VA Loans: Discover What A VA Mortgage Can Do For You

Posted by Lauren Schneider on Monday, May 6th, 2019 at 1:17pm.

How to Apply For A VA LoansThe VA loan is the most incredible loan program available in the market today.  With a VA loan, veterans can purchase a home with no money down! That means you can buy a home and finance 100% of the purchase price, up to $417,000, in El Paso county.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

VA Mortgage Guidelines & Requirements

What is even more incredible is that active duty service members are eligible for VA financing after just 90 days of service! Specifically, you are eligible for a VA loan when you meet ONE of the following criteria:

  • You have served 90 consecutive days during wartime.
  • You have served 181 days during peacetime.
  • You have served in that National Guard or Reserves for more than 6 years.
  • You are the spouse of a service member who died in the line of duty or due to a service-related disability.

Benefits of Using a VA Loan Vs. FHA Or Conventional Loans

By meeting just ONE of the above criteria, you are eligible to take advantage of the VA loan program, which also carries the following benefits:

  • VA loans do not require private mortgage insurance.  Private mortgage insurance can run hundreds of dollars per month, and is required when home buyers do not put 20% down on the purchase of a home.  VA loans are exempt from this requirement, saving you hundreds of dollars per month.
  • VA loans have very competitive interest rates, that are lower than conventional loan interest rates.
  • VA loans are assumable by veterans and non-veterans.  If you decide to sell your home down the road, and interest rates increase, anyone can assume your loan at the low interest rate you locked in when purchasing your home in this current low rate environment.  This will help you sell your home quickly.

While finding a loan is arguably less exciting than finding a home, it really is the most important first step in the home buying process. Once you are preapproved, you can narrow in on a price range, decide where your comfort level is for a monthly payment, and begin looking at homes! 

4 Awesome Reasons to Use a VA Loan to Buy a Home in Colorado Springs

Buying a home has been a difficult hurdle to cross for today’s generation of first-time homebuyers. Between strict mortgage rules, high market prices, and an ever-increasing cost of living, saving up for your first down payment can be one of the most challenging financial tasks, unless you’re a veteran. And if you’ve served for more than three consecutive months during wartime, or six months during peace time, then there’s a good chance that you can reap the rewards of this valuable, government-funded program.

Exclusive only to our nation’s veterans, the VA loan is an exclusive program that can help you buy a home in today’s challenging real estate market. Here’s a closer look at how VA loans compare to conventional mortgages, and why you should take advantage of them while you can.

No Need for Mortgage Insurance

Usually, if you don’t have quite enough saved up to cover 20% of the cost of the home, you could be faced with a PMI, private mortgage insurance. A little different from a private loan, FHA loans will require an upfront and annual mortgage insurance premium. Nevertheless, both of these options will increase the cost of your monthly payment. With a VA loan, there is an upfront fee, but this pales in comparison to the costs of the insurance premium that come along with other loans. And, if you have a disability from serving, this fee is completely waived.

VA Loans Are Flexible

The sole intention of this program is to help veterans become homeowners, so it’s a little more forgiving than your standard home loan. Previous bankruptcies and foreclosures, if you have any, require a shorter waiting period with a VA loan.

VA Loans Reduce Your Closing Costs

Regardless of what kind of home loan you have, there are always costs and fees at the closing of a sale. But who’s responsible for paying what generally varies depending on where you live. That is, unless you have a VA loan. These loans limit what costs you could be expected to pay, and actually make it so you’re not on the hook at all for particular fees and costs.

VA Loans Eliminate Your Down Payment

That’s right, we’ve saved the best for last. One of the biggest benefits to a VA loan is that it can completely remove the need for a down payment, that is, as long as the home is less than $417,000. In Colorado Springs, you can buy a big, beautiful, new-construction home for around $400,000. With an FHA mortgage, your down payment would be around $14,000, and with a conventional loan, you’d be looking at putting at least $20,000 down. Alternatively, you wouldn’t have to put anything down with a VA loan.

6 Common Misconceptions About VA Loans (And the Truth Behind Them!)

VA loans are one of the best ways for active-duty military and veterans to become homeowners. Since the military lifestyle involves moving around for several years, it can be difficult for veterans and their families to save the money they need for a down payment, and VA loans allow them to bypass that problem by financing 100% of the home's value. Another big advantage is that VA loans don't require private mortgage insurance, since the loans are guaranteed by the Department of Veterans Affairs. Finally, VA loans tend to have below-average rates, which could end up saving you money down the line. So with a VA loan, you can buy a home right away with no extra costs.

If VA loans are such a great opportunity, then why don't more people consider them when deciding whether to buy a home? Unfortunately, there are some widespread misconceptions about VA loans that lead people to dismiss them. Here are a few of those misconceptions, and the truth behind them.

Myth #1: You Have to Have Served a Long Time to be Eligible

Since the "V" stands for "veterans," you might be worried that these loans are only for long-serving personnel. Actually, depending on the nature of your service, you may have become eligible a while ago. It's true that, in the reserves, you have to wait six years for eligibility—but only if you never see service. All it takes is six months of active duty to become eligible for a VA loan, and if you see active duty during wartime, you become eligible after only 90 days.

Myth #2: VA Loans Are Hard to Come By

If VA loans are such a great deal, then surely they're rare, especially in this economy, right? Wrong. VA loans have actually become more and more common since the 2007–2008 economic crisis. In fact, the program has seen incredible growth since 2007, reaching record highs in 2013 and showing no signs of stopping. In the rough economic climate of a decade-long recession, VA loans are allowing military personnel and their families to buy their dream homes, and your family can take advantage of this opportunity too.

Myth #3: VA Loans Take Too Long

You might worry that, compared to a conventional mortgage, a VA loan will take too much time to close. After all, you might only have a limited amount of time to find a home. The good news is that VA loans close at roughly the same speed as conventional loans, taking an average of just under six weeks. So don't let time constraints hold you back from pursuing all the advantages of a VA loan for you and your family.

Myth #4: You Can't Apply Without a Certificate of Eligibility

You might be concerned that you'll have to go through a long, bureaucratic process to get a certificate of eligibility that you can show your lender. Don't let the certificate hold you back! If you know that you're eligible, you can approach a lender for a VA loan today, and obtain your certificate of eligibility later in the process, saving you time.

Myth #5: You're Not Eligible If You've Gone Through Bankruptcy or a Foreclosure

If you have a history of bankruptcy or foreclosure, you might feel as if you will never qualify for a loan. Actually, though, the VA loan program is still available to people in your position, regardless of your history. In fact, you can still use your VA loan benefit even if you had a previous VA loan foreclosed on you.

Myth #6: VA Loans Don't Close

If you're anxious about buying a home, you might be reluctant to pursue a VA loan, because you worry that unconventional loans are less likely to close. But the opposite is true, and government-supported loans are significantly more likely to close. In 2014, an Ellie Mae report showed that over 70% of VA loans closed, compared to just over 60% of conventional loans. So not only will a VA loan cost you less, but it will also make you that much more likely to close!

How to Apply For a VA Loan

If you think you might be eligible for a VA loan and want to learn more about how they work, you can contact us today to speak with our lending expert at Movement Mortgage Home Loans of Colorado Spring. A VA loan might be just what you need to help you buy a home.

Applying For a VA Loan? Anticipate These Closing Costs

Regardless if you’re a buyer or seller, it’s important to be aware of the closing costs through every stage of the transaction. Your agent will inform you about these costs well before the final stages of the transaction to make you aware of what portion of the closing fees you’re responsible for.

One of the many great attributes of a using a VA loan to buy your home is that it limits the amount of closing costs a veteran is expected to pay during the transaction. That being said, it doesn’t eliminate the closing costs in the way it does the down payment, so you’ll still need to have a little extra money on hand to cover your portion of the fees.

Closing Costs You Could Be Expected to Pay

All closing costs are negotiable during the closing process, but the items below cover what closing costs are allowable with a VA loan. Generally, they can be broken down into two categories: loan related and non-loan-related. Together these include:

  • Escrow for property taxes, prepaid interest, and homeowners insurance
  • VA Funding Fee
  • HOA dues (if applicable)
  • VA appraisal fees
  • Home inspection
  • Credit reports
  • Title exam and insurance
  • Title documentation fees (including underwriting and processing)

Costs You Won't Be Expected to Pay

Now here’s the good news for VA loan applicants; thanks to your loan type, you won’t have to worry about the following costs on your purchase. These include:

  • Notary fees
  • Lender documentation fees
  • Transaction Coordinator Fees
  • Broker fees

How Are Closing Costs Calculated?

Closing costs vary from transaction to transaction because some of the costs are determined by a small percentage of your loan amount. After you submit your loan application, your VA lender will let get back to you with a Loan Estimate, which will include an estimate of your loan amount as well as closing costs. Bear in mind that nothing is set in stone at this point, but it gives you an idea of what you have to work with during negotiations with the seller.

How to Pay Closing Costs With a VA Loan

During the negotiation process, your agent can ask the seller to pay for some or all of the loan-related closing costs, as well as up to 4% of the purchase price in concessions, which can be used to cover the non-loan-related fees. That being said, the seller is certainly under no obligation to cover these closing costs, so you should still be prepared to cover them yourself.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

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