As an active military member or veteran, when it comes time to purchase a home, you are able to do so with a VA loan. A VA loan is designed to allow you to purchase a home with a special loan that is tailored to provide you with some very specific benefits and structures. If you are an active or retired military veteran, this is one option you have available to you for financing the purchase of a home.
#1 Need a Certificate of Eligibility
You cannot just walk into a bank, let them know you are an active or retired military member, and expect to walk out with a VA loan. You are going to need to prove that you are a member of the military. In order to do this, you have to get a certification from the Department of Veterans Affairs. This certificate of eligibility will be accepted by private loan lenders and will allow you to start the process of obtaining a VA loan.
#2 Loan Amount Varies
The amount that you can take out with a VA loan varies based on two factors. VA loans look at both your personal income as well as the average price for a home in the county that you are looking to purchase a home. This will determine the cap that you are able to borrow.
Additionally, your monthly salary will be looked at closely. The VA wants you to be able to afford your home loan, so they are going to make sure that your monthly mortgage payments, tax payments, and other debt do not equal more than about a third of your overall income.
#3 Best to Pay Down Debt
As VA loans look at not just your monthly income, but the debt that you are already carrying when determining the size of loan that you can get, it is best to pay down other debt before you try to purchase a home. This can allow you to qualify for a larger loan.
For example, if you have student loans, focus on paying those down. Or if you have a car loan, pay it off before applying for a VA loan. Lowering your overall debt will help you qualify for a larger VA loan.
#4 No Money Down
One of the big benefits of a VA loan is that you do not have to put any money down. That means that you do not have to save up 20% of the cost of a home to get a loan. This is a big benefit of getting a VA loan.
#5 Some Fees Are Required
Although you do not have to put down a traditional down payment, there are some fees that you have to pay. You have to pay what is called a first-use fee, which is based on how many VA home loans you have taken out and what type of down payment you are putting on the home. Although you are not required to place a down payment, doing so will lower your first-use fee and will help you pay off your home faster.
A VA loan can be a great way to finance your home purchase. Get your certification from the Department of Veteran's Affairs, and then start working with a private loan lender. With a VA loan, your loan amount is based on your income, debt load, and where you live. One of the big benefits of a VA loan is that you don't have to make a down payment, although you do have to pay a first-use fee for the loan.
For more information on VA mortgages, contact a company such as NRL Mortgage LLC.