I had a great neighbor, an older gentleman, who always seemed to get things done in record time. While I was still trying to decide what to do, he was already doing. We often talked over the fence and one of his favorite sayings was, “there is no time like the present.
In the spirit of taking wise action now, here are five good reasons why you should take advantage of your VA home mortgage loan entitlement:
- Reason #1: Veterans, active duty and certain surviving spouses are eligible for VA home loan benefits. Qualified surviving spouses may borrow up to $417,000 (more in high-cost counties) with no money down. Surviving spouses are exempt from paying the VA funding fee.
- Reason # 2: VA home loans can be used to purchase foreclosed and short-sale properties, often with little or no money down. VA-eligible borrowers possess an advantage over those who need up to 20% cash down to qualify for conventional loans. Work through a VA appraiser who is trained to certify value and safety. He will be able to steer you away from problem properties that are not a good investment.
- Reason # 3: If you are currently deployed overseas, you can sign a power of attorney or (POA) designating your spouse or someone else to act in your behalf for a VA home loan. The POA grants permission for the attorney in fact to sign on behalf of the VA-eligible borrower. The service member must give intent to obtain a VA loan through an email, letter, or other written notification. Only a spouse can satisfy the occupancy rule (move in within 60 days of closing) in a deployed serviceperson’s stead. Otherwise, the borrower serving away from home is granted an extension of up to 12 months to occupy the home.
- Reason # 4: There are knowledgeable specialists who can help you get the facts. You should not trust a real estate as a reliable source for VA loan information. A VA specialty lender, one whose majority product is VA-backed loans, can provide reliable VA mortgage lending facts.
- Reason # 5: If a lender is specialized in VA home loans, then closing can often happen within 30 days. The VA-approved lender is given flexibility to decide on its own whether a borrower is a satisfactory credit risk. Oftentimes a borrower with extenuating circumstances can close quickly.
Where do I Start?
Your quest for a VA home loan starts with a Certificate of Eligibility (COE). You are required to obtain a COE to pursue a VA mortgage loan. If you do not have this certificate, you will need to apply using VA Form 26-1880 (which requires a copy of DD-214—your Certificate of Release or Discharge from Active Duty showing character of service). Along with the COE, you will need to document your credit, savings, and employment information to apply for a VA home loan.
Why get a Military Home Loan?
Simply put, there are distinct financial advantages to do so. A VA Home Loan allows qualified buyers the opportunity to purchase a home with no down payment. There are also no monthly mortgage insurance premiums to pay, limitations on buyer’s closing costs, and an appraisal that informs the buyer of the property value. For most loans on new houses, construction is inspected at appropriate stages and a 1-year warranty is required from the builder. VA also performs personal loan servicing and offers financial counseling to help veterans having temporary financial difficulties.
I’ve Already Used My VA Loan Eligibility
You can have previously-used entitlement “restored” one time only to purchase another home with a VA loan if the borrower has paid off the prior loan but still owns the property, and wants to use his entitlement. This often occurs with active duty borrowers who transfer to a new station but want to keep their existing home for retirement. However if the prior loan has been paid off, AND the property is no longer owned, they can have their entitlement restored as many times as they want. They can re-use their VA eligibility for every home purchase from the first to the last.
A veteran’s maximum entitlement is $89,912, and lenders will generally loan up to four times your available entitlement without a down payment, provided your income and credit qualifications are fine, and the property appraises for the asking price.
Remember, there is no time like the present!