Did you know TheBANK of Edwardsville is an approved VA mortgage lender that creates a military-friendly home buying experience? A VA Loan is a great opportunity if you are a veteran, on active duty, a select reservist, in the national guard, or a surviving spouse to buy your dream home or refinance your existing mortgage … and we’re here to help you! In this article we’ll talk about what a VA Loan is, its advantages and the fees associated with it. Then next time, we’ll go over the application and approval process, and what you can expect when you meet with a mortgage loan professional from TheBANK.
— Patti Dieu
Mortgage Loan Originator, Mortgage Lending
TheBANK of Edwardsville
What Is A VA Loan?
The VA Loan is a mortgage loan issued by approved lenders and guaranteed by the U.S. Department of Veterans Affairs (VA). The program was created in 1944 by the United States government to help returning service members purchase homes without needing a down payment or excellent credit. This program has guaranteed more than 22 million VA loans to help veterans, active duty military members and their families purchase homes or refinance their mortgages.
VA Loans are available for veterans and active duty service members who meet the basic service requirements. You may be eligible for a VA Home Loan if you meet one or more of the following conditions:
- You have served 90 consecutive days of active service during wartime
- You have served 181 days of active service during peacetime
- You have more than 6 years of service in the National Guard or Reserves
- You are the spouse of a service member who has died in the line of duty or as a result of a service-related disability
The VA Loan Advantage
The VA Loan program is the most powerful home loan program on the market for many veterans, service members and military families. These flexible, government-backed loans come with significant benefits that open the doors of homeownership to veterans who might otherwise struggle to obtain financing. VA loans require no down payment or private mortgage insurance. They feature competitive rates and terms and allow qualified borrowers to purchase a home with little to no money out of pocket.
No Down Payment
Saving money and building credit can be difficult for service members who are constantly on the move. With the VA Loan, qualified borrowers can finance 100 percent of the home’s value without putting down a dime.
No Private Mortgage Insurance
Many conventional lenders require borrowers to pay private monthly mortgage insurance unless they’re able to put down at least 20 percent, which is a tough task for many veterans. Private mortgage insurance (PMI) is an insurance that protects lenders in case of a borrower default. With a VA Loan, however, there is no PMI. This is because the federal government backs all VA Loans and assumes the risk on behalf of the borrower that is typically covered by the PMI. This VA Loan advantage allows you to build more and more equity in your house, effectively saving you thousands of dollars over the life of your mortgage.
Regulations and Fees
Although the VA Loan is a federal program, the government generally does not make direct loans to veterans. Instead, private lenders finance the loan while the Department of Veterans Affairs offers the guaranty. This guaranty, which protects the lender against total loss should the buyer default.
In most parts of the country, veterans who qualify for the VA Loan can purchase a home worth up to $453,100 without putting any money down; however, with the 2018 VA Loan Limits, borrowers in high-cost counties may be able to purchase homes far exceeding that amount without a down payment.
The VA Funding Fee goes directly to the VA to ensure the program keeps running for future generations of military homebuyers by removing any additional burdens off tax payers and veterans. The fee varies depending on the borrower’s circumstances and does not apply for veterans with service-connected disabilities. For example, if this is your first time using the VA Home Loan Program, the funding fee is typically 2.15 percent of the purchase price of the home. For subsequent use of your VA Loan benefit, the fee is 3.3 percent.
VA borrowers can roll the funding fee into their overall loan amount. The VA also limits closing costs for veterans and allows sellers to pay most or all of those expenses. Many of our borrowers purchase a home with no money due at closing.