Veteran VA Mortgages
Veteran VA Mortgages
VA mortgages are among the most popular military benefits for both current servicemembers and Veterans. And no wonder! At a time when most potential buyers need a healthy down payment in order to acquire a home, VA mortgages require no down payment and remove the penalty of Private Mortgage Insurance or “PMI” that most people have to pay if they have down payments of less than 20%. The loans have no prepayment penalty, are written at very favorable rates in view of current interest rates, are assumable, and are applicable on virtually any home you want so long as it is your primary residence.
Tips To Keep In Mind When House Hunting
When you start looking for house, there are several things to keep in mind:
- First, you must buy a home that is lower than the amount you are approved for. If you want a more costly home, you will have to put up money to cover the difference.
- Second, you must keep in mind your VA entitlement. The VA grants every service member, Veteran, or other qualifying person a basic entitlement credit of $36,000. With the basic credit, you could buy a home worth up to $144,000. However, you may be eligible for extended credits of up to $68,250, which means the VA will back up to $104,250 of your loan. With this in mind, you can buy a house up to $424,100 in most areas and have the government back 25%, or $104,250, of the VA loan.
- Third, you must not exceed the loan limits. As noted above, $424,100 is common in most areas, but some areas of the country with notoriously high cost of living rates have higher limits. If you find a house that exceeds the loan limit, you must pay the difference and only finance the $424,100 or area limit. Using the full amount of the federally-mandated loan limits depends entirely on what your lender has approved you for.
- Fourth, since VA mortgages only cover the loan, you must consider the other costs of acquiring a home. Before you even get your keys, you will need to pay closing costs. Although VA mortgages often have lower closing costs, you will be responsible for some of these costs. You might be able to negotiate a contract where your seller pays the costs, or the costs are factored into the price of the home. When moving, you will also need earnest money, moving costs, utility deposits, and additional money to add or replace appliances and the furnishings to get you started.
Obtaining VA Mortgages
Obtaining one of these VA mortgages is a privilege offered to the select group of people who have either served in the military or meet certain other conditions. Typically, you will have to have served 90 days if you are current servicemember or have a service record that shows 90 days of wartime service or 181 days of peace time service if you are a Veteran. If you served in the National Guard or Reserves, your minimum service time is six years. Those who were discharged for hardship, at the request of the government, due to a reduction in force, for a medical condition, or for disability may also be eligible to apply for VA mortgages. Also, spouses of those missing in action, held as prisoners of war, disabled, or killed while in the military can claim the benefits of VA mortgages so long as they have not remarried.
Proving your eligibility is the first step in the loan process. You need a DD-214 proof of service and a Certificate of Eligibility (COE) to move to the next step. With government paperwork in hand, you need to apply for your loan with a VA-approved lender like Capital Bank, N.A. to obtain prequalification. This requires that you have a responsible debt to income ratio and a credit history that shows you pay your bills on time. If you have had a brief period of unemployment, family illness, or other emergency that got you off track, you may still qualify for the loan as long as you have shown a faithful payment record since that time. Capital Bank, N.A. will not only assist you in obtaining your COE, but will help you through the prequalification process as well, ensuring you understand how various factors affect your eligibility and loan amount you are approved for.
Ready To Get Started?
If you are a Veteran thinking of buying a home, Capital Bank, N.A. is the place to start. We can help you successfully complete the online application form and guide you through the VA mortgages process. Whether you need help obtaining your COE, obtaining prequalification, or clarifying how VA mortgages work, give us a call at (866) 216-3577, where our trained staff of loan specialists are ready to help you.