VA Funding: Thank You for Your Service!
On November 11th, we’ll remember the sacrifices of our heroes past and present – those returning home and those fallen.
We are humbled and grateful remembering the sacrifices that our heroes have made on our behalf – and those of their families – since the founding of the United States. In Pueblo, particularly, we are humbled to live in the Home of Heroes.
Before we go much further, THANK YOU FOR YOUR SERVICE!
With this holiday arriving soon, we thought it was a good chance to share one of the benefits available to our service personnel: The VA Loan.
The VA Loan is not so much a loan directly from Uncle Sam, but rather a government guarantee of a loan from a qualified lender. It was envisioned to extend long-term financing for eligible American veterans or their non-remarried, surviving spouses – best of all, no down payment is required.
We won’t go into all the details, as a qualified lender is better-suited to share all the up-to-date changes – like loan limits – which change frequently. But we wanted to share some highlights and resources that will get you on the path to taking advantage of this benefit if you qualify.
Here’s a quick checklist to help you out:
1. First, you have to be an honorably discharged eligible veteran. (Non honorably discharged veterans will require additional development to better understand the circumstances of discharge.) But you can check your eligibility on the VA site:
2. You need to apply for a Certificate of Eligibility (COE). To get yours, go the eBenefits portal at this link or put this URL in your browser:
3. Get prequalified with a qualified lender (we are happy to refer you to some) prior to searching and FOR SURE prior to submitting an offer. In today’s environment, it’s important to ensure you have started the dialogue with the lender early on to ensure a smooth transaction.
4. Then decide on a home to buy and sign a purchase agreement; you’ll need to ensure the home is habitable (or meets certain similar conditions) as the VA/FHA appraisal processes are more stringent than a traditional loan (often referred to as “conventional”).
5. Once the purchase agreement is signed, formally apply for the loan.
6. Order an appraisal from the VA (this is usually done by the lender).
7. Keep in communication with the lender and close the loan.
8. Move in.
Why do a VA Loan? The reasons are many, but the best benefits to our veterans include:
1. No down payment!!!! As with all things, some exceptions may apply.
2. The loan can be up to 100% of the VA-established value of the property.
a. Because the qualified lender may resell the loan to what is called the “secondary market” the loans generally may not exceed $417,000 ($625,500 for loans in Hawaii, Alaska, Guam and U.S. Virgin Islands). This figure is subject to change each year.
3. There is a flexible negotiating of interest rates with your lender.
4. No PMI — monthly mortgage insurance premium.
5. There are prescribed limits on buyer’s closing costs, keeping you from being burdened with excessive fees.
6. VA also allows the seller to pay all of the veteran’s closing costs as long as the costs do not exceed 6% of the sales price of the home.
7. An appraisal, which informs the buyer of estimated property value.
8. You’ll get a thirty-year loan with a choice of repayment plans.
a. Traditional fixed payment
b. Graduated Payment Mortgage – GPM (low initial payments which gradually rise to a level payment starting in the sixth year);
c. And in some areas, Growing Equity Mortgages-GEMs (gradually increasing payments with all of the increase applied to principal, resulting in an early payoff of the loan).
d. Hybrid ARMs: VA is authorized to guarantee hybrid ARM loans where the initial rate remains fixed for at least 3 years. The initial adjustment can be as much as 2 percent if the fixed rate period is 5 or more years. Annual adjustments thereafter are limited to 1 percent if the fixed rate period is less than 5 years, and 2 percent if the fixed rate period is 5 or more years. If the fixed rate period is less than 5 years, the initial adjustment is limited to 1 percent and the annual cap to 5 percentage points.
e. Traditional ARM loans: VA can also guarantee traditional 1-year ARM loans where the rate is adjusted annually. Annual adjustments are limited to 1 percent and the maximum interest rate increase over the life of the loan is limited to 5 percentage points.
9. New homes, appraised before or during construction, receive inspection to ensure compliance with the plans and specifications used for the appraisal and with VA minimum property requirements. All new houses, regardless of when appraised, are covered by either a 1-year builder’s warranty or a 10-year insured protection plan.
10. An assumable mortgage, subject to VA approval of the assumer’s credit.
11. Right to prepay loan without penalty.
12. VA performs personal loan servicing and offers financial counseling to help veterans avoid losing their homes during temporary financial difficulties.
The VA has put together a set of videos that can be viewed online at: http://www.benefits.va.gov/homeloans/target_video.asp
And you can check out the factsheet at: http://www.benefits.va.gov/homeloans/factsheet.asp
Lastly, you can connect socially with the VA at:
· Facebook http://www.facebook.com/VeteransBenefits
· Twitter: http://twitter.com/VAVetBenefits
We hope this overview helps our veterans understand how to use a VA loan, what it does and additional resources for assistance.
We provide this information for guidance and don’t wish to commercialize it. However, if we can provide any guidance, it would be an honor to be of service to our heroes. Please feel free to contact us at: http://www.SoldOnPueblo.com or 719.583.8383.
Robert, Jeff, Greg and Russ
The RE/MAX Associates Pueblo Leadership Team