(Mar 21, 2023)
The US government created VA loans to ensure service members purchase homes without excellent credit or a down payment. Veterans and returning service members have relied on these loans to finance their homes during the Great Recession and the recent global pandemic.
Essentially, these loans have come in handy when Veterans face high credit scores. Since the government backs VA loans, banks won't require service members to buy private mortgage insurance. Besides, these loans have the market's lowest average fixed interest rates.
The ability to purchase with no down payment makes these loans ideal for any veteran looking to settle down. Read on for more information about VA loans in Hernando County, Florida.
Are you a Hometown Hero? Find out your eligibility for the Hometown Heroes Loan Program in Hernando County, Florida.
Different types of VA loans
Veterans can actualize the dream of homeownership with these loans while leveraging significant financial benefits.
VA Purchase Loans
Veterans can leverage their VA loans to acquire homes without any down payment. The purchase loans are also ideal for anyone keen on purchasing condos, multiunit properties, or single-family homes. Different lenders have various policies and guidelines for their specific loans.
VA Cash-Out Refinance
Qualified homeowners can refinance their mortgages with the VA Cash-Out refinance. With this loan, you won't necessarily need a VA loan to refinance up to 90% of your home's value. Also, these loan option lets you take out cash from your home's equity.
This option works perfectly as a basic rate-and-term refinance for veterans without the typical VA mortgages.
VA IRRL
Most homeowners prefer the VA Interest Rate Reduction Refinance Loan (IRRRL). These low-cost refinance loans continue to provide a lifeline for veterans looking to settle their families in new and existing homes. Also known as VA Streamlines, VA IRRL might not require an appraisal or income verification in certain instances.
Are you a veteran with an existing loan? VA IRRRL is perfect for you. However, the loan limits the time the lender recoups costs and fees. Essentially, Veterans get to enjoy the maximum financial benefit with this loan.
VA Energy Efficient Mortgage
Veteran loan options allow veterans to borrow money to add energy-efficient home features. These additions could either be part of a refinance or a completely new home purchase. If you need to purchase solar heating, cooling systems, thermal windows, or heat pumps, this loan offers up to $6000 to cover the additional costs. However, most lenders won't allow you to use these funds for non-permanent additions.
Who is eligible for VA loans?
The Department of Veteran Affairs (VA) has minimum requirements for VA loan eligibility. You or your spouse must meet these requirements and have a valid Certificate of Eligibility (COE). Besides, you need to satisfy the lender's credit and income requirements.
Other requirements to gain the loan include:
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Six service years in the Reserves or National Guard
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Serving 90 consecutive days during wartime
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Serve 181 days of active service during peacetime
- Being the spouse of a Veteran who died while on duty or due to a service-related disability
You might still be eligible for a Veteran loan in certain situations if you don't meet basic service requirements. Eligibility will depend on your discharge type in these circumstances. You might qualify for the loan if your discharge falls into any of these categories:
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A service-connected disability or medical condition led to your discharge
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You served not less than 21 months of a 2-year enlistment
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The government discharged you for a reduction in force
- The government discharged you at its convenience or for hardship
Do you need clarity on your service status? Contact a VA lender to assess your situation and determine where you stand.
Typically, lenders need the Certificate of Eligibility (COE) to verify if you meet the minimum service requirements. The COE offers confirmation that you qualify for VA loan benefits. Lenders only need your date of birth and social security number to find your COE.
Getting your COE should only take a few minutes. With this document, you can fast-track your home financing and ensure that it proceeds with minimal delays. You can get your COE by:
- Applying for it through a VA-approved lender
- Using the VA Form 26-1180 to apply via mail
- Applying online through the VA's eBenefits portal
How Spouses Verify their Eligibility
Lenders might require surviving spouses to provide a COE that verifies their eligibility. As a surviving spouse, you'll need to clarify whether you're receiving Indemnity Compensation or Dependency before getting a COE.
If you're receiving the Dependency and Indemnity Compensation benefits, fill out VA Form 26-1817. You'd also require a copy of the Veteran's separation paperwork. Otherwise, you'll need to fill out the VA Form 21P-534EZ and submit it to Hernando County's Pension Management Center.
Additionally, lenders will require you to provide the Veteran's separation paperwork, a copy of your marriage license, and the Veteran's death certificate.
Vender Lender Requirements
Besides the set VA requirements, Hernando County private lenders might have additional requirements for borrowers. These requirements include a satisfactory credit score, acceptable debt levels, and a reliable income to repay the loan.
Credit Requirements
Credit score requirements typically depend on a specific lender's requirements. Most lenders require a mortgage credit score of 620 before approving a loan request. Besides the credit score, you'll also need to maintain a residual income after paying all significant expenses. In an ideal situation, the residual income should cater to your specific family needs.
These enforcements ensure borrowers can meet their financial obligations and retain a cushion for emergencies. Some VA lenders can also use your debt-to-income (DTI) ratio. Essentially, your residual income, DTI, and credit score offer a holistic view of your purchasing power. A lender will also consider these factors to determine if you qualify for a better loan.
How to apply for VA loans in Hernando County, Florida
Before starting the process, you must know if you're eligible for the loan. Once you confirm your eligibility status, you can proceed with the application process.
The loan applications typically involve getting pre-approved. You can complete this step speedily on your phone, tablet, or laptop. Once you get pre-approved, proceed to make an offer for your preferred home. A pre-approval letter often delivers a sense of your buying power. Also, listing agents and sellers need the letter to show that you could get to closing.
The loan application process usually takes 30 to 45 days for a veteran who gets under contract on a home. It is essential to remember that your loan application doesn't obligate you to proceed with home buying or to a specific lender.
A typical loan application process involves:
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Contacting a lender to begin the loan application process
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Obtaining your Certificate of Eligibility to verify your eligibility
- Finalize your application with the necessary paperwork to your lender.
The VA Loan Limits
Qualified veterans who've not started leveraging their Veteran loan entitlement have no loan limit per se. Essentially, such service members can borrow as much as their preferred lender can extend. The loan entitlement also comes with no down payment.
However, if a veteran has less than their full entitlement, they should expect to have loan limits. Such situations arise if you already have an active loan or have lost a previous foreclosure loan. Working with loan specialists can help you understand better how these loan limits might affect you.
Can you use VA loans more than once?
The second-tier entitlement makes provision for numerous loan benefits. Usually, VA loans are not one-time offers. You could use it for the rest of your life if you earn the benefit. Also, you could reuse the loan's benefits multiple times or have more than one active loan simultaneously.
You won't need to pay back your existing loan to use the benefit ultimately. If you qualify for a loan, you can use the program repeatedly, and the benefit won't expire.
VA Funding Fee
Are you wondering how the VA loans remain sustainable? The VA funding fee removes burdens from taxpayers and veterans as it goes directly to the VA. With this approach, the government has ensured that the program runs securely for present and future Veteran and military homebuyers.
The funding fee is typically dependent on a borrower's circumstances. Are you using the VA home loan program for the first time? The funding fee will be 2.3% of the home's purchasing price. For subsequent loan uses, expect a funding fee of 3.6 percent.
On the other hand, the fee for a VA IRRR loan remains constant. Regardless of the number of times you use the benefit, the fee is always 0.5%. However, some veterans and surviving spouses might not remit the funding fee. The standard exemption exists for veterans with a service-connected disability.
Also, surviving spouses eligible for VA loans enjoy these exemptions. Remember that only the VA can determine these funding fee exemptions.
You could opt to roll the funding fee into your overall loan amount. Ultimately, the VA will limit your closing costs while ensuring sellers pay most of the expenses.
Overall Benefits of a VA Loan
VA loans offer attractive loan options for veterans. VA loans deliver multiple benefits from zero down payment, no mortgage insurance, and low-interest rates. Besides, the loans come with flexible and forgiving credit guidelines.
With the zero down payment benefit, veterans and service members don't have to save for the typical lump-sum payment. If a veteran opts for an FHA loan, they'd need to pay a minimum down payment of 3.5%, while conventional financing requires a 5 percent down payment. These amounts require years of saving for an average military borrower.
Service members might not save money and build credit seamlessly because they are always on the move. These loans ensure veterans can finance their home value without spending a dime. Essentially, these loans guarantee significant savings for veterans.
No Private Mortgage Insurance
Many typical lenders require borrowers to pay monthly private mortgage insurance (PMI) as security if the borrower defaults. Most veterans might have difficulty raising the 20 percent equity in the home that exempts them from PMI. FHA loans also have specific monthly mortgage insurance to secure the loan.
However, VA loans ensure veterans don't worry about raising the additional charges. The absence of PMI stretches the Veterans' buying power while guaranteeing significant savings.
Less Strict Credit Requirements
While the Department of VA doesn't enforce credit score minimums, most lenders use credit scores to determine whether a borrower will pay or default on their loan. Although the cutoffs can vary, the minimum requirements are usually lower than you'd need for conventional mortgages.
Besides, you won't need perfect credit to qualify for home financing at competitive interest rates. Also, If you're bouncing back from a short sale, foreclosure, or bankruptcy, VA loans will offer you more leniency.
Closing Cost Limits
Unlike typical mortgages with fees and closing costs, VA loans limit what a vendor will charge you. Qualified homebuyers get an affordable homeownership plan with these well-structured loans. For example, a seller can cover loan-related closing costs, including insurance and prepaid taxes.
Competitive Interest Rates
Veterans can leverage the lowest average fixed rates with this loan program. Data from ICE Mortgage Technology indicates that VA loans have had the lowest fixed rates for the last six years. The loan's interest rates are usually 0.5 to 1 percent lower than conventional interest rates.
Limits Foreclosure Likelihood
The residual income guidelines ensure the loans provide veterans with a safety net. The VA also goes out of its way to ensure that Veterans in jeopardy don't lose their homes. With the VA guarantee program, Veterans can get into their homes with the assurance that they will keep them.
Acceptable Income
The loan process usually involves verifying income that ensures borrowers can afford the new monthly mortgage payment. VA lenders typically accept multiple income streams aside from salaries and wages. Your retirement income, disability pay, and basic housing allowance can efficiently serve as a source of income.
Funding Fee Exemptions
Every VA loan has a VA Funding Fee that helps cover losses and ensure that the loan guaranty remains active. Although most borrowers should pay up to 3.6 percent, some Veterans can enjoy exemptions.
You qualify for funding fee exemptions if you:
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Receive compensation for service-related disabilities
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Are a surviving spouse eligible for a VA loan
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Receive disability compensation based on a pre-discharge review
- Are not receiving payment while on active duty
Most of these benefits resonate with a veteran's situation. A home loan specialist can offer required guidance on the diverse loan options and the accompanying benefits.
Things to Do in Hernando County, Florida for a Veteran
Are you wondering what you could do while in Hernando County? Here are the top fun activities for veterans in the area.
Explore the Veterans Memorial Park
Stop by the Memorial Park to watch some good softball. Explore the ½-mile Paved Veterans of Foreign Wars Trail circling the park. The 21.5-acre park in Spring Hill has multiple exercise trails, multipurpose fields, picnic tables, and concession stands.
Visit the Pine Island Park
Explore a wealth of well-known and undiscovered attractions whenever you visit Pine Island Park. The 3-acre park includes a fancy beach and swimming area. You'll get access to the pavilions if you visit the park early enough. Consider signing up for a boat tour where you could kayak or canoe.
Vibrant Nightlife
Spare time to explore Niko's Neighborhood bar. This hidden gem guarantees good bar food and all-week specials. Otherwise, you could spend time at the aqua bar and grill for super-friendly services. Enjoy a fun, clean atmosphere all night long.
Well-stocked Shopping Areas
Hernando County has multiple shopping options for Veterans, from Peace Tree Trading to the Tampa Premium Outlets and the Hyde Park Village. Be sure to explore the International Plaza and Bay. The Easy Street Home Decor store will be an ideal fit if you need decorations for your new home.
Explore the Gulf of Mexico's Venice
Besides offering direct access to the Gulf of Mexico, Hernando County is home to Gilligan's Island and the Hernando Flats. Be sure to exploit the northern section, middle section, and south section of the beach to get a complete feel of the serene environment.
Conclusion
Overall, VA loans exist to expand access to homeownership for service members and veterans. Generations of veterans and service members have relied on these loans to own homes. The program features flexible credit underwriting guidelines that ease access to the loans.
(Mar 21, 2023)
