Why a VA Loan?
The more you know about our home loan program, the more you will realize how little “red tape” there really is in getting a VA loan. These loans are often made without any down payment at all, and frequently offer lower interest rates than ordinarily available with other kinds of loans. Aside from the veteran’s certificate of eligibility and the VA-assigned appraisal, the application process is not much different than any other type of mortgage loan. And if the lender is approved for automatic processing, as more and more lenders are now, a buyer’s loan can be processed and closed by the lender without waiting for VA’s approval of the credit application.
Additionally, if the lender is approved under VA’s Lender Appraisal Processing Program (LAPP), the lender may review the appraisal completed by a VA-assigned appraiser and close the loan on the basis of that review. The LAPP process can further speed the time to loan closing.
What is a VA Guarenteed Loan?
These loans are made by a lender, such as a mortgage company, savings and loan or bank. VA’s guaranty on the loan protects the lender against loss if the payments are not made, and is intended to encourage lenders to offer veterans loans with more favorable terms. The amount of guaranty on the loan depends on the loan amount and whether the veteran used some entitlement previously. With the current maximum guaranty, a veteran who hasn’t previously used the benefit may be able to obtain a VA loan up to $240,000 depending on the borrower’s income level and the appraised value of the property. The local VA office can provide more details on guaranty and entitlement amounts.
Who is Eligible?
Veterans who served on active duty and were discharged under conditions other than dishonorable, during World War II and later periods are eligible for VA loan benefits. World War II (September 16, 1940 to July 25, 1947), Korean conflict (June 27, 1950 to January 31, 1955), and Vietnam era (August 5, 1964 to May 7, 1975) veterans must have at least 90 days’ service. Veterans with service only during peacetime periods and active duty military personnel must have had more than 180 days’ active service. Veterans of enlisted service which began after September 7, 1980, or officers with service beginning after October 16, 1981, must in most cases have served at least 2 years. VA regional office personnel may assist with additional eligibility questions
VA Loan Applications
The application process for VA financing is no different from any other type of loan. In fact, the VA application form is the same as that used for HUD/FHA and conventional loans. The mortgage lender verifies the applicant’s income and assets, and obtains a credit report to see that other obligations are being paid on time. If all is well and the appraised value of the property is enough to cover the loan needed, the lender, in most instances, can then close the loan under VA’s automatic procedure. Only about 10 percent of VA loan applications have to be submitted to a VA office for approval before closing.
VA Loan Uses
You may use VA-guaranteed financing:
1. To buy a home.
2. To buy a townhouse or condominium unit in a project that has been approved by VA.
3. To build a home.
4. To repair, alter, or improve a home.
5. To simultaneously purchase and improve a home.
6. To improve a home through installment of a solar heating and/or cooling system or other energy efficient improvements.
7. To refinance an existing home loan.
8. To refinance an existing VA loan to reduce the interest rate and add energy efficiency improvements.
9. To buy a manufactured (mobile) home and/or lot.
10. To buy and improve a lot on which to place a manufactured home which you already own and occupy.
11. To refinance a manufactured home loan in order to acquire a lot.
VA Loan Costs
A basic funding fee of 2.0 percent must be paid to VA by all but certain exempt veterans. A down payment of 5 percent or more will reduce the fee to 1.5 percent and a 10 percent down payment will reduce it to 1.25 percent.
A funding fee of 2.75 percent must be paid by all eligible Reserve/National Guard individuals. A down payment of 5 percent or more will reduce the fee to 2.25 percent and a 10 percent down payment will reduce it to 2.0 percent.
The funding fee for loans to refinance an existing VA home loan with a new VA home loan to lower the existing interest rate is 0.5 percent.
Veterans who are using entitlement for a second or subsequent time who do not make a down payment of at least 5 percent are charged a funding fee of 3 percent.
Maine FHA and VA Home Loans
I can help you with your Maine FHA and Maine VA home loans. Maine FHA home loans can help Maine borrowers obtain a Maine mortgage more easily. Maine VA home loans can help Maine Veterans secure Maine home loans to purchase their dream home.
Contact Seth Jacobs for help with your Maine FHA and VA home loans.