The VA releases a new handbook early next year, and guideline revisions usually result in stricter requirements for qualification.
One thing we’re sure of is that rates are at or near historic lows right now. There’s never been a better time to be in the market for a mortgage.
In addition, VA loans have a few benefits that a veteran can’t get with any other loan program. For instance, it’s the only loan program that offers 100% financing on your mortgage.
More Money in Your Pocket
The major benefit of the VA loan is that it keeps more money in your pocket.
The opportunity to have 100% financing provides an immense amount of financial flexibility. Instead of putting that money toward a down payment, you can choose to put your money into appliances, furniture or other items you need for a new house.
In addition, a one-time funding fee replaces monthly mortgage insurance, saving you money over the life of the loan.
If you have a service-related disability, are an eligible surviving spouse or are a Purple Heart recipient serving in an active-duty capacity, the funding fee on your loan is waived. If you apply for your disability benefits before you close and get them approved, you can contact your state’s VA regional loan center for a refund of the funding fee.
Better Seller Concessions Policy
Seller concessions are one useful tool in closing the deal because they give some flexibility at the negotiating table. Concessions allow sellers to get a higher price for their property, but they also allow buyers to keep upfront costs down. For example, a seller might agree to pay for certain origination costs in exchange for a higher purchase price. In effect, this allows the buyer to spread out closing costs over the life of the loan.
With VA loans, there’s no limit to the amount a seller can contribute in categories such as these:
- Prepaid points for buying down the interest rate
- Origination costs associated with the loan setup
- Miscellaneous fees, including for property surveys, appraisals, credit reports, etc.
The seller can also contribute to the funding fee and help prepay property taxes and homeowners insurance. However, the latter items are limited to no more than 4% of the purchase or appraisal price, whichever is lower.
VA loans also offer the ability to lower your interest rate even when you owe more than your home is worth. Quicken Loans allows qualified applicants to refinance up to 120% of their home’s value.
This is extremely powerful in today’s low-rate environment. It could provide you with the flexibility to get a lower payment even if you lack equity in your home because your property value hasn’t yet recovered from the economic downturn.
These are just some of many great benefits that the VA loan program can provide eligible active-duty members of the military, veterans and qualified surviving spouses. The VA program has many benefits, and now is a great time to get into a new VA loan. The guidelines are being updated in September, and a new handbook will be arriving early 2017. That means it could get harder to qualify. You can avoid the uncertainty by getting started with your loan online today or by calling 888-728-4702.
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