Disclaimer: Beginning January 1, 2020, the VA funding fee will be changing to a range of 1.4% – 3.6% based on factors like your down payment or equity amount, your service status and whether this is a first or subsequent use of a VA loan.
If you’re a disabled veteran thinking about a VA loan you may be wondering how your disability benefits factor into helping you with your loan. Disability benefit paperwork often takes some time to be processed. Should you wait until your disability benefits go through to get your VA loan?
The good news is, you don’t have to.
Tip #1: The funding fee can be retroactively removed from your VA loan.
This means that if your benefits are pending, and you want to proceed with your VA loan, the funding fee will initially be rolled into your loan. Once your disability benefits are approved the VA will refund the funding fee in the form of a principal reduction. For example, if your funding fee is $3,000, that amount will be added to your loan. Once your benefits are approved, the $3,000 funding fee will be removed from your principal amount due.
Tip #2: Approved disability pension can help you get approved for a VA loan.
If you’ve already made it through the process and are receiving disability compensation from the VA, the compensation can be counted as income. This could help people meet the income requirements for a VA loan. However, this cannot be retroactively applied. Meaning, you must already be receiving your disability compensation in order for you to claim it as income. While not necessarily applicable to your mortgage, it’s important to note that the VA will give you your disability benefits from the date of your discharge. A lot of veterans use that lump sum disability check to pay down their principal if they decide to move forward with their loan before their benefits are approved.
If you’re trying to take advantage of record low mortgage rates and don’t want to risk waiting for what could potentially be months for your benefits to be processed the VA loan can help you achieve your goals. VA loans have many advantages, especially for disabled veterans. Talk to a Home Loan Expert about a VA loan today.
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