Did you know that if you are a Veteran, you can qualify for a VA Loan? A VA Loan is a mortgage loan guaranteed by the U.S. Department of Veterans Affairs and was created to make housing affordable for eligible U.S. veterans and members of the military.
VA home loans are available to veterans, reservists, active-duty military personnel, and surviving spouses of veterans with 100% entitlement. Eligible veterans may be able to buy a home with no down payment, refinance up to 100% of the home’s value and pay no private mortgage insurance.
These loans carry a number of benefits (such as no down payment) that make them far more appealing than conventional loans in most cases for those who qualify.
Benefits of a VA Loan
The biggest benefit of a VA loan, for many borrowers, is that there is no need for a down payment. There aren’t many loan types that don’t require a down payment, and VA is one of them. There is no need to pay Private Mortgage Insurance (PMI) or arrange for a “piggyback” mortgage to cover your down payment.
Another significant benefit of a VA home loan is the competitive interest rate. Many times with a lower down payment, the interest rate will increase. But VA loans don’t have that problem!
What Can You Do With a VA Loan?
- Specifically, a VA home loan can help veterans:
- Buy a home or residential condominium
- Build a home
- Repair, alter or improve a home
- Refinance an existing home loan
- Buy and improve a manufactured home lot
- Add energy-efficient improvements to a home
- Purchase and improve a home simultaneously with energy-efficient improvements
- Refinance an existing VA loan to reduce the interest rate
VA Loan Limits for 2019
If you want to purchase a home, condominium or manufactured home, the VA can guarantee up to the conforming loan limit of the total loan – with additional benefits such as no down payment and no private mortgage insurance (PMI). Keep in mind, your VA loan may have a funding fee depending on which benefits you qualify for.
If you are considering refinancing an existing loan, VA offers you two options. You can either refinance to reduce your current interest rate. This is also known as a “streamline loan” or “Interest Rate Reduction Refinancing Loan (IRRRL).”
Veterans also have the option to take equity out (a “cash-out” loan). You can obtain a VA cash-out loan for up to 100 percent of your home’s value.
Veterans can use a Jumbo VA loan to purchase or refinance when the loan amount exceeds the conventional loan limits. Jumbo VA loans require a down payment. The amount of the down payment is determined using a calculation that factors in the county loan limits for the area the home is in, and the portion of the amount exceeding that loan limit which the VA will guarantee.
Our expert mortgage advisors can explain the details on how much of a down payment would be based on your specific scenario. Typically, the amount of down payment required on a VA Jumbo loan will be significantly lower than what’s required on a conventional jumbo loan. VA Jumbo loans also do not require mortgage insurance, regardless of the down payment amount, whereas conventional loans with down payments less than 20% always require mortgage insurance.
Do You Qualify?
Reach out to us on The Polder Group at Summit Funding. We are here to help.
Most industry professionals know that VA Loans can be a great option for some clients, offering a simple and smart solution to their financing needs. However, as beneficial as the VA loan program can be, these transactions still possess traits which require knowledge and finesse to navigate confidently. Over-eager or inexperienced lenders can turn the underwriting process into a nightmare for your client, so it’s important to have an expert on your side.
Mishandling of VA loans is more common than you think. In November of 2016, the CFPB released a report detailing how many consumers had felt cheated or mislead during the course of a VA Loan. You can read the report here. In the best of cases, the borrowers felt stressed out or confused by the processes. While some unfortunate clients suffered from buyer’s remorse at the closing table or were declined all together when they were already in contract. The question becomes, why did this happen, and how can you help your clients avoid a situation like this? We can take a look at the data to see how we can avoid repeating these mistakes.
VA Loans – Mistakes and Solutions
Mistake 1: For some clients, loan terms were not in the borrower’s best interest. Just because a borrower is a Veteran, doesn’t mean that a VA loan is the right choice for them. Without a qualified Mortgage Banker looking out for the borrower’s best interest, borrower’s found themselves in new mortgages that presented new financial difficulties, instead of making their lives easier.
Solution: You need a mortgage banker who looks at your client holistically, not just as a commission check with legs. I treat every client with respect and put their goals and needs first. Like you, I want clients for life, with a relationship based on trust.
Mistake 2: In many cases, a thorough examination of the borrower’s financial profile was never performed, so qualification-threatening issues were discovered at underwriting, instead of upfront. A lender may lack a deep understanding of VA guidelines which cause the borrower to be declined.
Solution: This is why my team and I request full documentation upfront from the borrower, so issues aren’t caught in the end or the middle of the underwriting process. I work closely with our underwriters so no one is surprised by guideline changes. No one should sell something they don’t fully understand.
Mistake 3: For other clients, communication with the lender was either delayed, or non-existent, causing the process to stretch on endlessly, blowing the borrower’s rate lock period, or allowing sensitive documents to expire.
Solution: My team and I engage our clients with clear, transparent communication at every step of the mortgage process. We update both the client and you, so there is never a need to request the status of the loan. The process can be stressful enough without being left in the dark.
All of these errors highlight why expertise in lending matters. You need a lender who knows how to work within the VA system, who can set realistic expectations for all parties involved, and who provides one-on-one, personal service with the history and experience to back it up. And most importantly, you can trust I have your client’s best interest in mind during every step of the process.
Contact The Polder Group today if you have questions with how we can help your clients obtain smart and confident VA financing!