VA Loans 101 – An Introduction for the Beginner

Buying a home is a dream which every American harbors in his/her heart. However, buying a home is pretty expensive. It is probably the most expensive purchase that you are ever going to make. Most of the times, you would probably go for a mortgage loan from a lender. Now, when it comes to mortgage loan, you have access to a number of options like conventional loans, FHA Loans, USDA Loans and VA Loans. If you are a veteran or an active duty member of the United States Military, then you would find that most people would recommend you to go for a VA Loan. Well, there is no point denying the fact that VA Loans are perhaps the easiest way to buy a home for military home buyers as it comes with several benefits like zero down payments, low interest rates, and no mortgage insurance. Here in this post we would be looking at some of the basic but important facts that you should know about the VA Loans program.

Who offers the loan?

VA Loans are administered by the Department of Veteran Affairs (VA) of the U.S. Federal Government. Although they are known to be VA Loans, the Department of VA doesn’t actually offer the loan. The loans would be offered by banks and other financial institutions that can extend financing on homes through the VA Loans Program.

How Does VA Home Loans Work?

The Department of Veteran Affairs (VA) would provide the guaranty to the loan taken by military vets. It would pay a portion of the loan to the lender if you are unable to pay back the loan.

To take a VA Loan, you would need to have the Certificate of Eligibility (COE) and certain other documents. You need to get in touch with a VA approved lender and get pre-approved. The pre-approval letter would tell you how much loan you can get. Once, you have the pre-approval letter, you can get in touch with a real estate agent and get into contract to buy the home you desire.  Once you are done with that, you can apply for the home loan. You get the loan and then you pay for the mortgage every month. You complete the tenure of the loan and then you can close the loan and the property becomes yours. It’s that simple!

VA Home Loan Down Payment

One of the biggest advantages of VA home loans is that you don’t have to pay for any down payments in most cases. The VAhas ‘limits’ on the maximum amount it can guarantee. In most cases, if your loan amount is below the VA Loan Limit, then you don’t have to pay for any down payment. The VA Loan Limits differ from county to county and it depends on the local real estate market. So, in certain high cost counties like San Francisco, CA you can expect to get a loan of as much as $625,000 without paying any down payment.

However, paying a down payment does have its own advantages. For example, the more down payments you pay the less VAfunding fee you need to pay.  For example, if you are a veteran and you are taking a VA Loan for the first time, then on a loan of $100,000 you would need to pay a funding fee of 2.15% of the loan amount as down payment, which comes around $2150. However, if you pay 10% or more down payment, you would only need to pay 1.25% of the loan amount as funding fee.

VA House Loan Rates

The VA interest rates are typically lower than conventional loans as the loan would be guaranteed by the government.  There are two types of interest rates for VA Loans. The first one is a fixed rate interest, where the interest rate stays constant throughout the tenure of the loan. The second is the Adjustable Rate Mortgage (ARM) where the interest rate can change based on theprevalent market conditions. You can always get in touch with a VA Loan specialist to know which type of loan would work thebest for you.

Get Conclusive Solutions to Your VA Loan Issues from a Top Qualified Lender In Town

You may be a military personal earning laurel for your heroics on the battlefront, but on a few issues there is similarity between you and the civilians. It is about the finances and fulfilling some basic responsibilities towards your spouse and it is now that if you are short of cash, we suggest that have a look at the VA loans rates. As an US military individual, if you looking for loans, this is your best bet. We would like to say that just because it is for the armed forces the rate of interest on the loan is the lowest. In fact, this is a loan, where the government of the day is ready to be your guarantor.

Hence, it just lovely and you perhaps have plans to fill up the application papers for your VA loans for mobile homes. We would like to say that both current, ex-servicemen and even spouses are eligible for this form of borrowing. Anyone of you who has spent three months in a war zone or six months during peacetime is eligible to fill up the papers. Just for you guys who have left the force we would like to state that you will have to submit an honorable discharge from your unit and that should be it.

American Home Loan Originations Decrease by 8% Compared to Last Year

According to the latest data released by RealtyTrac, home loan originations in the United States have gone down considerably compared to the same period last year. According to RealtyTrac’s Q1 2016 U.S. Residential Property Loan Origination Report, home loan originations in America has gone down by as much as 8%.

However, closer analysis of the report brings out a different story. According to the report, purchase loans and HELOC loans originations have seen a growth, but the overall rate has been pulled down by the dismal performance by refinance loans. Purchase Loans have increased by 3% and Home Equity Line of Credit or HELOC loans have increased at 10% from a year ago. However, on the other hand, Refinance loans have decreased by as much as 20% over the same period.

Home purchase loans have increased by a considerable margin in cities like Tucson, Nashville, Baltimore, Louisville and others. Whereas, the cities which have seen a tremendous rise in the number of HELOC loans include San Antonio, Portland, Tampa, Dallas and the likes.

Industry analysts were expecting such results. Over the past many years, purchase loans in the United States have grown at a slow but steady pace and refinance loans, despite having lower interest rates, have seen depreciation in the past as well. Experts attribute this change to the lower interest rates in purchase loans. This has attracted borrowers towards purchase loans and away from refinance loans.

However, government backed loans like FHA Loans has seen a remarkable rise in the period. Markets have also seen a rise in the number of VA loans. The number of military vets applying for VA Home Loans has gone up and so has the number of approved loans. VA Loans edges out all the other loans as it gives a number of advantages to the borrower. So, if you are a military veteran then you should seriously consider getting a VA Loan and fulfill your dream of buying your own home.

Knowing More about VA Loan and its Mortgage Rates

The VA loan program has turned out to be a highly successful military home loan guaranty program offered by the government of the United States. Today it is a highly popular mortgage loan offered by qualified lenders in the city, and approved by the federal government. Today, it has been the cause why more than 20 million veterans in the country are able to lead a stable and secure life within their own houses, with their families. But, changes of regulations and fear of a market collapse, keep people skeptical about the loans and whether they would facilitate their requirements.

Why is it advantageous to have a VA loan?
 

This loan program is indeed powerful and highly flexible. Thus, it is perfect for people who are looking for home ownership and are struggling to accumulate the required finance. The best part is that one does not need having a private mortgage insurance for getting a loan amount sanctioned. Competitive rates and terms are allowed by lenders of VA loans and one can get to save a lot of money while closing. However, it essential to know about the mortgage rates for VA loans before house hunting is started.

What are the current home loan rates?

The interest rate currently is pretty low and that is exactly why this is the right time to invest in home ownership. Let us take a look at the VA home loan rates today.

5-Year ARM	3.125%	(3.62% APR)
30-Year Fixed	3.75%	(4.011% APR)
15-Year Fixed	2.875%	(3.345% APR)
VA 30-Year Fixed	3.25%	(3.505% APR)
VA 5/1 ARM	2.875%	(2.967% APR)

 

There are several factors that determine the rate of VA home loan. Though the interest rates would be as mentioned, it would also depend on certain other factors. These factors include credit score, loan duration, debt-to-income ratio and current situations in the market. The best VA loan rates can be achieved once you have conducted your share of market research. Every lender would want to know all about your debt-to-income ratio and credit score before a loan is guaranteed. But, the rules aren’t very stringent and therefore a decently good credit score will get you really low interest rates.