VA Mortgage Highlights
Make sure to check out all about VA loans under the VA loan category but I wanted to share with you what KCMBlog.com posted on their site as they did a great job of highlighting VA mortgages:
- 100% Financing on Home Purchases – Veterans, assuming they are in good standing, can buy a home with no money down. In most cases, the maximum VA loan is $417,000.
- The Ability to Finance Reasonable Closing Costs – On many VA loans, the closing costs are negotiated into the sales price and the seller pays them. This feature can significantly reduce the cash a veteran needs to buy a home.
- More Understanding with Regards to Credit Challenges – In an effort to help those who served us, lenders are more liberal towards hiccups in credit.
- Common-Sense Look at Income – Rather than approve loans strictly by income ratios, VA mortgages incorporate what is called Residual Income. There is a form that actually budgets all expenses (not just housing) to account for family size, heating and electrical usage, and more.
- Financed Insurance Premium – The VA charges what they call a Funding Fee to set up a fund to reimburse lenders, should a default occur. The Funding Fee varies on loan terms and usage (consult your lender for exact costs), but the good news is that it is typically just added to your loan. Instead of paying thousands of dollars up front, you can pay $10-$50 a month in a higher payment.
- Refinancing Your VA Loan is Easy – Through the I.R.R.L. (Interest Rate Reduction Loan) Program, getting a better rate (if the market has better rates) does not carry with it all the verifications of income, credit, appraisals, and assets of other loans…and closing costs can be added into the loan! The logic is the VA is already “on the hook” and lowering the payment increases the likelihood of continued payments, so why not be as lenient as possible.