Strategies for Veterans Buying Your First Home Using Your VA Loan
A new study published by The Mortgage Reports shows that the number of veterans choosing a VA loan to buy a home has increased significantly over the past few years. These findings come as no surprise, considering the benefits VA loans provide.
To help prospective homeowners make the most of these flexible, no-down payment loans, we’ve gathered below a few strategies to use a VA mortgage.
- Potential borrowers can get pre-qualified for a VA loan – Getting pre-qualified for a VA mortgage isn’t a required step in the home-buying process. However, VA loan pre-qualification can help applicants find out the mortgage amount they can borrow and, implicitly, the price range they should consider when searching for a home to purchase.
- VA loans are guaranteed by the VA – Since these types of loans are backed by the VA, which guarantees up to 50% of the loan amount, depending on the VA loan limit in each county, a veteran and an active duty military can secure better terms and rates than if he or she would opt for other mortgage programs.
- VA loans don’t require private mortgage insurance (PMI) – When choosing other mortgage products, one way to avoid paying PMI is to put down the minimum amount required by the lender, which could range from 3.5% to more than 20% of the appraised value or sales price of the property. A great aspect about VA loans is that they don’t require any down payment and insurance.
- VA loans are reusable – According to the VA, a veteran’s available entitlement can be restored. That basically means that a VA mortgage can be used over and over again, but only if the borrower has paid off the prior loan and sold the property. The VA also allows active duty borrowers, who relocate to another state or county, to keep their existing homes—also purchased with VA loans—for retirement and use their entitlement to purchase a second home in the new location. On a side note, service members who have gone through bankruptcy or foreclosure can also utilize their VA loan benefit.
- VA loans can be used to purchase foreclosed properties – Another strategy to use a VA mortgage is to purchase a distressed home. To qualify for a VA mortgage, a foreclosed home needs to meet certain safety and health standards, and provide “decent and safe living conditions,” as required by the VA. The VA will guarantee a loan only if the home complies with its guidelines.
- VA loans don’t have prepayment penalties. As with any other loan, an early VA mortgage payoff can net substantial interest savings. But the greatest thing about using a VA loan is that you can pay it off several years or months before its maturity date without worrying about prepayment penalties. For instance, just $100 paid extra every month can shave thousands of dollars and many years off your mortgage.
- The VA offers assistance to struggling borrowers. What if a borrower can no longer make payments on his or her VA loan after a while? In that case, he or she can approach the VA for assistance. The VA has dedicated financial counselors who are ready to negotiate repayment plans as well as other terms and conditions with lenders on behalf of VA borrowers.
Not all lenders in Northwest Florida offer VA loans. To help veterans and active duty military personnel get their dream home, Whitworth Builders is pleased to recommend the services of our preferred lenders, Mortgage 1 One and First Florida Bank, that can professionally handle many types of loans, including VA mortgages.