(May 30, 2023)
Unlike other mortgages, they offer 100 percent financing, require no insurance, and have multiple refinancing options. But qualifying for this home loan requires more than proof of military service. Let’s dig deeper into VA loans and how to start the loan process when living in Hamilton County, Florida.
Are you a Hometown Hero? Find out your eligibility for the Hometown Heroes Loan Program in Hamilton County, Florida.
What is a VA Loan?
While the VA loan program has partial backing of the Department of Veterans Affairs (VA), it isn’t disbursed to borrowers by the federal government. VA-approved lenders like select mortgage companies, credit unions, and banks originate these loans. Thanks to this system, the VA backs the loan and refunds a portion of any pending balances to the lender in case of a default.
VA loans must be the most appealing home loan option in the mortgage market due to their flexible terms. They come with low-interest rates and don’t require mortgage insurance or a down payment. You can also refinance the loan with a low-interest-rate loan or use part of your home’s equity for the refinance.
Types of VA loans
Since they are designed to serve various purposes, VA loans can be categorized into four types. These types include the VA purchase loan, VA energy efficient mortgage, VA IRRRL, and VA cash-out refinance as discussed below:
VA Purchase Loan
A VA purchase loan is a convenient option if you want to own a new or existing residential property with zero down payment. With this financing, you can acquire a new construction home, multi-unit home, condo, or single-family home. However, lending guidelines and policies vary with the lender.
VA Energy Efficient Mortgage
The VA home loan program supports energy-efficient improvements on properties financed with a VA loan. Along these lines, it can offer you an additional $6,000 for the improvements. The money should only be used to install permanent energy-efficient appliances like solar heating/cooling systems, heat pumps, and storm/thermal windows.
VA IRRRL
As one of the refinance options under the VA home loan program, the VA IRRRL is a simple yet low-cost solution for refinancing a VA mortgage. Your lender won’t subject you to income verification and credit underwriting or demand an appraisal.
However, you need an active VA loan to be considered for this refinance loan. The new rate will be smaller than your previous loan, granting you full financial benefits.
VA Cash-Out Refinance
As a qualified homeowner, you can refinance your mortgage by taking cash from your property’s equity with a VA cash-out refinance. Lenders can consider you for this type of loan whether you have a VA loan or not. Also, they allow you to refinance a maximum of 90 percent of the home’s value.
VA Loan Eligibility in Hamilton County, Florida
One of the documents you’ll need to meet VA’s eligibility requirements is a valid Certificate of Eligibility (COE). Your lender will also require you to meet minimum credit and income requirements to consider you for the loan. The service requirements for a VA loan include:
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90-day active service during wartime
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181-day active service during peacetime
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At least 6 years of service as a Reserve or National Guard member
- Be the spouse of a deceased service member whose death was a result of a disability or injury while serving
The eligibility requirements for veterans differ slightly from those of service members and surviving spouses. They depend on the discharge type. So, if your discharge is categorized as follows, you’re likely to qualify for a VA home loan:
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Discharge due to hardship, reduction in force of convenience of the federal government
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Discharge for a service-related disability or medical condition
- Discharge for early-out with a minimum 21-month service two years after being enlisted
Verifying Your VA Loan Eligibility Status
With a valid COE, you can prove to the lender that you qualify for the benefits that come with VA loans. The COE will also be proof that you meet the minimum service requirements. You may obtain the COE with your lender’s help or by downloading it from the Department of Veterans Affairs website and filling it out.
How Spouses Can Verify Their VA Loan Eligibility
Lenders also require surviving spouses to submit a valid COE to verify their eligibility to use VA loan benefits. Your Dependency and Indemnity Compensation will largely determine the type of COE you must fill out.
If you are currently a beneficiary of Dependency and Indemnity Compensation, getting and filling out VA Form 26-1817 will be appropriate. Your lender will also need you to submit a copy of your Veteran’s separation paperwork, including DD Form 214.
On the other hand, if you aren’t a Dependency and Indemnity Compensation beneficiary, you’ll have to apply through VA Form 21P-534EZ. Be sure to submit it to a local VA Pension Management Center for reviewing.
The Detailed VA Loan Process
VA loans follow almost the same loan process as other mortgages. However, minor differences in the procedures give VA home loans a competitive edge. Here’s a breakdown of the entire loan process:
Choose a VA-Approved Lender
While you may consider getting a VA home loan from any lender, some don’t offer government-backed loans. Check whether the lender has valid approval from the VA to originate VA loans. They should also be able to guide you through the VA loan process to speed up the process.
Get a Certificate of Eligibility
Approach an experienced lender for help in obtaining a COE. You need this document to prove that you satisfy the minimum eligibility requirements for VA loan benefits. A COE can also inform a lender about your military service and help them determine your VA loan entitlement.
Get Pre-qualified
While pre-qualifying for a VA loan is essential, it isn’t required. However, getting pre-qualified can prevent uncertainties in the process.
Share with the lender details about your marital status, employment, income, and credit history to pre-qualify for a VA loan. The pre-qualifying stage can help identify aspects of your loan application that you need to improve. Some of these loan aspects include debt-to-income ratio and credit.
Shop for Homes and Sign a Purchase Agreement
A pre-qualification letter obtained from your lender can help you start house hunting. The sellers and real estate agents you interact with will be more compelled to accept your offer if you have this letter. Being pre-qualified means that you are in a position to afford a home loan.
Loan Application Processing and Appraisal
Present the signed purchase contract to your lender to complete your initial loan application. Expect the lender to order a VA appraisal to ensure the home’s asking price matches the current market value. The appraisal also checks whether the property conforms to VA’s minimum property requirements.
Close on the Loan and Move In
With approval from the underwriter, the final step is to close on the VA loan and move in. The home will be legally transferred from the previous owner to you at closing. Also, you’ll have to sign certain documents confirming that you agree to the loan terms.
VA Loan Limits
As of 2022, the VA loan limit stands at $647,200 across most counties in the US. Expect a loan limit of $970,800 if you want to finance a single-family home with a VA loan in a high-cost county.
Since VA loan limits don’t specifically represent a cap or maximum loan amount, you can borrow as much as your lender will give you without putting any money down. A full VA entitlement can allow you to enjoy this benefit, while a reduced VA entitlement attracts limits to the maximum amount you can borrow.
Can a VA Home Loan be Used More Than Once?
While you can use a VA home loan, again and again, you have to satisfy the qualifications for the reuse. If any of these three scenarios apply to you, it’s possible to use the loan more than once:
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Loan paid in full and home sold
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Loan assumed by another borrower (Veteran)
- Pending balance on the mortgage, but you still own the property
The VA Funding Fee
When you pay the VA Funding Fee, it goes directly to the Department of Veterans Affairs to keep the loan program for future military and veteran home buyers. The VA also relies on this fee to remove the additional burden on taxpayers and borrowers.
If you take a VA home loan for the first time, you pay 2.3 percent of the home’s purchase price as the VA Funding Fee. Consequently, applying for a subsequent VA loan attracts a fee that’s 3.6 percent of the home’s purchase price. IRRRLs (Interest Rate Reduction Refinance Loans) attract a funding fee of 0.5 percent whether or not it’s your first time using the benefit.
The VA can allow you to include the funding fee in your total loan costs. You may also be exempted from making this payment entirely if you are a beneficiary of a service-related disability or an eligible surviving spouse.
The Overall Benefits of a VA Loan
As a prospective homeowner enrolled under the VA home loan program, there’s a long list of benefits you can enjoy. Here’s a detailed review of some of the perks of taking a VA loan:
No Down Payment Needed
Down payment requirements on conventional mortgages can make it difficult for you to afford a home if you are a veteran/service member with little savings. But turning to VA loans can give you relief since no down payment is required. With this condition, you can save for other loan costs paid at closing.
No Mortgage Insurance
Mortgage insurance premiums are usually a significant point of focus for conventional loans and FHA loans since they help reduce lenders’ underwriting risk. A VA loan doesn’t require any mortgage insurance despite being a zero-down mortgage.
Lower Closing Costs
The closing costs on a home loan can help you determine whether you can afford it or not. Expect lower closing costs on a VA mortgage as you inch towards becoming a homeowner. The VA also limits the maximum origination fee (up to 1 percent of the loan) lenders charge to reduce the closing costs.
Reasonable Interest Rates
At first, lower interest rates on a home loan may appear suspicious. However, if the loan has the backing of the federal government like a VA home loan, there’s absolutely nothing to worry about. VA rates tend to be 0.5 percent lower than their interest rates on conventional loans.
Convenient Refinancing Options
You can conveniently refinance your VA loan with the VA cash-out option or the Interest Rate Reduction Refinance Loan (IRRRL) option. The cash-out refinance lets you use your home equity, while the IRRRL lowers your rate on the new loan.
Relaxed Approval Requirements
It’s easier to qualify for a VA-backed home loan since the approval requirements such as income, debt-to-income ratio, and credit requirements are lenient. You can also use the loan to buy a larger or more expensive home without a down payment.
Outdoor Recreational Opportunities in Hamilton County, Florida for Veterans
Nested in the north-central part of the Sunshine State, Hamilton County, Florida, is a paradise of moonlight dancing, night-blooming jasmine, and magnolia blossoms. It’s not common to find a county with just one city and two towns embodying the real essence of Old Florida.
As a veteran looking to live in this county, here are some of the fun outdoor activities to consider:
Whitewater Rafting at Big Shoals State Park
The Big Shoals State Park boasts the most extensive whitewater rafting in Florida. It derives most of its elegance from the limestone bluffs residing over the Suwannee River shores, which give great viewing opportunities. The park also features up to 28 miles of wooded trails for horseback riding, biking, and hiking.
Walk Over the Suwannee Springs Bridge
The Suwannee Springs Bridge remains accessible to pedestrians despite being abandoned back in 1971. It retains excellent historic integrity with original metal railings and is a hotspot for graffiti ranging from love declarations and inspirational messages to pop culture characters.
Horseback Riding at Dragonfly Ranch, Florida
Ride along the Suwannee River as you discover a preserved wildlife habitat on the sinkholes, hidden springs, and wilderness trails thanks to the Dragonfly Ranch Florida. The ranch offers guided horseback rides on 20 acres of pastures and woods.
You can even sign up for the rides as a beginner, intermediate or advanced rider. If you are a first-time rider, you get an acquainted ride to experience the sensation of horseback riding.
Enjoy the Scenic Sights of Falling Creek Falls
As a 110-foot high waterfall spread over a 136-acre natural area, Falling Creek Falls is one of Florida’s picturesque waterfalls. Surprisingly enough, the creek roars more than a 10-foot waterfall flowing under Falling Creek Road at normal water levels. The area also features a recreation site with a boardwalk, historic building, and picnic tables for wildlife viewing, picnicking, and hiking.
Bass Fishing at The Withlacoochee River
Also referred to as Crooked River, Withlacoochee River boasts crystal clear water in certain spots that are ideal for bass fishing. The river has an irresistible wild feel that can keep you wanting to paddle through the waters. Due to its gorgeousness, it ranks among the most scenic rivers in the Sunshine State.
The famous fish species to catch at Withlacoochee River include Bowfin, Red drum, and Largemouth bass. And since fishing regulations in Florida change all year round, it’s essential to learn about the fishing regulations for catching these fish species.
Summing up
A VA home loan can be a convenient home financing solution if you are eligible and want a loan with no down payment, fewer closing costs, and low-interest rates.
Lenders can also approve you for the loan without imposing strict credit, income, and debt-to-income ratio requirements. Best of luck when applying for a VA loan and using it to finance a home in Hamilton County, Florida.
(May 30, 2023)
