VA Home Loan Guarantee Program is available for veterans to own their own house, initiated by the US Department of Veterans Affairs (VA). Hopefully, with this program, veterans and service members, along with their spouses, can own a house with little to no down payment (DP). But how do you get this program? Find the answer below.
How to Get a VA Loan
Since VA loan helps veterans become homeowners, they tried to give up to 100% financing based on a home’s price. Eligible borrowers can utilize a VA loan to build a house or purchase an existing home. They can also repair and improve a home or get a lower interest rate for a mortgage.
To benefit from a VA loan, borrowers should provide the lender (banks or mortgage companies related to the VA) a certificate of eligibility from Veterans Affairs. It means you must get service-related documentation to prove you’re a veteran or an active military member. The certificate itself can be obtained from the VA website.
3 Types of VA Home Loan Guarantee Program
There are three types of VA loans you can get as long as you’re an active duty service member, veteran, reserve member, national guard member, or particular surviving spouse. Look at the details below.
1. Purchase Loan
A purchase loan type is the best choice to assist you in purchasing a house at a competitive interest rate. Therefore, you don’t need to make a down payment (DP) or buy mortgage insurance to gain a purchase loan. You can also improve a house or build one yourself based on your liking.
By applying for a purchase loan, you can buy a single-family house, up to four units, and purchase a condo in a VA-approved project. Getting a manufactured home or lot will be easy as well. You can even add new features to your house (such as solar power) to make it more energy-efficient.
2. VA IRRRL
This VA loan program is also known as Streamline Refinance Loan. The word ‘streamline’ implies that the IRRRL process is faster and more straightforward than the other types of refinancing choices.
VA IRRRL has several benefits, including helping you switch to a fixed-rate mortgage from an ARM (Adjustable-Rate Mortgage), changing your repayment term, and lowering your monthly interest. Still, remember that the requirement is to have an existing VA loan to receive VA IRL.
3. Cash-Out Refinance Loan
With a cash-out refinance loan, you’ll be able to change your current loan with a new loan that has different terms. You’ll also be able to take cash out of your home’s paid-off portion or refinance a non-VA loan to a VA-backed loan with cash-out refinance loan type.
To activate a cash-out refinance loan, don’t forget to check whether you’re qualified for a VA-backed home loan Certificate of Eligibility. Also, ensure you meet VA’s and the lender’s standards for income, credit, and other requirements (if any). Lastly, remember that you’ll need to live in the house you’re refinancing with the loan.
Why Should You Get a VA Loan?
VA Home Loan Guarantee Program for veterans and other service members has at least three reasons why you should consider earning this loan. Other than giving you benefits to finance the house’s upgrades and renovations and cash out the equity of your home, you’ll also be able to experience the other four pros explained below.
1. Easy Requirements
No need to worry too much if you’re planning to get a VA loan. Because you only need a credit score of at least 620. Most borrowers will need to meet a higher score to gain a conventional mortgage, more likely if they wish to get a reasonable interest rate.
Anyway, 620 is a number in the ‘Fair’ credit score range, a tier below ‘good’ and two tiers below ‘Excellent.’ So, it would be easy for the borrowers to gain this loan as the requirements aren’t that burdensome.
2. No Down Payment (DP)
Conventional loans will necessitate you to pay a down payment of at least $20,000. However, the VA loan tried its best to give you an excellent benefit by eliminating a down payment requirement. You’ll get to purchase up to a country’s standardized loan limit without a down payment with a VA loan.
This way, veterans and service members can own homes without struggling to save their monthly salary.
3. No Mortgage Insurance
Conventional loans demand borrowers to pay private mortgage insurance, at least 20 percent of the purchase price. If the mortgage costs you $450,000, you must pay $90,000 annually for the insurance. VA loans came to help by giving you no mortgage insurance to prevent you from paying those amounts.
Indeed, a VA loan also comes with a mandatory funding fee to be distributed to the Department of Veterans Affairs. However, those with service-connected disabilities will be free from purchasing this fee.
4. Fully Guaranteed
VA loan frees you from the headaches regarding foreclosure and bankruptcy issues because it’s possible to secure a VA Home Loan Guarantee Program from bankruptcy or foreclosure. To be saved from these financial setbacks, veterans need to file for bankruptcy protection, which is written in Chapter 13.
Furthermore, the service members who experience a VA-backed mortgage loss can still purchase another mortgage. On the other hand, conventional mortgage buyers will experience a significantly more extended waiting period.
Get Your VA Home Loan Guarantee Program Now!
Whether it is a purchase loan, VA IRRRL, or cash-out refinance loan, you will know your best choice once you adjust it to your need. However, if you want to purchase a house without the need to make a down payment beforehand, you may pick a purchase loan.
On the other hand, if you own an existing VA loan, you might be fond of Streamline Refinance Loan or IRRRL. This way, you’ll obtain a lower interest rate by changing your repayment term from a VA adjustable rate to a fixed-rate mortgage. Then, let’s visit the official website and apply for a loan now!
