VA Loans: What All Borrowers Should Know
A VA loan is a special mortgage available to people who serve or who have served in the United States Armed Forces. These loans offer special rates and qualifications, and can give soldiers and their families an opportunity to own their home. But what many borrowers may not realize is that VA loans also have some extra benefits or unusual aspects that can change the home buying experience. Read on to learn more about the many unknown aspects of VA loans.
VA loans can be "reused" for a new home even after you've received the first one. If you want to move and need a new mortgage, you should be eligible as long as the prior loan has been paid off. It's also important to note that there are circumstances where you can apply and be approved for a new VA loan even if your previous home ends up in foreclosure.
The purpose of a VA loan is to accommodate military members and their families. These loans are designed to help you find a single family home, condominium, town home, or some types of apartments that are move-in ready. But if you're looking to use the loan to purchase land alone, a business, or certain homes that need serious repair, you will probably not be eligible. They also cannot be used to purchase investment homes or rentals.
Even though VA loans have the term in the title, the VA is not responsible for issuing these loans. They do provide a guranty on the home loan but the loans themselves are actually guaranteed by the US government. In most cases, the VA will help guarantee no more than a quarter of the total amount, but this helps improve lender confidence, ensuring that you'll be approved. In fact, even those who may have undergone bankruptcy or a foreclosure can usually still manage to secure a loan.
Unlike most mortgages, VA loans do not require you to purchase mortgage insurance. However, there is a VA funding fee that applies. This fee is usually approximately two percent of the total amount of your loan. It helps to keep the loan program in operation so that other soldiers can participate. These fees apply to new and refinance loans, but can be rolled into the total loan amount and is often waived for soldiers who have disabilities as a result of their service. Get a free VA loan quote at your local center today!