Learn the Myths and Facts About Qualifying for a VA Loan

VA loans are a great benefit for any veteran.

Not only do they generally come with a lower interest rate than you could find with a traditional loan or even an FHA loan, they also don’t require any money down.

That means you can get into your new home sooner and start building equity, taking advantage of tax benefits, and even saving money every month if you live somewhere where it’s cheaper to buy than it is to rent.

But when it comes to understanding the benefit, a lot of veterans don’t know it’s available to them. Or worse, they believe some of the myths out there about the loans and decide not to use the benefit at all. 

Make sure you know what’s fact and what’s fiction so you don’t end up losing out on some seriously great benefits. 

Don’t be fooled by myths about VA loans

VA loan lenders hear the myths all the time. They can keep you from taking advantage of a benefit that would help you become a homeowner and save a lot of money while you’re doing it.

Myth #1: You need excellent credit

There’s technically no credit limit for a VA mortgage. Why?

Since the loans are backed by the federal government, there’s a much lower risk for lenders. That being said, you should still work on improving your credit if you’re going to apply because it will help you get even better rates and terms. 

Myth #2: They’re a scam

It’s true there are a lot of people out there running VA loan scams and general mortgage scams. But if you’re going through a qualified lender, these loans are actually one of the best options available to a veteran. 

Myth #3: They take a long time to close

VA mortgages don’t take any longer to close than traditional mortgages. In fact, in a lot of cases they’re more likely to close and close faster. 

Myth #3: They’re risky

VA loans are actually more stable than traditional mortgages.

Why? They come with an income requirement, which helps ensure the borrower can afford their loan and they’re tracked by the Loan Guaranty Service. If a home buyer is more than 60 days late on their payments, the Loan Guaranty Service will work with you and your lender to find an alternative to foreclosure. 

Myth #4: You can only use them once

One of the really nice things about a VA mortgage is you apply for it as many times as you need to. That’s great news for active military who might end up moving multiple times before they retire. 

Myth #5: They’re expensive

You can use your VA loan benefits for a loan up to $417,000 in most places in the US without a down payment.

Not only that, VA loans don’t require private mortgage insurance (PMI), which can save you close to $200 a month. Add that to what you’ll be saving thanks to your lower interest rate and the limits on your closing costs and you’re looking at a pretty good deal. 

So, what should you know about qualifying for a VA loan?

New myths about VA loans pop up every day and if you don’t know the facts, it’s hard to know what to believe. Here’s what you can count on when it comes to VA loans. 

They’re not issued by the VA

The loans are backed by the federal government, which is one of the reasons they have such great rates and terms.

But you don’t go to the VA to get them. Instead, you’ll get your Certificate of Eligibility through the VA and your loan through a qualified lender.

You have to live in the home you’re financing… but it can still be an investment property

VA loans are designed specifically for your primary place of residence. But you could use your VA home mortgage loan to buy a multi-family building with up to four family units and one business—if you’re willing to live in one of them. 

You can use them more than once

Your funding fee will be a little higher the second time you use the loan program, but you can use it multiple times if you want to. 

You’ll have to pay a fee

Each VA loan borrower is required to pay a funding fee. The amount is based on your military category, your disability status, and how many times you’ve used the benefit before. The fee helps reduce the burden to the taxpayers if you end up defaulting on the loan. 

You can use them to refinance a home or make improvements

VA loans aren’t just for new purchases. You can also use them for cash-out refinancing.

The only thing that will change is your funding fee. You may be able to use a VA home mortgage loan to make improvements on your existing house that make it more energy efficient or to add accessibility features to the home. 

They’re easier to get than a traditional loan

Since the loan is insured by the federal government, lenders can approve you with lower credit scores and no money down—something that would be virtually impossible with a traditional loan. 

You can pay them off early—with no pre-penalty fee

Lots of traditional loans will charge you a fee if you pay your home loan off a certain amount of months before you’re scheduled to. That fee helps ensure lenders they’ll be able to make money through interest.

If you get a VA mortgage, you’ll be exempt from that fee.

Interested to see how much your VA loan could cost you from month to month?

Utilize our special VA Loan Calculator to figure those numbers out. We’ll estimate your taxes, your insurance payment, your VA funding fee, and more. Use this handy tool today!

You can get them while you’re deployed

As long as you have someone to handle things stateside and you can prove you’re alive and well, you can use your benefit while you’re deployed. Find out how

They’re not just for veterans

True, these benefits are designed for veterans, but there’s also a provision to allow the surviving spouse of a deceased veteran to claim the benefit.

According to the VA’s website, one of these conditions must be met for spouses:

  • Unremarried spouse of a veteran who died while in service or from a service-connected disability, or
  • Spouse of a servicemember missing in action or a prisoner of war
  • Surviving spouse who remarries on or after attaining age 57, and on or after December 16, 2003
    (Note: a surviving spouse who remarried before December 16, 2003, and on or after attaining age 57, must have applied no later than December 15, 2004, to establish home loan eligibility. VA must deny applications from surviving spouses who remarried before December 6, 2003, that are received after December 15, 2004.)
  • Surviving spouses of certain totally disabled veterans whose disability may not have been the cause of death

You can pair them with a state program

Lots of states have local benefits for veterans who buy a home in their state. Depending on where you live you might be eligible for reduced property taxes or other benefits—check your state’s VA website to find out.

You get it. VA loans are great. So, how do you get one?

Your lender will be able to give you specifics when it comes to the exact numbers you need. If you meet those qualifications all you have to do is prove you’re eligible for the loan. For most qualifying veterans, proving your eligibility is relatively easy. You’ll just need the following.

A DD-214 or Statement of Service

There are two options for the first form. Which one you use depends on if you’re on active duty, in the reserve, or have been released or discharged.

If you’re no longer on active duty, you’ll need your DD-214, otherwise known as your Certificate of Release or Discharge from Active Duty. If you can’t find that form, you or your VA-approved lender can request a new one from the National Personnel Records Center.

If you’re in the reserve or on active duty, you’ll need a Statement of Service on official letterhead, signed by the adjutant, personnel officer or commander of your unit or higher headquarters. It should include all of your basic information:

  • Full name and date of birth
  • Social Security number
  • Rank, branch of service, and any previous discharge dates and types
  • Date you entered active duty
  • Name, title, and signature of the officer providing the statement

Certificate of Eligibility

Your Certificate of Eligibility proves to your lender that you’re eligible for the VA loan benefit. All you need to do is prove that you:

  • Have served 90 consecutive days of active service during wartime, or
  • Have served 181 days of active service during peacetime, or
  • Have more than six years of service in the National Guard or Reserves, or
  • Are the spouse of a service member who has died in the line of duty or as a result of a service-related disability

You can apply for the COE yourself or your lender can apply on your behalf. Having your VA-approved lender apply is quicker.

You can also fill out a Form 26-1880, electronically or by hand, submit it, and wait for your COE to arrive. You can also ask your VA-approved lender to apply for you, which is generally a little easier, especially since you’re already dealing with a lot of paperwork to buy your home.

Either way, once you’ve received your COE, you won’t need to get another one, even if you end up borrowing from a different lender. 

Once you have the right forms, you’ll be well on your way to a home of your own. The VA Loan is a great benefit, and you’ve earned it.

Pass it on

Don’t let your friends miss out on their VA loan benefits. Pass these busted myths along so they can take advantage of their VA loan benefits. 

Still have questions? Get the facts about VA loans. Interested to learn how much house you can afford with a VA loan? Find out here.

This post was originally published on mortgages.com

Ultimate Check List for Buying A First Home

Buying a home can be overwhelming for some people. But if people break it down in to smaller bites and take it one step at a time, it becomes much more manageable.

Here’s how to get started:

1. Make a plan: Decide how long you plan on staying in your home. That will help you decide how large a home you should buy (think about needed room for any kiddos you might have a few years down the road), what neighborhood you might be interested in, and if you even want to buy a home at all.

2. Check your credit: The better your credit is, the more likely you are to get a better interest rate on your loan. You can check your credit score at www.annualcreditreport.com. If your score’s not what you hoped, there are some ways to raise your credit. 

3. Decide how much house you can afford: Our mortgage calculator can help you sort out how much you can spend on a mortgage payment every month after all your debts and other costs are taken care of. 

4. Save for a down payment:  Having a good down payment can help you avoid paying private mortgage insurance–an additional fee every month that will add up. The best way to save for the down payment? Make a budget. 

5. Choose a type of mortgage:  Different types of mortgages fit better with different plans and housing markets. Read about the different mortgage types and choose the one that’s best for you. 

6. Find a lender:  Remember, you don’t have to go with the first lender you talk to. Shop around and find out who is able to give you the best rates on your loan. 

7. Get preapproved:  Once you know which lender you’d like to go with, it’s time to get preapproved. Your preapproval letter will let the seller know you’re serious about buying their home and financially able to do it. 

8. Find a real estate agent: Be sure to interview a couple before you make your decision. If you’re not sure what questions to ask, check out our 5 Questions to Ask Before Hiring a Real Estate Agent. 

9. Choose a neighborhood (or two): Your real estate agent is going to want to know what neighborhoods you’re interested in. That will help her narrow down the homes you look at and suggest other possibilities based on your choices. If you’re new in town, there are a lot of things you can do to choose the perfect location for your new home. 

10. Make an offer:  Once you find the right home, it’s time to put in an offer. Typically, your real estate agent can help you decide a good starting price for negotiations. 

11. Negotiate:  It’s not very often a seller accepts the very first offer you make if it’s under asking price. A good real estate agent will be able to help you negotiate the price and any other add-ons you’re interested in, like a home warranty, or that pool table that fits perfectly in the game room. 

12. Get a home inspection:  Never ever skip the home inspection. It’s your chance to have a professional take a look at all the inner workings of your house and ask the seller to fix anything that’s wrong. The inspection is also an opportunity for you to ask questions and learn how everything in your home works. 

13. Get homeowners insurance:  Before you close on your house, you’ll need to prove you have homeowners insurance. This is another instance where it pays to shop around and get quotes from a few different providers to make sure you’re getting the best deal.  

14. Close on the house: You’re almost there! Closing on the house is when you’ll need to sign all the legal documents and pay your earnest money and other closing costs.  

15. Hire movers: Moving can be almost as stressful as actually buying the house. We spoke with the experts at Two Men and a Truck to find out what it takes to have a successful move. 

16. Throw a party: You did it! Now it’s time to celebrate with a little housewarming party! 

This post was originally published on mortgages.com

Love Craft Breweries, National Parks, and Affordable Housing? Move to New Mexico.

Location is important for anyone buying a house, but it’s especially important for younger home buyers. You’re making a big commitment to that location during a time in your life when you’re not necessarily tied down to a certain career, you don’t have that many family responsibilities, and most of your disposable income is still dedicated hanging out with friends and finding cool things to do on the weekends. For us, the ideal location is somewhere you can get outside, enjoy a drink with friends, and not break the bank on your mortgage.

So, where is this enchanted place? We cut out the guess work for you and rated all the states based on the number of craft breweries, the number of national parks, and the average home price. If you want to hit the trifecta, start looking in New Mexico.

How do the states stack up? Here are the rankings:

When it comes to choosing your first home, these three attributes can make for a great lifestyle. But they can also help you find a home in an up-and-coming neighborhood where you have the potential to increase your property value over the years. Here’s how.

National parks: Supply and demand
It’s a simple case of supply and demand. Unless we shrink our park’s acreage, you’re buying up a finite resource: land. Depending on how close you are to the park, it can also be a safeguard against someone deciding they want to develop a huge mall one block over from your house or to divert a major highway through your backyard.

Ready to get your rates?

See what lenders have to offer.

Craft breweries: A neighborhood vibe
Most craft breweries and brewpubs are relatively small. These businesses have reclaimed old warehouse districts, renovated rundown buildings, and generally popped up in spaces no one else wanted to mess with. But their “pull you up by your bootstraps” attitude means they’re highly dependent on—and involved in—the community. They typically try to make their business a place where you can come with your friends to enjoy a game of trivia, bring out of town guests for a long lunch, or celebrate a happy hour with your coworkers. These aren’t places that encourage drunkness and debauchery. In fact, they usually make an effort to be family friendly by providing games and toys that guests of all ages can enjoy. That means you don’t have to worry about an unsavory neighbor bringing your property values down or making you feel unsafe in your own neighborhood.

Home values: A first-time buyer’s biggest concern
This one’s a no-brainer. It can already be difficult to figure out exactly what you can afford and how to budget for a down payment. That can be much harder if you live somewhere where property values are sky high and owning a home seems out of reach. Finding that cross-section of a good location and a reasonable price is key for any first-time home buyer.

Infographic Methodology
Home value: We looked at each state’s median list price per square foot across a period of one year (07-2016 to 06-2017). We then divided $300,000 by the state’s median to get our final number. The median list prices for North Dakota were only available in five representative counties. To calculate the final number for this state, we found the median for a one year period in each of the five representative counties and then took the median of that spread. We then ranked all the states based on their final number with one being the least expensive place.

National Parks: We used the National Parks Service data to show the raw number of parks, trails, and national historic sites in each state. We then ranked all the states based on the number of National Parks Sites they have with one being the state with the most sites.

Craft breweries: We used data from the Brewers Association to show the number of crafter breweries in each state. After that number by the state’s total population and multiplied the total by 1,000,000 to get craft breweries per 1,000,000 people. We then used that number to rank the states with one being the state with the most craft breweries per capita.

Overall rank: The overall rank is an average of each state’s final rank in each of the three categories.

This post was originally published on https://www.mortgages.com