once you have confirmed your eligibility, you must obtain a COE. Present all of the relevant documents as proof. This can be done online, through the mail or in the presence of your lender. Also, conditions for applying for a COE vary based on status such as being a veteran, an active duty service member or a surviving spouse.
3. Check your credit. You’ll need to determine that your credit rating is acceptable before you speak with a lender. Obtain a thorough credit report. If necessary, rectify your credit rating before applying for a loan. Try to pay off any outstanding debts. Examples include unpaid credit card bill or medical debts as best you can.
4. Find an Appropriate Lender. By “appropriate lender,” I don’t just mean one who is honest and capable. In fact, I mean one which the Department of Veterans Affairs approved to grant VA loans. Their knowledge of this specific type of loan will be a huge asset for you in this process.
5. Go house-hunting. Once you have found a lender who is willing to loan money to you seeing your satisfactory financial history, you’ll want to look for a home that satisfies your needs. Therefore, make sure that any home you do consider is within your budget, as determined by your loan amount, entitlement and personal income.
6. Complete a purchase agreement. Once you have found the home of your dreams, you need to sign a purchase agreement to finalize the initial process. Your purchase agreement will include such information as how much your down payment will be, the ultimate sale date and when you’ll be able to move in.
7. Undergo VA Appraisal. A VA appraisal is a process in which a professional with VA approval determines the condition of your home is equal to that of what you paid. Once this process (which should take no longer than ten days) is complete, the VA will be able to give you their blessing for your loan.
8. Finish the loan application. Assuming your application receives approval, you’ll just need to finalize your loan application and move in. You’ll need to sign various documents outlining the condition of the loan. So make sure you have full awareness of the conditions you’re agreeing to.
9. Stay informed. Once you have settled in your new home, you will still have the responsibility of making your mortgage payments on time. Therefore, be aware of how much you need to pay and when. Also, make sure to save your money for scenarios such as the conditions of your mortgage changing, or the amount of interest. Moreover, keep in touch with your lender and the Department of Veterans Affairs.
How Does Repayment Work?
They will not expect you to repay everything immediately. Still, you will need to make regular payments. In fact, you can opt for either a fixed mortgage or an adjustable rate one. With a fixed rate, the amount you pay cannot change. An adjustable rate mortgage (ARM) will fluctuate depending on economic factors.
It is wise to consider interest rates for your loan as well as other long-term financial plans. Also, there is no penalty for exceeding your payment amount requirements or the date of repayment.
However, the possibility does exist of your lender changing. Therefore, this means the business you originally sign on with redirecting you to make your payments to another business. Should this happen, they have to tell you. Also, if you send a few initial payments to the original company by mistake, you will not receive penalties.
FAQs We Know You Have
Q: Are children of service members eligible?
A: No. While some conditions do allow for non-military service members to receive these loans, being the child of one does not satisfy the conditions.
Q: What is the longest length of a loan?
A: 30 years, 32 days
Q: Can you sell your home to a non-service member?
A: Yes, the conditions of the loan do not preclude selling of the home to a non-service member. However, they must meet the necessary financial conditions.
Q: Am I eligible solely on the condition that my spouse is deceased?
A: No. Surviving spouses are only eligible if their spouse died as part of active duty or as the result of a disability obtained through military service.
Q: Does the VA provide financial assistance?
A: Yes. If you are having trouble with making your mortgage payments, the VA can work with your lender to provide the necessary assistance for you to make your payments.
Obtaining a VA loan is an important step in a monumental chapter in a person’s life. Therefore, the process takes some time and patience, but the payoff is tremendous. If you are an active military service member or veteran and want to purchase a home, look into obtaining a loan.
Once you have met all the satisfactory requirements, found a lender you trust and a home you love, you will be that much closer to your dream. I hope this article has served you well, and I encourage the sharing of your experiences, thoughts, and questions.