VA Loans

VA Loans

Since WW II, the federal government has provided a mortgage loan benefit for those  who have served in the U.S. armed forces called VA Loans.  Originated under the GI Bill, this program is generally referred to as a VA (Veteran’s Administration) loan.  It has several advantages over other loan programs and has its own unique guidelines.  Here, Mark Wells answers general questions about the VA loan program.

Do I have to be a discharged veteran to be eligible?  No, active duty military may also be eligible, including reservists.

What determines eligibility?  Generally speaking, anyone with 4 full years of active duty in any of the 4 services (or in the Coast Guard), will have full eligibility.  Reservists with 6-8 years active reserve will generally be eligible also.  VA must issue a Certificate of Eligibility to each veteran, confirming their eligibility.

How do I get this certificate?  Call your mortgage broker and he can usually pull it up electronically for you.  If not, he can route you to the proper VA office for this.

What is the most significant benefit to a VA loan?  There are two things, actually.  VA loans provide 100% financing on any purchase, and there is no monthly PMI premium associated with a VA loan.  For a $175,000 purchase, this saves a borrower $8750 in down payment, and saves them $110 per month in PMI premiums compared to a conventional loan.

What kind of credit qualifying is there?  In most cases, a 640 credit score is required.  If there has been a major credit disruption in the past, VA usually requires a 12 month clean payment history to overcome the past problems.

Can I refinance my home using a VA loan?  This is a little known benefit, but Veterans can refinance a non-VA loan using a VA program.  This can save the borrower the monthly cost of a PMI premium compared to refinancing with a conventional loan.  So this option should always be considered when refinancing.

I currently have a VA loan.  Can I refinance that again using VA?  Actually, this is one of the best benefits of all.  VA offers a streamline refinance loan that is quoted at a rate where there are no closing costs at all to the Veteran, other than funding the new escrow account.  The Veteran receives an escrow refund from his current lender once they are paid off, so this becomes a truly “no cost” refinance loan.

Mark Wells welcomes any questions, etc. ——  Preferred Financial Services offers VA loans and can assist with obtaining Certificates of Eligibility and credit qualifying for any veteran.