What do you know about VA loans … start by asking your buyers, “Have you served?”
A Veteran can obtain a COE (Certificate of Eligibility) from the VA (Veterans Association) as long as they have a DD214 (discharge papers) and are a qualifying Veteran. Approved VA lenders can obtain the COE on behalf of the Veteran, if they have the proper information. It is important to note that the VA does not lend money; they only insure the loan, so the Veteran must apply with a VA approved lender. Every lender should ask EVERY borrower if they are a Veteran.
Simply put, VA loans are probably the best loans available. Here are some bullet points as to why:
• 100% financing with NO monthly mortgage insurance (HUGE savings)
• Interest rates are often lower than on a conventional loan.
• Often times lenders will waive origination fees (attorneys and title companies often discount fees for Veteran’s as well)
• Higher debt to income ratio flexibility.
• On a purchase the VA allows the seller to pay up to 4% of the purchase price towards the Veteran’s closing costs.
• VA loans are assumable so if rates are higher and another Veteran is interested in assuming the mortgage they can do so at the lower rate.
• The VA does have a funding fee that is added to the loan amount. This fee varies based on first time or subsequent usage of the VA loan but is waived if the Veteran has 10% VA disability or more.
• The VA offers what is called an IRRRL (Interest Rate Reduction Refinance Loan). If rates go down the Veteran can refinance to lower the current rate with low cost, low documentation and often times no appraisal required.
• The VA will also allow for additional money for energy improvements to a home.
In honor of Veteran’s Day let’s remember to ‘ASK’ and help our Veterans become successful homeowners!
Written by Justin Bitler, Senior Mortgage Consultant, NMLS# 153699.