Military Home Loans- 11 Things You Should Know About VA Home Loans
Did you know that if you are an active duty service member or veteran looking to buy a home, that military home loans are in place to help? These military home loans fall under the Veteran Affairs (VA) and are frequently referenced as simply VA home loans.
For military home loans, the VA home loan represents an uber powerful lending program for our nation’s military service members, both active duty and veteran. Originally enacted by the United States Congress in the Servicemen’s Readjustment Act of 1944. In short, this act extended myriad of benefits for eligible veterans. Later, in 1978 the Veterans Housing Benefits Improvement Act expanded and increased the benefits for many millions of America’s veterans. Most recently, the President signed Public Law 110-389 known as the Veterans’ Benefits Improvement Act of 2008 further expanding the horizons of military home loans.
So now with some historical context of military home loans and how they came to be, let’s dive deeper into what this means to you.
Since 1944 an estimated 21 million (and counting) active duty, retired, and veterans of the US Armed Forces have become homeowners. Yet, even amongst VA borrowers many aren’t familiar with the VA home loans quirks and immense benefits.
Here’s 11 Things You need to know about VA Home Loans:
- You can use them again and again, kinda like roll over minutes but better. Many borrowers of military home loans aren’t aware that you can actually reuse your full VA home loan entitlement. The catch… You simply need to pay off the previous loan each time. Even if you have lost on to foreclosure or currently have one, you may be able to get another. (If you have one know, sell or refinance out of the VA home loan, to get another)
- Only for specific kinds of homes. If you want to buy that commercial property down the street for your new business venture or a fix and flip property, then military home loans may not be right for your needs. VA home loans are ideally targeted for “move-in ready” homes for sale. These include: single-family homes, some modular housing, some multi-unit properties, townhouses, approved condos, and more.
- Must be your primary home, not for that dream hotel venture. If you’re planning to buy a vacation home in the US Virgin Islands or an open up a dream hotel venture, then don’t bother with attempting to use your military home loans benefit. VA Home loans are only for a primary residence with very few exceptions.
- Military home loans aren’t issued by the VA. This fact may come as a bit of a surprise… However, the VA itself is not the business of issuing and servicing VA home loans. For the VA’s part, they issue the guaranty of military home loans for qualified service members.
- They’re backed by Uncle Sam. If you do qualify for military home loans, the VA generally guarantees roughly a quarter of the amount of your VA home loans. With this guaranty in place, lenders are more confident in providing military home loans with great rates and terms.
- Ever had a foreclosure or bankruptcy, its ok a lot of us have. Even with bankruptcy or a foreclosure on your record you can still obtain a VA home loan. The rules and circumstances for either, a foreclosure or bankruptcy, are a bit different. Service members who have experienced a foreclosure using the VA home loans still may be able to use their military home loans benefit. Contact a lender for more for information.
- Yay, no monthly mortgage insurance. With any other loan program, monthly mortgage insurance is part of the fee on top of your mortgage payment when not putting at least 20 percent down. Since military homes loans come with a VA guaranty, this requirement is eradicated is it is not needed for VA home loans. This is a highly favorable term that puts more money in your pocket since you won’t be paying for monthly mortgage insurance or a mortgage insurance premium.
- No down payment but a mandatory fee. Military home loans are no money down, have no monthly mortgage insurance, but they do have a mandatory VA Funding Fee. The fee is usually about 2 percent of your VA home loans. So what does it do and why does it exist? This fee helps keep the VA home loans program up and running and is required whether you are getting military home loans for purchase or refinancing. Here’s a ray of sunshine, the VA Funding Fee can be rolled into the amount of the loan or completely obliterated if you have service-connected disabilities.
- Who can be a borrower, may not be Great Granny Susan. With most loan types a borrower can have nearly anyone as a co-borrower including Great Granny Susan. Military home loans are restricted to who you may and may not have as a co-borrower. Not to worry, unless you really did want to add Great Granny Susan to your home loan… Sorry Great Granny! Here’s what you can do… You can add your spouse or another qualified veteran to your VA home loans who will also reside with you. In such cases, a down payment will be required. Not all lenders offer these kinds of joint loans, so check for VA home loan lenders.
- Pay monthly or pay early, no early pay off penalties. This is the quickest way to get a jumpstart on your paying off your military home loans mortgage early. Take comfort in knowing that when you do make additional principal payment no one’s going to call a foul. No prepayment penalties for VA home loans exist. Even just an extra $100 per month can shed years and many thousands of dollars of the balance of your military home loans. Here’s more advice on how to pay off your VA home loans faster.
- Last but not least, some sellers may not accept military home loans. Very sad but true… A few home sellers out there may not accept VA home loans simply because they have heard myths and formed misconceptions about military home loans. That’s ok, get with your real estate consultant to find our which sellers are accepting VA home loans and which aren’t. In many cases, a military friendly real estate agent who is knowledgeable about military home loans can shed insight and dispel any misgivings listing agent and seller may have. Quick note… When looking for a military friendly real estate agent, check to see if the agent is a certified “Military Relocation Professional (MRP).” A MRP agent will be a massive asset like the gold in Fort Knox during your home buying journey.
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Looking to buy your new home in Las Vegas, NV? Contact Andrew Finney, he is a licensed Real Estate Consultant in Las Vegas, NV, former US Marine, and a Military Relocation Professional.
Berkshire Hathaway HomeServices, Nevada Properties
Andrew Finney Team
7475 W. Sahara Ave. Suite 100
Las Vegas, NV 89117