VA loans are exclusive to military service personnel, past and present, and their families. They are offered by private loan companies and backed by the Department of Veteran Affairs, abbreviated DVA. Furthermore, due to the 2008 Veterans' Benefits Improvement Act, vets with conventional mortgages now have the opportunity to refinance to a VA-backed loan.
The VA also offers funds to veterans with disabilities linked to their service to assist them in purchasing or building an adapted home or modifying what they already own to accommodate their disability.
Though conditioned on a veteran's service, VA loans are not different from other mortgage programs. The program features, eligibility requirements, and application procedure are outlined in the article below.
Are you a Hometown Hero? Find out your eligibility for the Hometown Heroes Loan Program in Flagler County, Florida.
How do VA-Backed Loans Work?
The DVA provides mortgage loan guarantees for eligible military veterans and their families. They guarantee a percentage of the loan you take, usually 25%. If you default on the loan, the lender can recover a portion or all of their losses from the VA.
Because the loans represent reduced risks for lenders, they are more inclined to offer better terms - including no down payment, no private mortgage insurance, and flexible qualification criteria. Indeed approximately 90% of VA loans are issued with 0% down payment requirements.
How can I Obtain a VA loan?
Put your paperwork in order, consult a VA loan expert, and get pre-approved before you start looking at properties. A knowledgeable lender can assist you in making the most of this mortgage program.
A pre-approval letter explains your buying power and shows sellers and their representatives that you have the funds to complete the purchase.
What Are the Requirements for a VA Loan?
When issuing VA-backed home loans, lenders adhere to established DVA standards. They will first require a certificate of eligibility, abbreviated as COE. The COE is available from the DVA. You can apply for it online.
Veterans, past and present, can apply for this certificate. It demonstrates you've served and thus qualify for VA loans. However, you won't be issued with one if you received a dishonorable discharge.
Before approving your VA loan, lenders may set additional requirements. These requirements could include having a good credit score or getting an expert's opinion on the home's value. The DVA doesn't specify a baseline Credit score; instead, it requires lenders to give loans to applicants who they consider manageable risks. Most VA lenders consider 620 a good baseline when assessing an applicant's creditworthiness.
What If My Score Is Lower Than the Required Minimum?
A lower credit score does not automatically disqualify you from receiving a VA loan. Lenders are constantly adjusting the figure. Furthermore, credit ratings aren't the only metric lenders consider when evaluating borrowers. They also consider other factors, DTIs, and may lower the score requirement.
Nonetheless, it's a good idea to be wary of mortgages for low credit scores as you may have to fulfill specific lender requirements or fill out extra paperwork to secure and keep the mortgage. Otherwise, your mortgage might be repossessed. Thus, it's advantageous to maintain high credit scores. Always take measures to raise your scores if they are anything other than stellar.
What VA Loans Can I Apply for?
Veterans who are eligible for the VA loan program have several good home finance options to choose from. These include:
VA Purchase Loan
This 0% down payment VA loan is available to veterans and their families to purchase new or used homes, including condos, manufactured homes, and single-family homes. Borrowers can also use program funds to build their own homes or remodel them.
You must produce a certificate of eligibility, meet the lender's credit, income, and other requirements, and use the house as your primary residence unless you are given Permanent Change of Station (PCS) orders.
VA Energy Efficient Mortgage
The Energy Efficient Financing VA loan is an option available for a mortgage loan or refinancing. One can use the program funds to implement energy-efficient changes such as green energy, thermal windows, and cooling systems in their homes.
Native American Direct Loan
This type of VA loan is only available to vets who are Native American or whose partners are Native American. It can be used to develop or remodel residences on federal trust land.
The VA Interest Rate Reduction Refinance Loan is an alternative to traditional refinancing. It's a streamlined refinance option for vets looking for a cost-effective way to consolidate their debts and reduce monthly payments. It doesn't require credit screening, property assessment, or evidence of income. However, it's only available to vets with ongoing VA loans.
VA Cash-Out Refinance
The VA Cash-Out Refinance allows veterans to restructure various home loans and take out cash from their home's equity. You don't need a VA loan to refinance using this option.
What terms apply to VA loans?
VA loans are characterized by favorable terms than other conventional mortgages and even some government home loan programs.
No deposit is required unless the lender requests one if your home's purchase price is more than what the DVA can guarantee 25% of
Private mortgage insurance is not required
The seller might pay the closing costs, which are usually low
You can opt to repay the loan early and won't be penalized
VA subsidies and other help are available to lessen the risk of default
- You might have to pay a VA funding fee
Is it true that all VA loans require no down payment?
The down payment obligation is often the most challenging roadblock to homeownership for Americans, especially first-time buyers. By removing this barrier and mortgage insurance, the VA loan program makes it easier for vets to afford homes. Indeed, the VA and USDA loan programs are Americans' only remaining zero-down mortgage programs. Veterans can benefit from both, but qualifying for VA loans is far more accessible.
What is the VA Funding Fee?
The VA financing fee is an additional one-time payment added to the total of your home mortgage. This fee ensures that the VA Mortgage program continues to exist for vets, current and future, and their families. Plus, it spares taxpayers from shouldering the cost of the program.
The percentage of VA funding fees imposed varies based on each borrower's circumstances. First-time VA applicants will be charged 2.3 percent of their loan amount. Repeat borrowers pay 3.6%. However, all borrowers can reduce the fee by putting down a downpayment.
Those refinancing will pay a 0.5% fee, no matter how many times they've used the loan program. The fee can be integrated into the loan or paid separately.
Vets with a VA-approved handicap are exempted from paying the funding fee. Surviving spouses who qualify for the loan are also exempted from the fee. Finally, soldiers who resume active duty after winning a Purple Heart are exempt too.
Nonetheless, only the DVA can decide who must and must not pay the fee.
What Are the VA Loan Interest Rates?
Lenders establish interest rates on VA loans depending on market parameters. Nonetheless, most of them set competitive loan rates to remain in business. Still, asking about and comparing different lenders' offers may help you score a better deal.
Factors that will be used to establish your VA loan rate include:
Type of loan - Fixed-rate, adjustable-rate, huge jumbo loan, or a refinance
Debt repayment legacy - Individuals who have previously proved the capacity to repay debts swiftly might be granted cheaper interest rates
- Loan term - longer loan terms attract higher rates
Although the variables mentioned above will help lock the rate on your VA loan, there are still efforts you can take to secure a better deal on your loan.
Negotiating a VA Loan Rate
Many consumers are unaware they can negotiate lower rates on their loans. Indeed, many do not ask about and compare offers from several lenders; instead, they stretch their hands to accept the first deal on the table, even though it might not be the best they could get.
Research shows that looking at multiple offers and picking the best can result in up to $3K in savings. Here's a quick look at how to negotiate for a decent rate on your VA loan.
Shop around - You are not obligated to accept the first offer you get. Search around for a better deal. When evaluating different offers, consider the total loan cost. Some lenders tempt customers with lower upfront rates, closing expenses, and so on, but then levy other hidden fees. Take everything into account.
When you find a better deal, please return it to your bank and request that they match it.
Work to improve your credit score - after all, most lenders assign great importance to credit scores when evaluating borrowers.
Make a more significant down payment - Saving for a down payment is advised even if VA loans don't require one. It will lower your future debt obligations.
- Lock it down - Once you've secured a lower rate, get it included in the contract to protect yourself from market volatility.
Can I Have More than One VA Loan?
VA loans can only be used to buy a primary home. They even include an occupation stipulation to ensure that the purchased home will be used accordingly.
However, holding multiple VA loans for various primary residences is legal. This can occur when an active military person receives PCS orders requiring them to shift to a new duty station.
Consider the following scenario - you have a VA debt on your current home but get PCS orders to shift to another location. In that case, you can apply for a new VA loan to buy a new home in the new area, as long as you meet VA lenders' credit and income standards. Following that, you can either sell the first home or put it up for rent, then utilize the rental revenue to pay off the first mortgage.
That said, depending on your outstanding entitlement to VA repeat loans, there may be limitations on the amount you can borrow without having to deposit a little.
What are My VA Loan Entitlement and Limits?
Your VA loan entitlement is a specific dollar amount the DVA determines when securing your home loan. It's the amount they're willing to guarantee. That way, your lender can claim their losses if your loan defaults. The DVA will only guarantee a VA mortgage up to a certain sum.
Vets with full entitlement have never taken out a VA loan or have sold their previous VA-backed home and fully paid off the outstanding debt. There are no loan limits for people who have full entitlement. The VA will cover one-quarter of the loan amount they take.
Vets with full entitlement can borrow over $144K. However, it doesn't mean the lender will approve any loan size you want. Your income, assets, and credit history determine your max VA loan amount.
Vets with full entitlement have an unpaid VA compromise claim, a foreclosed and unpaid VA-backed property, or an ongoing VA loan, refinancing into a non-VA loan.
A reduced VA entitlement limits the max amount of VA loans you can borrow again. Usually, in this case, the DVA is willing only to cover 25% of your county's loan limit, less the amount of entitlement you've already used.
That means if you are buying a home that exceeds your county's max loan cap, you will have to pay down to supplement the amount the VA is willing to cover.
To understand more about how VA loan entitlements and limits may affect your borrowing capacity, speak with an approved VA loan officer.
How To Restore VA Entitlement If I Have None?
In case you have a $0 VA loan entitlement remaining, you can restore the figure by repaying off some or all your outstanding VA debts. That may mean selling your former home if you can't get the money another way. Pay off VA compromise claims and foreclosures too.
Can VA help Avoid Foreclosure?
If you cannot make your repayments for VA loans, your mortgage lender may seize your home to collect the outstanding debt. As a result, speaking with your mortgage servicer before this occurs is always a brilliant idea. This is your chance to devise a strategy that will work for you. There are several solutions for avoiding foreclosure on VA-backed homes.
However, be wary of offers to help you make up missed payments. Whenever in doubt, call 877-827-3702 to speak with a VA technician. They may counsel you on various foreclosure solutions.
Local Info About Flagler County, Florida
Flagler County, lying on Florida's east coast, is likely best known for its parks and gardens, which include the Graham Swamp Preserve, Old Dixie Park, and the Seminole Woods Neighborhood Park.
The county was formed in 1917 by combining parts of Volusia and Saint John's counties and was named after Henry Flagler, builder of the Florida East Coast Railway. One hundred fifteen thousand three hundred seventy-eight people were living there as of the 2020 Census.
Is Flagler County, Florida good for Veterans?
Flagler County has a sizable veteran population. Its economy is mainly retail-driven, and the cost of housing is considerably lower than in the rest of the state. The median home price is $157,100, making it easy for veterans to afford their own homes. The county boasts a fantastic sub-tropical climate that often attracts folks escaping from the frigid winter in the northeast.
The unemployment rate has also been falling, with increased job prospects, especially in the sales industry. Above all, there are several organizations dedicated to serving veterans.
These include The Department of Veterans Services in Bunnell, the VFW, Jewish War Veterans, Marine Corps League, Disabled American Veterans, and American Legion of Florida. This combination of job opportunities, amenities, great climate, and beautiful landscape makes the county great for vets and their families.
Top attractions and activities in Flagler County, Florida include:
Hit the Beach
Flagler Beach is a Sunshine State treasure. Surfing, horseback riding, seashell searching, building sandcastles with your kids, and other activities are available. Parking is both free and easy.
Marineland Dolphin Adventure
Do you enjoy swimming with dolphins? Visit this park to engage with the creatures and learn more about them. The park provides a variety of trips that educate visitors about dolphins and marine life conservation. There are several renowned dolphins here, notably Aqe, the star of the film Bernie the Dolphin. You can interact with them here.
Florida Agricultural Museum
Learn about agriculture by visiting this museum. Explore a rehabilitated 1890s founder homestead, structures from a 19th - century citrus ranch, and a past governor's milk and cheese barn. The farm is filled with horses, ducks, cows, and other animals.
Catch a Performance and Support Local Talent
This coastal city has a thriving performing arts community. There's something for everyone, from outdoor concerts to theatricals and musicals. Some locations where you catch performances and plays include Flagler Playhouse and Flagler Auditorium.
If you enjoy golf, Flagler has enticed some of the popular names in the game, including superstars who developed stunning courses such as the Halifax Plantation, Grand Reserve Golf Club, and River Bend Golf Club.
Is getting a VA loan a wise idea? The VA loan program is one of veterans' most cost-effective home loan financing options. VA loans are characterized by low to zero down payment, relaxed credit requirements, competitive interest rates, and no mortgage insurance demands. Furthermore, veterans can use the program multiple times.
However, remember that characteristics such as entitlement differ from borrower to borrower. It would be brilliant if you talked to an experienced VA technician so they can advise if the loan program is a great fit and how to use it to the max.