By: James Lutz | Mortgage Loan Officer
A VA mortgage loan is type of mortgage that is backed directly by the Veterans Administration. It is made available to current servicemembers, Veterans, and any surviving spouses.
To qualify for this mortgage product, you must meet certain credit score, employment/income, and asset requirements. There are a few very noticeable advantages to this type of mortgage. First, you are not required to have a down payment. This helps with the overall amount of funds needed to close. Next, there is no monthly PMI (Private Mortgage Insurance) on this type of mortgage either. Another great aspect of this mortgage is that the buyer pays limited closing costs as well. The interest rates for VA loans are generally better than other types. After all, shouldn’t we truly be focused on all the ways we can give back to those who gave us everything they have? These benefits are good for the entire lifetime of the qualified buyer.
While some may wrongly believe that these types of loans might be tougher to close, VA loans are just as easy to close as any other type of loan out on the market. It is important to make sure that you work with someone who has the experience and knowledge of these specific loans. For example, people who are unfamiliar with VA loans may not know that they will need a pest inspection done on the house that is being purchased – and the buyer cannot pay for it.
It is also very important to understand that each person may have a different eligibility amount. The DD214 discharge papers, and certificate of eligibility are two very important pieces of documentation to review upfront. This will help you determine the correct funding fee. The funding fee is typically going to be a small percentage of the loan amount. It will usually get rolled into the mortgage amount and be paid over the life of the loan. This is one way the VA makes money back to help ensure they can continue to guarantee new mortgages.
There are just so many reasons why you should consider using your benefits. But make sure you work with a lender that understands the ups and downs of this loan product as it pertains to your local market. Another piece of advice would be to make sure you start your mortgage process before you need to rush out to make an offer. This is a huge decision for you and your family that we are more than happy to help you with, but it is in your best interest to get all your ducks in a row up front. You also want to make sure you go over the ins and outs of the loan process – so you understand what you are getting into and what you should be able to expect.
There are many benefits to a VA loan and we are always happy and ready to answer any questions you may have. If you are an active-duty servicemember, veteran or a surviving spouse who has any questions about this process or whether or not a VA loan is right for you, visit MichiganFirst.com/mortgage today.