(Mar 25, 2023)
More surprisingly, programs meant to help veterans afford homes are available today, but this problem persists! Why are so many veterans struggling with homelessness if there’s a solution, you may ask?
Simple. Most people don’t know about VA (Veterans Affairs) home loans. But we are about to change that. This article has everything a veteran should know about the VA home loan programs, including available options, qualification requirements, and how to apply.
We will also introduce you to one of the best places to buy a home using a VA loan: Sumter County, Florida. Are you ready? Let’s dive in!
Are you a Hometown Hero? Find out your eligibility for the Hometown Heroes Loan Program in Sumter County, Florida.
VA Home Loans - An Overview
Approximately eight decades ago, government officials sought a way to appreciate the sacrifices made by our service members. After extensive debates and consultations, they settled on helping these heroes afford homes and live decent lives like their civilian counterparts.
Although cash bonuses would have played a significant role in helping veterans to transition to homeownership, the government decided against them. Why? Cash incentives are often a magnet for numerous unintended issues, including fraud and misuse.
To avoid the problems associated with cash payments, officials devised a better solution - VA home loan programs. That happened in 1944 and has proved indispensable over the years.
VA home loans are mortgages provided by approved lenders like banks and mortgage companies. Their names bear the “VA” tag because the US Department of Veterans Affairs guarantees a certain percentage of each loan, depending on the amount. For instance, the VA offers lenders a 50% guarantee for home loans that don’t exceed $45,000.
The VA home loan program’s main objective is to help veterans finance home purchases and enjoy favorable terms and reduced interest rates. So far, over 24 million service members have benefited from VA home loans and used these solutions to turn their homeownership dreams into a tangible reality.
A Sneak-Peek at VA’s Zero Down Payment Offer
Before diving into the VA home loan programs, let’s first discuss the 0 down payment feature.
You likely know that most mortgage lenders require borrowers to pay a certain percentage of the home purchase price upfront. And although the exact amount may vary depending on the entity, many institutions demand around 6%. What does that mean?
Assume you are eyeing a home that costs $300,000. If your mortgage lender requires you to cover a 6% down payment, you must raise $18,000 and pay it upfront. Once you have done that, the lender may allow you to take out a mortgage for the balance, which in this case is $282,000.
Unfortunately, down payments are one of the reasons why most first-time home buyers have trouble affording property, service members included. But the VA home loan program has made that less of a menace by making it possible for eligible participants to buy homes without putting money down with their $0 down payment policy.
In other words, if you are a veteran, service member, or qualified surviving spouse, a hefty down payment should deter you from owning a good home. If you can’t afford the upfront payment private lenders demand, bypass the issue by simply applying for a zero down payment VA home loan!
Although the VA doesn’t require participants to pay down payments, their home loans attract a funding fee. That is a one-time fee you have to pay to the department. The VA uses it to support the home loan program.
Types of VA Home Loans
The VA has the following loan options for eligible applicants:
Purchase Loans
As you may have already guessed, VA purchase loans help service members to buy homes. But that isn’t all. You can also direct a VA purchase loan toward construction and home improvement. So, this option may befit you if your plans include purchasing, building, or improving a new home.
But, before you can get and enjoy a home purchase loan, there are certain things you need. First, you must be eligible for a Certificate of Eligibility (COE). A COE proves you satisfy all VA requirements and communicates the same to private lenders.
Cash-Out Refinance Loans
Suppose you need to tackle significant expenses like paying tuition fees, clearing a critical debt, or improving your home but don’t have enough money. In that case, the VA has a solution for you: the cash-out refinance loan program.
The cash-out refinance loan program provides access to cash based on home equity. So, if you have built your home equity using strategies like paying off your mortgage earlier, you can use this program to cash out and use the money to cater to various needs and projects.
According to the VA, you may also use this solution to refinance a non-VA mortgage into a VA-backed mortgage.
Native American Direct Loans
Did you know that 140,500+ veterans identify as American Indian and Alaska Native (AIAN)? Surprisingly, according to the same report, most of these individuals earn less and are more susceptible to unemployment than veterans of other races.
However, if you are a Native American veteran, you can still afford a home despite issues like unemployment or low wages. How? Through the Native American Direct Loan (NADL) program. The same applies to veterans from other races who have Native American spouses.
Note that NADL only caters to eligible participants whose tribal governments have an agreement or MOU (Memorandum of Understanding) with the Veterans Affairs. Therefore, before requesting financial assistance from NADL, check if your government has an MOU with the department.
Most importantly, NADL offers direct loans issued and serviced exclusively by the Veterans Affairs.
Interest Rate Reduction Refinance Loans
Interest Rate Reduction Loans are popularly known as IRRRLs. As the name suggests, these loans are for borrowers that want to enjoy lower interest rates and, subsequently, reduced monthly mortgage payments.
The best thing about Interest Rate Reduction Refinance Loans is the application process is considerably quick and easy. That is why some service members call them VA Streamline Refinance loans.
Besides reducing mortgage payments, you can use the IRRRL program to make them more stable. So, if your current home loan makes you worry incessantly due to fluctuating interest rates, using this option to enjoy the peace of mind that comes with fixed-rate mortgages is still within your reach.
Note that the IRRRL program is for applicants with existing VA-backed home loans. That means you can’t exploit this option if you have any other type of mortgage.
How to Get a Certificate of Eligibility
Before applying for a VA home purchase, cash-out refinance, or Native American home loan, you must be eligible for or have a valid Certificate of Eligibility. However, not everyone qualifies for a COE. Veterans Affairs only awards these certificates to applicants that satisfy specific requirements.
For instance, if you are a veteran, the VA requires you to submit a copy of your release or discharge papers (DD214) to get a COE. On the other hand, an active-duty service member can get the document only after submitting a statement of service.
The requirements differ for other factions, including surviving spouses and former or current activated Reserve and National Guard members.
Once you’ve checked the COE application requirements and ascertained your qualification, go to eBenefits and apply for your certificate.
Besides eBenefits, your lender can give you a Certificate of Eligibility through the VA’s Web LGY system. Your mortgage lender likely knows this option intimately, so inquire and seek clarification beforehand.
Finally, if you prefer requesting a COE via mail, the good news is you can. Just download a VA Form-26-1880, fill it out, and mail it to the address written on the form. But that only applies to veterans and service members. Unmarried surviving spouses should use a VA Form 26-1817, then follow the same procedure.
Reasons to Apply for a VA Home Loan
Several factors make applying for a VA home loan a grand idea - $0 down payment, seller concessions, competitive interest rates, and no prepayment penalties. Since we’ve discussed the no down payment aspect, let’s chew the others over.
Seller Concessions
Nothing is arguably more soul-crushing than getting a lovely home on offer and then realizing you can’t cover closing costs. If you think this problem is uncommon, think again. Closing costs can be pretty high, sometimes reaching 6% of a home’s purchase price.
Lucky for you, the VA home loan program allows seller concessions. That means the entity you are buying property from can help you cover closing costs, provided you agree. The expenses a seller can help you take care of when you use a VA loan include property taxes, title insurance, and origination fees.
Competitive Interest Rates
One issue that makes homeownership a pipe dream for many Americans today is interest rates. Mortgage rates have been rising since 2022’s first half, and experts expect them to keep spiking. How does that affect homebuyers?
Paying high interest means increasing monthly mortgage payments, getting deeper into debt, and having less money to spend or save. But don’t fret yet.
VA-backed mortgages come with lower rates than conventional alternatives, with the 30-year VA home loan’s APR (annual percentage rate) roughly 5.090%. So, you pay less and save more in the long run by opting for a VA-backed loan.
No Prepayment Penalties
In an ideal world, paying off a mortgage early should attract countless benefits and juicier offers. But that is hardly the case in our reality. Mostly, lenders hit borrowers that clear their mortgages prematurely with prepayment penalties, which can be as high as 2% of the loan balance.
Thankfully, the VA home loan program has no qualms with borrowers that want to pay off all or a part of their mortgages early. That means you can make additional monthly payments or clear the entire thing prematurely without worrying about prepayment policies.
Who Can Apply for a VA Home Loan?
VA home loans are for veterans, active-duty service members, and eligible surviving spouses.
If you are a veteran, the period you served determines if you meet minimum requirements and can get a VA home loan. For example, if you were an officer between Oct 17, 1981, and Aug 1, 1990, you may qualify for the VA home loan program if you served 24 continuous months or more.
Active-duty service members, too, have their requirements. If you belong in this category, applying for a VA home loan may prove futile if you have not served for 90 days or more. On the other hand, the minimum requirements for Reserve and National Guard members depend on the service period.
Finally, if you are a surviving spouse of an active-duty service member veteran, you may be eligible for a VA home loan, provided you have a COE.
Should Veterans Use Their VA Home Loans to Buy Property in Sumter County, Florida?
Consider yourself immensely lucky if you are a fan of the outdoors and are eligible for a VA home loan. Why? You can apply for a mortgage, use it to buy property in Sumter County, and immerse yourself in the following activities:
Biking
Biking is good for your health. This activity can help you build stronger heart muscles, cut blood fat, and lower your resting pulse. Plus, cycling lets you keep your weight in check and maintain a good, appealing physique, even as you age.
Sumter County residents can enjoy all the perks associated with cycling for life. That is so because the region has myriad challenging, scenic, wildlife-filled trails and areas, ranging from the Croom Wildlife Management Area (CWMA) to the Dade Battlefield Historic State Park.
Jogging
Jogging is ideal for cutting weight, getting off the exercise plateau, bolstering the immunity system, and decreasing insulin resistance, thereby staving off diabetes. So, there’s no reason to hate this activity.
What’s more, people that jog enjoy improved mental health. The reason is that jogging allows participants to interact with other people and avoid issues like isolation, loneliness, and depression.
If you plan to start jogging or are already a fan, you’ll be glad to know that Sumter County has many worthwhile routes and tracks, including the Palmetto Trail and the Florence Rail Trail.
Shopping
Do you love to shop till you drop? If yes, move to Sumter County and try the spots available here. The shopping spots in this area stock diverse commodities, ranging from novelties and gifts to home décor and clothing. These include Banner Mercantile, Ambrosia on the Square, City Furniture, and Caribongo.
As if that isn’t enough, Sumter County shopping centers also boast countless local restaurants that serve delicious cuisines, entertainment spots, and stunning theatres.
Exploration
What do the William Brice House, Heritage Education Center, and Carolina Back Country Homestead have in common? They are all in Sumter County! Plus, these museums hold items of vast cultural, artistic, historical, and scientific significance.
When you become a Sumter County resident, you will have all the time you need to visit all the museums in the area, gain a ton of knowledge, and have uncapped fun!
Agritourism
Most regions use agritourism to revitalize rural economies, conserve agricultural heritage, and teach community members about agriculture. If you enjoy agritainment, there’s plenty to love about Sumter County.
First and foremost, this county has been a significant agricultural hub for decades. Many visitors and permanent residents associate it with farmers’ markets, aquaculture, fresh produce, and farm-to-table items.
To Summarize
Sumter County is known for its scenic, awe-inspiring outdoors that make the area a paradise for people that love activities like exploring, biking, and shopping. This region is infamous for agricultural endeavors and harvests featuring fresh apples, sweet potatoes, corn, wheat, strawberries, etc.
Suppose you’d like to live in this county and are a veteran, service member, or qualified surviving spouse. In that case, let the VA home loan program help you buy a decent home in the area and enjoy all the benefits that come with it. But, before you apply for a VA home loan, check if you meet all eligibility requirements.
(Mar 25, 2023)
