Veterans have better options in buying a home

In today’s uncertain real estate economy, many are finding obtaining loan financing to be quite challenging. Loan program guidelines have been reduced and many eligible buyers are sitting on the sidelines because they have no down payment.  Fortunately, with so many military bases located in the Greater Baltimore area and two active wars, many of these individuals are eligible for special Veteran’s Administration or VA Financing. What is so important about VA financing? For starters, eligible applicants are able to qualify with 100% financing (meaning the tremendous down payment hurdle is avoided), no monthly mortgage insurance for having less than 20% equity in their homes, and as good (if not better) rates than some of the comparable Conventional or FHA Loans that others receive. So, who exactly is eligible for such a program?  Well, veterans or their spouses who served on active duty and were discharged under honorable conditions, during World War II and later periods are eligible for VA loan benefits. There’s a lot more to it of course, read here for more on who is eligible.

What’s the down side to such a great program? There’s not much. All eligible people much pay a one-time funding fee which ranges from 0-3.35% of the purchase price of the home depending on the level of eligibility, if the usage is first-time or subsequent usage, and the amount of the down payment used (better terms are also available with more money down!).  In addition, expect to have additional paperwork which includes the standard certificate of eligibility or form DD-214. All applicants still go through the application and qualification process which includes qualifying on the standard income/credit/assets requirements. However, once those hurdles have been obtained, veterans truly do get a valued benefit. Another example is VA Homes where the Veteran’s Administration acquires VA-guaranteed or VA-backed properties, these properties are listed for to all parties.  In addition, third party fees associated with obtaining a loan are very much limited. Origination fees are capped at 1% of the loan size (while the option to pay reasonable discount fees to buy down the rate still remains). Best of all – when rates drop, these loans are eligible to be refinanced through IRRL or Interest Rate Reduction Loan to obtain a new lower rate with little cost involved, very little documentation, and often without an appraisal.

During the days of the housing boom of the last decade, new innovative programs often caused the VA financing options to be overlooked. In today’s market, the VA financing option is a must for those who are eligible. It really can mean the difference of qualifying for a first home, upgrading to a larger residence, or simply reducing your mortgage payment. For more information to see how VA financing may work for you, contact us directly.