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Maximize Your Veteran Benefits by Exploring VA Loans

Read Time: 3 Minutes January 30, 2019

Military couple hugging

If you're eligible for veteran's benefits, you have access to a specialized class of home loan that may help your dreams of homeownership come true. The Department of Veterans Affairs guarantees loans offered by commercial lenders, with features that can get you more house for your money. Even if you already have a home, VA loan products are also available for refinancing. 

Once you work with a lender or the VA to receive your Certificate of Eligibility, you can pursue one of these loans, taking advantage of helpful features such as no mortgage insurance requirements and reduced or no down payments. These empowering traits can help you make the most of your VA benefits and move into an ideal home for your family. 

A Specialized Loan Type

When seeking a mortgage for your home purchase, you may wonder what kinds of rates and features you are eligible for, based on personal financial measures such as your credit score or debt-to-income ratio. VA loans maximize your effective purchasing and offer more favorable terms. 

For instance, our VA loan products are available with no down payment for veterans with credit scores of 580 or greater (with no down payment). There is no mortgage insurance needed for VA loans, taking away a recurring expense typically associated with low down payments.VA loans also allow expanded debt-to-income ratios, allowing a veteran to afford a larger home than many other loan programs could get them. 

Cash-out refinancing is available with VA loans as well. If you already have a partially paid-off home loan, but need cash to pay off a high-income debt, perform repairs or otherwise make a major investment, a cash-out refinance is one way to get the required equity. This process involves taking out a higher-value loan on your home and receiving the difference as usable equity. Veterans with credit scores of 580 and up may refinance up to 90% of home value, with over 660 making applicants eligible for 100% financing. 

How Much Liability Will the VA Assume? 

The VA typically allows veterans to borrow an amount of money equal to four times available entitlement for loans with no down payment. Basic entitlement from the VA is $36,000 at present. Total entitlement encompasses both basic and Tier2 entitlement amounts. The exact amount of money the VA will assume liability for depends on whether the veteran has their full entitlement available or if they are held to the home’s regional loan limits (due to the differing prices of homes in different parts of the country).

Additionally, it's important to note that VA loans are assumable. What this means for homebuyers is that even if they're not eligible for a VA loan, they could "assume," or "take over," the home seller's mortgage payment and loan terms. This can be advantageous for homebuyers, especially in higher rate environments, leading to an otherwise lower mortgage payment and higher mortgage savings. 

The VA also offers a few helpful hints illuminating the extra advantages of its services. For instance, there is no penalty for paying off a VA-guaranteed loan early. Furthermore, purchase mortgages guaranteed by the VA aren't just for first-time homebuyers. If you're a veteran considering diving into the housing market, it can pay to determine your eligibility status. Once you have your Certificate of Eligibility, you can explore the options available and determine the most effective path to your new home. Your state may even offer extra veteran benefits on top of the VA's national programs. 


Source: Department of Veterans Affairs

By refinancing an existing loan, the total finance charges may be higher over the life of the loan. We may transfer the escrow account balance from the current loan to the new loan. If the current escrow amount is insufficient due to changes in taxes or insurance, we may require additional money when closing on the new loan.

Learn more in our other educational series.

We’ve assembled a treasure trove of jargon-free information to demystify home-financing and arm you with valuable insights and actionable options.

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