(Mar 21, 2023)
VA loans are an excellent option for eligible buyers. This comprehensive guide will cover everything you need to know when taking a VA loan in Seminole County. So whether you're a first-time buyer or looking to move up to a bigger home, this guide will provide you with all the information you need to make the best decision for your family.
Are you a Hometown Hero? Find out your eligibility for the Hometown Heroes Loan Program in Seminole County, Florida.
What is a VA Loan?
A VA loan is a mortgage loan that is guaranteed by the U.S. Department of Veterans Affairs (VA). The loan is issued by a private lender, such as a bank or credit union, and is guaranteed by the VA. This guarantee protects the lender against loss if the borrower defaults on the loan.
The VA loan program was created to help veterans purchase homes and has helped millions of veterans and their families achieve homeownership. VA loans are available to eligible active-duty service members, veterans, reservists, and National Guard members, as well as certain surviving spouses.
Because of the guarantee provided by the VA, lenders can offer more favorable rates and terms on VA loans than on other types of mortgages.
What Is the VA Funding Fee?
The VA Funding Fee is a one-time fee for all purchase and refinance loans closed with a VA Loan. The fee can be paid in cash at closing or added to your loan balance. The fee helps to finance the cost of the Veterans Administration's home loan program.
The fee amount varies depending on the type of loan, your military category if you're a first-time or subsequent loan user, and whether you make a down payment. For most borrowers, the fee is 2.3 percent of the loan amount. However, there are certain exemptions for disabled veterans and surviving spouses of veterans who died in service. You won't have to pay the VA Funding Fee if you're eligible for an exemption.
What Are the Benefits of VA Loans?
VA loans have grown in popularity in recent years for a good reason. These mortgages offer several benefits not available with most other types of loans. These benefits include:
Zero Down Payment
For many people, the biggest obstacle to homeownership is coming up with a down payment. With a standard loan, buyers must typically put down up to 20 percent of the purchase price. For a $200,000 home, that’s $40,000.
With a VA loan, eligible borrowers can buy a house without money. This benefit is available to qualified veterans, active-duty service members, and certain spouses of service members. Unlike other loan programs that require a down payment, the VA loan program allows borrowers to finance 100% of the purchase price of their home. This can make it much easier to save up for other costs associated with buying a home, such as closing costs and moving expenses.
More Favorable Interest Rates
Interest rates are one of the most important factors to consider when taking out a loan, and VA loans consistently offer some of the lowest rates available. For example, let's say you take out a $200,000 loan with a 4% interest rate. Over 30 years, you would pay $143,739 in interest. But if your interest rate were just 1% lower, you would only pay $111,853 in interest - a savings of over $31,000. And because the government backs VA loans, lenders are willing to offer even lower rates to qualified borrowers.
No Private Mortgage Insurance (PMI)
One major perk of VA loans is that they do not require private mortgage insurance (PMI). PMI is insurance that protects the lender if the borrower defaults on the loan.
It is typically required for loans where the down payment is less than 20%. With a VA loan, you can avoid this extra expense, which can add up to hundreds of dollars per month. This benefit alone makes VA loans a great option for eligible borrowers.
No Prepayment Penalty
When you take out a standard loan, you may be charged a prepayment penalty if you pay off your loan early. However, VA loans do not have this same restriction. You can pay off your loan at any time without being charged a penalty, giving you more flexibility and freedom regarding your finances.
Flexible Credit Requirements
While standard loans typically require a minimum credit score of 620, VA loans only require that borrowers have a "reasonable credit history." This means that even those with less-than-perfect credit may still be able to qualify for a VA loan.
In addition, VA loans do not have a minimum income requirement, which makes them accessible to a wide range of borrowers. As a result, flexible credit requirements make VA loans an attractive option for those who might not otherwise be able to qualify for a mortgage.
Can Be Used for a Variety of Things
VA loans are one of the most versatile types available, and as a result, they can be used for various purposes. For example, VA loans can be used to purchase a primary residence, a secondary home, or an investment property. They can also be used to refinance an existing loan, consolidate debt, or make home improvements.
VA Loans Are Assumable
This unique quality of VA loans enables borrowers to transfer their loan to another person, which is not the case with most other types of loans. For example, the new buyer can assume your loan if you have a VA loan and want to sell your house. This can be an excellent benefit for both parties because it can help to keep interest rates low and make it easier for the new buyer to qualify for the loan.
What Are the Different Categories of VA Loans?
Applying for a VA loan can choose from four different loan types.
- Native American Direct Loan (NADL) Program
- VA-Backed Purchase Loan
- Cash-Out Refinance Loan
- Interest Rate Reduction Refinance Loan (IRRRL)
Each of these loan types has its set of eligibility requirements, benefits, and drawbacks. The NADL program, for example, is only available to Native American Veterans who wish to purchase, construct, or improve a home on Federal Trust Land. On the other hand, the VA-Backed Purchase Loan can be used by any eligible Veteran to purchase a home.
Cash-out refinance loans are perfect for borrowers who wish to access home equity. With this type of loan, you can refinance your existing mortgage and take out a new loan for more than you currently owe. The difference between the two loans will be given to you in cash, which you can use for any purpose.
IRRRLs are available to borrowers with a VA loan who wish to lower their interest rate. These loans are also known as streamline refinance loans because they require less paperwork and documentation than a traditional refinance loan.
Applying for a VA Loan in Seminole County, Florida
Now that we've gone over the different types of VA loans let's take a look at the steps you'll need to take to apply for one.
Step 1 - Get Your Certificate of Eligibility (COE)
The Certificate of Eligibility (COE) is an important document that proves you are eligible for a VA-backed loan. The best way to get your COE is to apply online through the eBenefits portal. You'll need basic information, like your Social Security number, date of birth, and service history.
Once you've submitted your application, the Department of Veterans Affairs will review your information and send you a COE if you're eligible. If you prefer, you can also get your COE by mail or through a VA-approved lender. However you choose to get your COE, it's an essential step in applying for a VA loan.
Step 2 - Find a Suitable Lender
Now that you have your COE, it's time to find a lender who participates in the VA loan program. Not all lenders offer VA loans, and those that do may have different requirements, terms, and conditions. It's vital to compare multiple-lender offers to get the best deal.
There are a few ways to find participating lenders. The easiest way is to search online for "VA-approved lenders." This will provide a list of approved lenders in your area. You can also contact the VA directly, and they will provide you with a list of approved lenders.
Step 3 - Fill Out a Loan Application
Once you've chosen a participating lender, it's time to fill out a loan application. This is where you'll provide information about yourself, your finances, and your employment history. You'll also need to provide supporting documentation, such as bank statements, tax returns, and pay stubs. The lender will use this information to determine whether or not you're eligible for a VA loan.
Step 4 - Get Pre-approved for the Loan
After you've submitted your loan application and supporting documentation, the lender will review everything and determine if you're pre-approved for the loan. This means they've reviewed your financial information and believe you're a good candidate for the loan.
Getting pre-approved is an important step in the loan process because it gives you a better idea of how much money you can borrow. It also shows sellers that you're a serious buyer, which can give you an advantage when competing for a home.
Step 5 - Find a Home and Make an Offer
Now it's time to start looking for a home. Once you find a home you want to purchase, you'll need to make an offer. The offer should include the price you're willing to pay for the home and any contingencies, such as needing to sell your current home first.
Be sure to negotiate the contract and get a home inspection too.
Step 6 - Complete a Final Walk-Through of the Property
Before you close on the loan, you'll need to do a final walk-through of the property. This is your last chance to make sure the home is in good condition and that any repairs agreed upon have been made.
Step 7 - Attend the Closing and Sign the Paperwork
The closing is where the loan process comes to an end. You'll sign the final loan paperwork at the closing and get the keys to your new home. Congratulations! You've just purchased a home using a VA loan.
What Are the VA Loan Limits?
When veterans or service members hear about a VA Loan, they think it will cover the entire cost of their home. But there are loan limits to what the Department of Veteran's Affairs will insure. In 2022, the standard loan limit for a VA loan is $647,200 for most U.S. counties. If you're looking to purchase a home that costs more than $647,200, you'll need to put down a down payment equal to 25% of the difference between the purchase price and the loan limit.
Thus, if you're looking at homes in an area with a higher cost of living, you may need to save up a larger down payment. But don't let that discourage you! The VA Loan program still offers one of the best financing options for veterans and service members.
Can You Use Your VA Loan More than Once?
While most people think of a VA loan as a one-time benefit, you may be able to use your VA loan more than once. Depending on your specific situation, you may be able to take out multiple VA loans throughout your lifetime.
One way you could do this is by taking out a new loan to refinance an existing VA loan. You may also be eligible for a "streamline" refinance, which can help you secure a lower interest rate or monthly payment without going through the complete underwriting process. Additionally, if you sell your home and use the proceeds to pay off your VA loan, you may be able to take out another VA loan in the future.
So, if you're thinking of taking out a VA loan, know that it could be just the beginning of your journey with this valuable benefit.
Benefits of Buying a Home in Seminole County, Florida Using Your Loan
You can start looking for a home as soon as the funds are available in your account. Seminole County, Florida, has a lot to offer residents, so you may want to check out properties in this area. Some of the exciting activities that you can look forward to as a resident of Seminole County include:
Golfing
If you love golf, you'll be happy to know that Seminole County has many championship golf courses. The county is home to more than 20 golf courses, including the renowned TPC at Sawgrass. So, whether you're a casual golfer or an avid player, you'll be able to find a course that's perfect for you.
Boating and Fishing
Seminole County is also home to many lakes and rivers, making it the perfect place for those who love spending time on the water. Among our favorite spots are Lake Monroe and the St. Johns River. Whether you're looking to go fishing, swimming, or enjoy a day on the boat, you'll be able to find what you're looking for in Seminole County.
Enjoy a Wealth of Cultural Attractions
If you're looking for a place with a lot to offer in terms of culture, you'll want to check out Seminole County. The county is home to several museums, theaters, and other cultural attractions, including the Maitland Art Center, the Holocaust Memorial Resource and Education Center of Florida, and the Orlando Shakespeare Theater.
Hiking and Biking
If you prefer to stay on land, Seminole County has many hiking and biking trails. So, whether you're looking for a stroll or a challenging hike, you'll be able to find what you're looking for. Our favorite trails include the West Orange Trail, the Cady Way Trail, and the Cross Seminole Trail.
Camping
Seminole County is the perfect place to camp for those who love spending time outdoors. The county is home to several campgrounds, including Wekiwa Springs State Park and Seminole State Forest.
Apply Today and Enjoy the Perks of Living in Seminole County, Florida!
VA loans offer veterans and service members many benefits, and Seminole County is the perfect place to take advantage of those benefits. If you're thinking of buying a home in Seminole County, Florida, contact a VA-approved lender today and start the process of securing your loan. And if you have any questions about VA loans or the home-buying process, don't hesitate to contact us. We'll be happy to help you every step of the way.
(Mar 21, 2023)
