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Your Guide to a Veterans Affairs Mortgage
The U.S. Department of Veterans Affairs, referred to as “the VA”, offers a variety of home buying and home refinancing options strictly available to armed forces veterans. Established to offer long-term financing to retired U.S. service men and women, VA programs offer financing options when private lenders may not, and include a variety of veterans affairs benefits not made available to non-veterans.
Since the VA home loan guarantee program was established, more than 18 million veterans have cashed in on this valuable government sponsored mortgage lending option. If you are a veteran and exploring your home buying options, consider how a Veterans Affairs mortgage can help you realize your dreams of homeownership.
We hope you find this guide to Veterans Affairs mortgages gives you the answers you need.
Traditional home loan applications often require paperwork and more paperwork. The VA has taken steps to ensure that the application process for veterans’ home loans isn’t any more cumbersome than private lender home loan applications. So to prepare for the application process for your Veterans Affairs mortgage, know that you will need the following items:
- Copies of W2 Statements – past 2 years
- Copies of previous pay stubs (two pay stubs are all that’s required)
- Asset documentation – checking and/or savings accounts, financial investments, trust funds, 401(k) and IRA accounts, etc.
- Self-employed veterans will need to provide tax returns for the past two consecutive years
Interested veterans need to use Fannie Mae’s loan application form number 1003, which has also been known as the Freddie Mac Form 65. Gather the paperwork above or contact one of our loan specialists who would be happy to help you get what you need and move you one step closer to achieving your homeowner goals!
Once you’re ready to proceed with your VA home loan application, you’ll need to consider the VA home loan options available to you, thanks to your Veterans Affairs benefits. We will briefly explore Veterans Affairs housing programs and options below, but encourage you to contact a qualified VA lender who can evaluate your unique situation and make recommendations based on your individual needs and goals.
Veterans Home Loans
The VA offers purchase and construction loans to qualified veterans, and these loans offer low home mortgage rates. The mortgage rate depends on a variety of individual variables such as your credit score, income, and the amount of the home loan you are requesting, so you’ll need to talk with a qualified VA mortgage lender while evaluating your options. VA purchase and construction loans come with a funding fee requirement which helps to offset the government’s cost of the loan. The funding fee rate changes depending on whether you’re using your Veterans Affairs benefit for this type of loan for the first time, or if it’s a subsequent use of the benefit. Rates can vary from 2.15% for first time use to 3.3% for subsequent benefit use of the loan.
Special loans are also offered to veterans who have service-related disabilities and need to make home improvements or modifications to accommodate their disability needs. If this type of Veterans Affairs benefit appeals to your needs, have your VA lender check into the VA’s Specially Adapted Housing Grant program for more information.
An important note to remember is that rates may depend on military status and whether you are a member of regular armed forces or a National Guard veteran – be sure to read all of the fine print so you have the right information before you make your final decision.
A word of caution: no matter which veterans home loan sounds best for your goals, beware of predatory lenders and make sure to do fact-checking to determine whether the lender you’re speaking with is a qualified VA lender.
You may have a current VA or non-VA loan that you’d like to refinance using your Veterans Affairs benefits. VA refinancing, similar to veterans home loans, comes with a variety of options that can help lower the percentage of interest you’re currently paying on your home mortgage rates and potentially save you hundreds of dollars every month on your loan payment.
There are two popular VA refinance options: the Cash Out Refinance Option and the Interest Rate Reduction Refinance Loan (IRRRL) program.
- Cash Out Refinancing -Cash Out Refinancing offers veterans the chance to secure low home loan interest rates being experienced on the U.S. housing market currently, and the option to use up to 90% of the equity in the home. This Veterans Affairs benefit offers a way to pay down high interest and/or credit card debt, finance tuition, make home improvements, or simply add cash to checking/savings accounts.
- Streamline VA Refinance -The IRRRL program is also called a streamline loan, or a VA-to-VA loan. The “streamline” nickname comes from the loan offering a chance for VA mortgage refinance to capture low interest rates, and the “VA-to-VA loan” nickname is due to the VA refinance option only being available to current VA home loans holders who intend on refinancing to another VA loan. IRRRL programs do not allow for any leftover cash (resulting from the refinance) to be absorbed by the buyer.
VA mortgage refinance offers a great opportunity to cash in on low home mortgage rates, save money on your monthly mortgage payment, and eliminate debt or add extra cash to your disposal. Talk with a qualified VA home loan lender and refinance specialist to explore options available to you based on your unique circumstances and goals.
The saying that “knowledge is power” is always true, especially when it concerns your home buying options. As part of your established VA benefits, a variety of Veterans Affairs housing programs have been put into place to ensure that the country can take care of our valuable veterans by providing them with safe, comfortable housing without plunging them into debt.
The U.S. Department of Veterans Affairs has a host of information available on their website at www.va.gov. It’s a great first fact-finding step that will offer unbiased information. A qualified VA mortgage lender is also a great place to find information, as these specialists are using VA laws and assisting veterans every day. As stated earlier, beware of lenders preying upon your veterans status and make sure they can back up their “qualified VA lender” status.
Speak To a Loan Specialist Today
If you have questions about the VA Mortgage process and want to speak to a knowledgeable specialist, we’d be happy to assist you. You can contact us by giving us a call at 800-211-4940. We’ll take the time to walk you through the process and get you the answers you need.
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