Qualifying For A VA Loan
The first step in obtaining financing with a VA Guaranteed Home Loan is to meet certain eligibility requirements. … read more
Refinance Your VA Loan
Current VA borrowers can take advantage of the streamlined refinance program (IRRRL) with less hassel and paperwork. … read more
VA Loan Purchase Program
A special program for eligible borrowers with typically lower down payments, fees and competitive interest rates. … read more
- About VA Home Loans
- Benefits of VA Loans
- VA Loan Eligibility
- Buying With A VA Loan
- Refinancing - IRRRL Streamline
- Common Questions
VA Loans in Douglas
The VA Guaranteed Home Loan Program is a benefit earned by Veterans and eligible service members.
Work with Patriot Home Mortgage, a Arizona Mortgage Lender that specializes in VA Home Loans.
→ Typically No Down Payment
→ Competitive Interest Rates
→ No Prepayment Penalties
→ Caps on Closing Costs
Arizona VA Home Loan Benefits
A VA Loan comes with a guarantee from the Veteran’s Administration. The VA does not actually lend money, but the guarantee they offer carries with it a great deal of influence to the participating mortgage lenders that are actually making the loans. The protects the lender against loss if the borrower fails to repay the loan. This guaranty would be similar to the mortgage insurance a conventional loan would require.
One of the more obvious benefits of a VA Loan is that it helps ensure the Douglas veterans are provided with an equal chance to buy homes. In addition to providing the opportunity of home-ownership without discrimination, the VA Loan program also offers the possibility of obtaining a loan for a home purchase without requiring a down payment.
VA Loans have other strong benefits for consideration as well, such as limitations on the closing costs of the loan, a fair and negotiable fixed interest rate (competitive with conventional loans) and 30-year amortization terms.
What Can The VA Do?
Important Features Of The VA Loan Program:
- Ensure that all veterans are given an equal opportunity to buy homes with VA assistance, without regard to race, color, religion, sex, handicap, familial status or national origin.
- Typically no downpayment (unless required by the lender, the purchase price is more than the reasonable value of the property as determined by VA, or the loan is made with a draduated payment features).
- A freely negotiable fixed interest rate competitve with conventional mortgage interest rates.
- The buyer is informed of the estimated reasonable value of the property.
- Limitations on closing costs and fees by the lender and real estate agents, as well as allowing the seller to cover many of the buyer's closing costs.
- An assumable mortgage. However, for loans closed on or after March 1, 1988, the assumption must be approved in advance by the lender or VA.
- Long amortization (repayment) terms, such as a 30-year fixed rate mortgage.
- Rith to repay the mortgage loan without being charged an early payoff penalty.
- For houses inspected by VA during the construction, a warranty from the builder and VA assistance in trying to obtain the builder's cooperation in correcting any justified construction compliant.
- Forbearance extended to VA homeowners experiencing temporary financial difficulty.
What VA Cannot Do?
The following items the VA cannot help you with:
- Guarantee that the house you buy, whether it is new or previously owned, will be free of defects. The VA Appraisal is not intended to be an inspection of the property.
- If you have a home built, VA cannot compel the builder to correct construction defects or otherwise live up to the contract. VA authority is limited to suspension of the builder from participating in the VA Loan Guarantee Program.
- VA does not have the authoity to provide borrowers with legal services.
What Can A VA Loan Be Used For?
A VA Loan can be used for the following:
- To buy a home or condominium in a VA-approved project.
- To Build a home.
- Simultaneously purcahse and improve a home.
- Improve a home by installing energy-related features or making energy efficient improvements.
- Buy a manufactured house and/or lot.
VA Loan Eligibility - Arizona
If you are an active military service member or previously served in the armed forces, you may be eligible for a VA Loan.
The primary purpose of the VA Home Loan Program is to help veterans finance the purchase of residential real estate with favorable lending terms and at an interest rate that is usually lower than rates charged on other mortgage programs.
With regards to the VA Loan Program, the term "veteran" includes certain members of the Selected Reserve, active duty service personnel and certain categories of spouses.
Applicants that have other than honorable discharges will usually need additional consideration before eligibility can be determined. Typically, if you are new to the service, you'll need to have at least 90 days on active duty and have been discharged under other than dishonorable conditions with a related disability to qualify. If the applicant has served at least 181 days of continuous active duty and has been discharged other than under dishonorable conditions they might be eligible if the discharge was for a related disability.
Others that are eligible are selected Reserves or National Guard members, surviving spouses that have not remarried and spouses of POW or MIA servicepersons.
There are other more specific criteria for discharges that we’re not covering here, so if you have questions it would be wise to contact the Arizona Veteran's Administration to find out if your specific situation qualifies.
Requirements For A VA Loan Approval
According to the VA, borrowers must have suitable credit, sufficient income and a valid Certificate of Eligibility (COE) to be eligible for a VA Guaranteed Home Loan.
To get a Douglas VA Home Loan, the law requires that:
- You must be an eligible veteran who has available home loan entitlement (except in the case of an IRRRL when refinancing)
- The loan must be for an eligible purpose. The Purchase price should not exceed the appraised value. Otherwise you will have to pay the difference from your own resources.
- You must occupy or intend to occupy the property as your primary residence within a reasonable period of time after closing on the loan.
- You must have enough income to meet the new mortgage payments on the loan, cover the costs of owing a home, take care of other obligations and expenses, and still have enough income left over for family support.
- You must have a good credit record.
Buying a Douglas Home With a VA Loan
There are many advantages that VA Loans have over either FHA loans or conventional loans. When it comes to purchasing a home, there are two of these advantages that make buying a home with a VA Loan a better option to eligible borrowers..
The first advantage would be that the Veteran’s Administration does not require a down payment. It's important to remember that the VA isn’t actually the lender of the mortgage money. Instead, the VA does "guarantee" a portion of the loan making it more appealing to lenders. These lenders have their own criteria (called underwriting guidelines) that they need to adhere to.
Aside from the down payment, there is one other major benefit to buying with a VA Loan. Many Douglas home buyers are unfamiliar with the qualifications necessary to purchase a home. VA Loans are far more lenient when it comes to credit when compared to conventional loans. Approval for conventional loans are heavily weighted on credit history and scores. When you apply for a VA Loan they will look at your credit, but are not as concerned with the numeric score. VA Loans require that the last 12 months of payments reflected on the credit report were made on time and that there were no late payments, judgments, or collections in the last year. This allows for a wider range of veterans and active military members to qualify for a VA Loan.
Find A Lender
Locate a VA Lender that you can trust and communicate well with who has experience with VA Home Loans.
Your lender will help you with the initial pre-qualification and eligibility process.
Get A Cerficiate of Eligibility (COE)
The COE verifies to the lender that you meet the eligibility requirements for a VA Loan.
Veterans can apply online through the eBenefits website, or a lender can also apply for the COE on the Beteran's behalf through the VA Portal.
Apply For The VA Loan
Working with your Douglas approved VA Lender, you'll complete a full loan application and submit the initial documentation necessary to obtain a Pre-Approval letter that your real estate agent will need when presenting offers to sellers.
It's important to make sure your real estate agent and VA Lending Specialist are on the same page and understand the specific language and terms needed for the purchase agreement offers.
Find A Home And Sign Purchase Agreement
Find a home and work with a real estate agent to negotiate the purchase prices, closing costs and terms of the agreement. Make sure you have the "VA Options Clause" in the sales agreement.
An example of a "VA Option Clause" would include verbiage that protected you, the buyer, if the appraised value of the property does not meet a reasonable value.
Loan Processing And Appraisal
One a final sales contract has been approved by both the buyer and seller, your lender will work quickly to get you a final VA Loan Approval, which includes an appraisal, full underwriting of all income and asset documentation and anything else the bank may require.
Note: Keep in mind that the VA Appraisal is not the same as a Home Inspection. VA only guarantees the loan, and not the condition of a property.
Closing On Your Home
The final steps of the loan process is where VA Lender sends the final loan documents to a title company, an attorney or escrow company that will coordinate the signatures.
As soon as the lender sends the loan funds, the new deed is recorded in your name and the home is yours.
IRRRL Streamlined Refinance
Homeowners who are looking to refinance their existing VA Loan to get into a lower interest rate can do so and still get a VA Loan with the Interest Rate Reduction Loan (IRRRL), also referred to as a streamline refinance.
IRRRL loans are not for veterans looking to take cash out of the equity in their home to pay off bills, those loans are considered cash out loans. The IRRRL loan will allow for any veteran that is presently in a VA Loan (fixed rate) refinance into a new loan if the interest rate of the new loan is to be lower than the interest rate of the existing loan. Also, if the veteran is refinancing from an adjustable rate loan into a fixed rate loan they may do so, even if the fixed rate is higher than the adjustable rate.
Other important details to take note of about the IRRRL, this loan does allow for some closing costs to be included into the loan.
Highlights: Interest Rate Reduction Refinance Loan (IRRRL)
- Appraisal is not required by the VA
- Credit Underwriting package is not required by the VA
- "No Money Out of Pocket" for refinance fees
- You can refinance from an ARM to Fixed Rate
- Cash-out is not allowed
How long has the VA Loan Program been available?
The VA Loan Program was originally initiated in 1944 as the Servicemen’s Readjustment Act. The United States Congress passed the program to help eligible veterans obtain financing for homes, as the VA was then authorized to "guarantee" a portion of the loan for a home, farm, or even business loan. The first major amendment to the original program came in 1978 with the Veterans Housing Benefits Improvement Act which allowed even more veterans to qualify for the benefit. Later there were more revisions in the early 1990’s that eliminated specific dates of duty for qualifying for the program. Additionally, it was in this modification that the VA also allowed for Reservists and National Guard members to qualify as well after six years of duty.
Over the history of the VA Loan program more than 18 million VA Loans have been insured by the Veteran’s Administration. While that might sound like a pretty high number, the VA Loan has been around since 1944. Stats as last as 2009 suggest that of the estimated 24 million living veterans, less than 10% have actually used a VA Loan. Additionally, as of the same year there were only an estimated 2.1 million VA Loans currently issued. With all the added benefits and advantages for veterans to consider the VA Loan program, it’s still estimated that up to 20% of veterans are not fully aware of the VA Loan program, how it works, and the benefits of the loan program.
Does the VA lender money?
NO - VA Guaranteed Home Loans are made by private lenders such as banks, credit unions and mortgage lenders. To get a VA loan, you apply to the lender. If the loan is approved, VA guarantees the loan when it is closed. The guaranty means that the lender is protected against loss if the borrower fails to continue making mortgage payments.
What is the maximum VA Loan?
There is no maximum loan size for a VA Loan, except that the loan amount cannot exceed the lesser of the appraised value or purchase price, plus a VA Funding fee and energy efficient improvements, if applicabl.
However, lenders generally won't make a no-downpayment loan larger than $417,000 ($625,500 in high cost areas) due to secondary market conditions. Ask your Douglas VA Lender about loan limits in your county.
Do I have to repay the VA Loan?
YES - A VA Loan is not a gift and it must be repaid to your lender, otherwise you may lose your home to the lender through foreclosure.
If the lender does take a loss by having to foreclose, then the borrower will also be responsible to repay the VA for the guarantee.
Does a veteran's home loan entitlement expire?
NO - Home loan entitlement is generally good until used. However, the eligibility of service personnel is only available so long as they remain on active duty.
Does the VA home entitlement provide cash to the borrower?
NO - The amount of entitlement relates only to the amount VA will guarantee the lender against loss.
Can a veteran get used entitlement back?
YES - Your entitlement can be restored if the property has been sold and the loan has been paid in full.
There are other stipulations for restoring entitlement based on repaying the VA for past losses or transferring a loan balance to another qualified veteran-transferee.