You've dreamed of owning your own home, and now you're ready to take the leap. But where do you start? Here we will go over tips that will help you get the home you deserve with the help of the Veterans Administration (VA).
VA Home Loans
The VA stands behind or guarantees some of the loans provided by the lender. Since there is less risk to the lender, you are more likely to be approved for a loan.
Who Can Apply for a VA Loan
First, make sure you are current service members, veteran, or an eligible surviving spouse.
How Do I Know If I'm Eligible?
Eligibility is dependent on the length of your service or the length of your service commitment, duty status, and record of service. If you're an active service member you will need to provide a statement of service. You will receive help from a commanding officer to complete the statement of service.
1. Down Payments
Something you might not expect, but will be extremely beneficial to know, is that about 90% of the time a VA Home Loan is given with no down payment. So long as the house’s sales price is not higher than the appraised value of the home.
Typically it is required that you make a down payment for traditional loans. If you make a down payment of less than 20% of the total mortgage amount with the VA, the lender will not drop you from consideration.
2. Have a Savings
Despite not needing to provide a down payment for your new home, saving up money ahead of time is in your best interest. There are fees that come along with buying a new home, so even if you’re not putting any money down, you’ll still need to have a reserve in your bank account.
Some of the fees you will be looking at include:
- VA Funding Fee
- Loan Origination Fee
- Closing Fee
- VA Appraisal Fee
- Recording Fee
And these are just to name a few.
3. Closing Cost
Even when you’re told that there is “no closing” cost, there is 100% going to be a cost to pay. When a lender offers a no closing cost loan, it means that they will pay it, but you will be given a higher interest rate that you cannot modify until you choose to refinance. In the long run, paying a closing cost will be less money out of your pocket.
4. Certificate of Eligibility or COE
While you could get the Certificate of Eligibility (COE) electronically or by mail on your own, you should wait until you can have a lender assist you. That's what the lender is there for, to help you through the process of buying a home. However, if you feel better or more comfortable acquiring it yourself, there is no need to wait.
5. Credit Score
There is no limit on the credit score you’ll need for buying a home via a VA Home Loan. The VA requires that the lender review your entire profile. Does that mean you shouldn’t keep an eye on your credit? Not at all! Be sure to use a free site to check your credit score. There might be an error on there, which could be causing your score to be lower than it should be. A better credit score will always go a long way.
It is understandable to have additional questions and need further guidance because buying a home is a big life event. Be sure to go to Money.com for further information on VA Home Loans.