What is a VA Home Loan?

 

As a military relocation specialist, I’ve worked with many military members whether active and/or former service members in the purchase and/or sale (even short sale) of their home in the New Jersey area. Prospective home buyers often ask me what a VA Home Loan is all about.

Explained simply, a VA Home Loan is backed by the U.S. Department of Veterans Affairs and there are a host of benefits and to see if you’re eligible follow these required steps to obtain one.

Finding a home should be an enjoyable process especially if you’re equipped with knowledge. Let’s learn about the benefits of getting VA financing.

BENEFITS OF A VA HOME LOAN

• Purchase power and purchase sooner because through this loan there are options for no money down.
• Increase buying power since loan to value ratio is 100 percent
• Back-end Debt to Income ratio is 41 percent in certain situations
• No private mortgage insurance
• Closing costs of up to 4% can be paid by the seller
• Loan is assumable by another qualified veteran borrower
• No pre-payment or early payoff penalties
• May apply for a new loan within 2 years or possibly less after a bankruptcy

STEPS IN THE VA HOME LOAN PROCESS

1. Determine eligibility and entitlement: Be sure to get your pre-qualification/pre-approval to determine how much you can borrow.
2. Start house hunting, present an offer and execute the sales contract.  Remember the owner must occupy the unit and if a multi-family, the owner must occupy one unit. Also second homes, businesses, or farm property are not eligible
3. Arrange home inspections to ensure your home is in working order but be sure to attend with your realtor representative
4. Apply for the VA Home Loan and supply your documents as required by the lender
5. Property appraisal as arranged by the lender
6. Examine title search documents as reviewed by your lawyer and you
7. Obtain home owner’s insurance
8. Pay fees and closing costs or if the seller agrees, concessions of up to 4% which may include the funding fee
9. Closing time–Hurrah once you’ve paid the VA funding fee/lender’s origination fee you can now say home sweet home

Use this handy table to determine your eligibility and entitlement:

photo credit: Learning Library 

GETTING PROOF OF SERVICE

• Active Duty – members, active reserves/guard must secure a statement of service by the personnel office or commander of the unit.  It must include service member’s full name, Social Security, date of entry and name of the command verifying information
• Reserve and Guard (if discharged) – submit a NGB Form, other wise known as Separation and Record of Service or an annual retirement points summary.  The veteran discharge must be honorable
• Veterans – secure a DD FORM 214, Certification of Release or Discharge from Active Duty. Honorable or general discharge from service is required to qualify for a VA home loan

What if you’ve misplaced, lost or no longer have your discharge papers?  Not a problem, the NPRC (National Personnel Records Center in St. Louis files service members records. Complete the GSA Form SF-180 and or fill out NRPC Archives and get the required documents.

BORROW AFTER FORECLOSURE OR BANKRUPTCY

If you’re wondering if you can borrow after facing a foreclosure or bankruptcy, the answer is yes you can.  Unlike conventional loans, the grace period may take 2 years or less to borrow again.  During the waiting period just stay on top of your bills to re-establish your credit rating.

Amazed with all the benefits of VA financing?  Send me a note if you’re interested in getting started if your local to New Jersey/NYC area but don’t worry if you’re out of state–VA home loans are nationwide and I’d be happy to connect you with a military real estate professional in guiding you on home purchase!

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