As both a US Army veteran and a Realtor©, I feel personally motivated to help educate fellow veterans and their friends and family about the VA home loan. Many people believe that a VA home loan is provided directly by the U.S. Department of Veterans Affairs. This is almost never the case. In addition, many veterans believe they won’t need any money to buy a house with this loan. As a result, some surprises may be in store for them if they aren’t fully informed about this program and how to navigate it.
The VA Home Loan is almost always a VA-Backed home loan: This means the home loan is partially guaranteed by the US Dept of Veterans Affairs for the sake of your private lender. If a veteran uses their VA home loan benefit to secure a mortgage for a home, and that home goes into foreclosure, the VA allows the lender to recover the guaranteed portion of the loan to cover their losses. This provides much less risk for a private lender, making it more likely for them to issue a veteran a loan. As a bonus, private lenders will typically offer more favorable terms to veterans.
Most banks, credit unions, and mortgage brokers offer a VA-Backed home loan: Nearly any institution that offers home loans will offer a VA home loan. However, not all lenders offer the same interests rates, or origination and lending fees. Go out and shop around, to at least three different lenders, to compare different loan terms.
$0 Down doesn’t mean no money out of pocket: When lenders advertise $0 money down, they are referring to the down payment. Typically a home buyer will need anywhere from 3-15% of the purchase price in cash for a down payment. On a $200,000 house, that’s $6,000 – $30,000. Clearly $0 down is amazing!! But, when anyone buys a house, there are closing costs. Closing costs include the lenders Origination Fee, the Title Company’s fee, prepaid insurance, and a couple of others. Make sure you ask how much you will need to cover, or have the seller cover, in closing costs.
The Certificate of Eligibility is where to start: In order to take advantage of the VA-backed home loan, a veteran must first obtain their Certificate of Eligibility (COE). To see what criteria you or your veteran family member must meet, and how to apply for the COE, click here: https://www.va.gov/housing-assistance/home-loans/eligibility/
The VA-backed home loan is a phenomenal and completely deserved benefit to veterans. I used it to buy my house, and love all the benefits it includes. There is more to know, but the key highlights have been mentioned above. Please make sure any friends and family you know that are US military veterans know this information! Reach out to me at my contact information below if you have any questions about the VA home loan, i’m always available to help a fellow service member.
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Mike Petrillo is a licensed real estate agent in the state of Washington. For more information about buying or selling personal property in the Tri-Cities area, feel free to reach out via email or text, or submit an inquire here: https://petrilloproperties.com/contact-me
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