Veteran Administration (V.A.) Loans
If you are a veteran you probably have what the VA calls entitlement. This is a benefit the government gives to those men and woman who have served their country in the armed forces.
What is “entitlement”?
If you have served enough time in the military, the government gives you an “entitlement” or access to a certain amount of money to help you buy a home. Veterans are entitled to $36,000.00 on the purchase price of a home up to $144,000.00. If the purchase price of the home is between $144,001.00 and $240,000.00, the entitlement is increased to $60,000.00. This entitlement allows the veteran to purchase a home without having to put any money down. For homes over $240,000.00 a down payment is required.
How do you know if you qualify for this entitlement?
You can request a Certificate of Eligibility (COE) from the Veterans Administration. A COE is required to do a VA loan.
Why a VA loan?
The most obvious reason is the entitlement. Next, government loans often allow for less than perfect credit records. If you had a bankruptcy discharged over two years ago and you have established good credit since, you may qualify. Also, VA loans have zero down payment, and unlike a conventional or FHA loan, there is no mortgage insurance! The VA charges a funding fee, which can be rolled into your loan amount!
What is the Funding Fee?
This is a fee that the VA charges when you purchase or refinance your home. First time use of your entitlement results in a funding fee of 2% of the purchase price of the home. For example, if you are purchasing a home for $100,000.00 your funding fee would be $2,000.00. If you have used your entitlement before, the funding fee goes up to 3% of the purchase price (or loan amount if your are doing a cash out refinance). The funding fee on a Streamline Refinance is a mere .5% of the loan amount. But don’t forget – this fee can be rolled into your loan amount! No money out of your pocket at closing!
VA LOAN PROGRAMS
100% Purchase Financing (up to $240,000.00 maximum loan amount) – With VA eligibility a borrower can finance the purchase of a new home up to 100% of the property’s appraised value.
VA Jumbo Loan (up to $333,700.00 maximum loan amount) – This loan program is ideal for the borrower who wishes to purchase a home in excess of the $240,000.00 limit. A down payment is required for this program, which will be determined by the lesser of the purchase price or the appraised value of the home. This program is also available for Cash-Out Refinances.
100% Streamline Refinance – Rate and Term reduction on 100% of the existing VA loan balance. This money can be used for any purpose, (debt consolidation, home improvement or money for a rainy day).