Many people have misconceptions about obtaining a VA loan. This comes from rumors of bad experiences and poor information. Now that you know the history of VA loans and how they work, here are a few things that service members looking to obtain a VA loan need to know:
They are reusable.
Your VA entitlement does not mean you are only entitled to only one VA loan. You can use your VA entitlement over and over again if the appropriate conditions have been met (such as having paid off the loan each time). Exceptions do exist so if you have questions please call to learn more.
They may only be used for certain home types.
VA loans are designed for obtaining a home that is in move-in ready condition. This would include single-family homes, modular homes, condos, and some multi-property units, with the condition that you plan to live in one of the units. A fixer-upper will not likely be an option with this loan type, and other restrictions may also exist on buying a working farm. Other loan options exist for these purchase types.
They are to be used only for the purpose of a primary residence.
You may not use your VA loan benefit to purchase an investment property or a vacation home. VA loans are solely for primary residences; however, as previously mentioned you can use this benefit to buy a duplex or another multiunit property, provided you live in one of the units.
They are not obtained directly through the VA.
The agency provides a guarantee on each qualified mortgage loan. You will obtain your VA Home Loan through a lender, like Benchmark. The government guarantees the home loan, which in turn gives lenders confidence and helps to get you great rates and terms.
They are available if you have had a foreclosure or bankruptcy.
Service members who have had a previous bankruptcy or foreclosure can get a VA loan. This is true even if you have had a foreclosure on a VA loan. Please contact us for more details if you have had a recent default on your home loan.
They don’t have private mortgage insurance.
On any other loan program, you are required to pay a monthly fee if you are not making a down payment of at least 20%. The VA loan program does not require this thanks to the VA guarantee, which means that having a VA loan will save you money each month that you would be paying in any other loan type.
There is a fee and it is mandatory.
The VA Funding Fee is mandatory, and it helps the VA keep the program going. It can, however, be rolled into the amount of the loan, and the fee can be waived entirely if you have any service-related disabilities.
There is no prepayment penalty.
Some individuals like to pay more money than the minimum due when they can afford to do so. Doing this can help individuals save a ton in interest payments, and shorten the length of the loan. You can make extra payments anytime you want.