A VA loan is available through the US Department of Veterans Affairs for qualifying veterans and their families. The loan can help you get started on your way to owning a home. However, many misconceptions about it leave so many people confused. In this post, we will clear them up to help you make the right decision and finally have the house of your dreams.
It’s Hard to Qualify for a VA Loan
The VA loan is not hard to qualify for, but it does require some work. The VA requires a certificate of eligibility and a certificate of discharge from your military branch. The certificate of eligibility is a report from the VA that determines whether or not you are eligible for a VA loan.
A certificate of eligibility is required if you are in the VA system and are not already approved for a time-sensitive VA loan. The certificate of discharge is required if you have served honorably. If you were in the military and received a dishonorable discharge, you are not eligible for the VA loan with a certificate of eligibility.
It Requires a Down Payment
A down payment is not required for a VA home loan at or under the local conforming limit, as opposed to conventional loans, which generally require a down payment of up to 20%. Of course, a down payment is still an option with a VA home loan, but it is not required.
It Requires a Private Mortgage Insurance (PMI)
Private mortgage insurance is not required for VA loans. With other loans, you would have to pay PMI if you put less than 20% down. This can add 0.2%-0.9% to your monthly mortgage payments. You don’t have to worry about this extra expense with a VA loan.
It Can’t Be Refinanced
That’s not completely true. VA loans can be refinanced just like conventional loans. However, it takes more time and some extra paperwork to complete. As a VA loan protects the lender in case you can’t pay, the lender needs some extra confirmation that the loan will be repaid.
It Must Only be One VA Loan At a Time
You can have more than one VA loan at a time, depending on your VA loan entitlement. Your loan entitlement is the amount the VA will pay your lender if you default on your loan. Your entitlement is based on your discharge status and your amount of active service. You can find out your loan entitlement by requesting your certificate of eligibility.
It is Not Assumable
It is assumable. The VA loan is assumable. This means that the loan can be taken over by another borrower when you are no longer the homeowner. Just be aware that the VA is not involved in the transaction and therefore, there is no guarantee that the loan will be assumed. The VA is not required to pay the new owner a portion of your loan if you default on it.
Time to Buy a House
Getting a VA home loan is not as difficult as many people make it out to be. It just requires a little extra work, but it is well worth it in the end. Not only does it help you become a homeowner, but it also gives you the ability to purchase a home that may be out of your price range if it were not for VA financing. Start pre-qualifying today, and you can be approved within days.
Do you need help with VA mortgage in Utah? We can help here at Clayson Mortgage. We will work for you and only ensure that you get the best deals. Get in touch with us.