Using a VA streamline loan is a smart idea for anyone with the opportunity to do so. It offers a number of benefits to the veteran which will be presented in the following paragraphs. VA loans tend to have more flexibility and to be more attainable due to the fact that more lenders offer them. It is often easier for the veteran to qualify, making it a convenient choice compared to other types of loans. Here are just five of the main reasons to choose a VA streamline refinance!
Using a VA Streamline Loan
- The qualification process for a VA loan is much easier than for a conventional loan.
- Credit standards are much more flexible. When it comes to other loans, this is typically where many borrowers have trouble qualifying and getting a decent rate. The VA simply looks for a clear 12-month credit history. At Low VA Rates, we have no set minimum credit score requirement. We understand that credit score alone doesn’t prove whether a borrower is creditworthy or not.
- There is no down payment required. This payment could be used for many other things, such as investing in savings, paying off other debts, making a larger payment on the home later, or maybe taking a family trip! If the borrower chooses, they can make a down payment, but just keep in mind that it is not a requirement!
- The amount that the VA allows the veteran to qualify for is generally quite a bit larger than that of a conventional loan while also offering lower interest rates. (Rates follow the market, but can become even lower if the veteran does opt to make the optional down payment.) A veteran can get a home for up to $1 million and with $0 down! Most states in the United States have a loan limit of $417,000. However, in some states the max goes up to $625,500. Specific lenders in any state will allow higher loan amounts to fund, up to a maximum of $1,000,000.
- The government limits the amount that can be charged in closing costs, origination fees, and appraisal fees. There are also no mortgage premiums required. Lenders are prohibited from requiring one. This is because of the VA guarantee put on the loan.
VA Streamline Mortgage Requirements
Are you convinced that the VA IRRRL is right for you? In order to qualify for a VA loan, you must have served at least 90 days during wartime or 181 days during peacetime and have not been “dishonorably discharged.” Spouses (who have not remarried) of veterans who died in war or due to service-related wounds are also sometimes eligible to finance their homes with VA loans.
Another important qualification to remember is that VA streamline loans can only refinance current VA loans. This requirement has earned the VA IRRRL another nickname: VA-to-VA loan. If you do not currently have a VA loan but would like to refinance into one, you would need to do so through the VA cash-out refinance. But if you know you meet these requirements, then get started on the loan application process today. You don’t want to wait for interest rates to go up.
Allowable Streamline Closing Costs
One of the many reasons to use a VA streamline as said above is that the VA actually forbids the borrower from paying certain closing costs. This gives VA home loans a huge advantage over just about any other loan type out there. By not paying certain closing costs that are generally required otherwise, you could be saving hundreds or even thousands. Let’s take a look at some closing costs that veteran borrowers are allowed to pay:
- Recording fee
- Origination fee
- Title insurance
- Credit report
The borrower is not allowed to pay for tax service, document fees, processing, escrow, underwriting, and other costs. But just because the borrower cannot pay them, that doesn’t mean these charges are simply free; they must be paid for somehow. These fees and even the allowable fees listed above can be paid for by either the lender or the seller of the home. Who pays what depends a lot on the individual situation. It is very common for the borrower to negotiate with the seller, offering to pay more for the home if the seller covers closing costs. Speak with your lender and real-estate agent about your options for covering closing costs to learn more.
Get Started Today
Veterans should take advantage of the VA loan if they can qualify for this option. Another perk for the veteran is that if they have any kind of service disability, they can look into getting their funding fees waived as well. There are so many benefits to VA streamline loans that it would be hard to not look into it. It is definitely one to take into consideration when buying a home. Call us now at 866-569-8272 to get started.