Welcome Home Radio recently tackled a crucial topic for veterans: the VA loan. This valuable benefit, earned through service to our country, offers significant advantages for home buying. Here’s a breakdown of the key takeaways from the discussion.
The VA Loan: What Are the Benefits?
The VA loan is a powerful tool for veterans, and it comes with some huge perks:
- 100% Financing: This is a major benefit, allowing you to buy a home with no down payment.
- Government-Backed: The loan is backed by the Department of Veterans Affairs, which can make it easier to get approved.
- No PMI: Unlike conventional loans with less than 20% down, VA loans do not require Private Mortgage Insurance. This saves you a lot of money each month.
- Waiver of Funding Fee: If you have a service-connected disability of at least 10%, your VA funding fee is waived. This fee can be a significant cost (2.15% for first-time use), so this waiver is a big money saver.
The Golden Ticket: Your Certificate of Eligibility (COE)
The most important step in the VA loan process is proving your eligibility. This is done through a Certificate of Eligibility (COE). Without it, you cannot get a VA loan.
Your lender can get this for you directly from the VA portal by using your Social Security number and date of birth. The COE confirms your eligibility and also provides key information, such as:
- Your entitlement: The amount of entitlement you have available to use.
- Disability status: A verification of your disability rating, which determines if your funding fee is waived.
- Service record: Confirmation of your honorable or other-than-honorable discharge status.
To be eligible for a COE, you typically need:
- 90 days of consecutive service during wartime.
- 181 days of service during peacetime.
- Six or more years of service in the Reserves or National Guard.
Assumable Loans and Other Common Questions
The discussion also cleared up some common misconceptions about VA loans:
- Can you have two VA loans at once? Yes, in specific circumstances, such as a divorce where one spouse keeps the home and the veteran buys another primary residence.
- What about assumable loans? While VA loans are assumable, the hosts warned against this. The original veteran remains liable for the mortgage until it’s fully paid off. If the person who assumes the loan defaults, it could damage the veteran’s credit and impact their VA entitlement.
Sufficient Income and the Condition of the Home
While VA loans are more flexible with debt-to-income ratios and have no minimum credit score, lenders still require sufficient income to ensure you can afford the payments. They also look at residual income and reserves, though the VA doesn’t have a strict requirement.
One of the most important things to remember is that the VA appraiser is very thorough. The VA wants to ensure the veteran is moving into a safe and move-in-ready home. This means they are strict about what they call Minimum Property Requirements.
The appraiser will look for issues related to health and safety, such as:
- Missing appliances in the kitchen.
- Non-functional plumbing or electrical outlets.
- Damage to the roof or windows.
- Exposed dirt where grass should be.
This is a protective measure to ensure veterans aren’t burdened with significant repair costs on a new home.
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