By Stephanie Visscher
As part of its mission to serve the nation’s military members, the U.S. Department of Veterans Affairs provides several housing benefits to service members and their families, including assistance with home loans. If you or someone close to you has a military affiliation, it’s a good idea to know about the resources available. Here’s an overview.
- Who’s eligible: Current service members, veterans and eligible surviving spouses of members of the armed forces can take advantage of VA home loan guaranty benefits and other housing programs.
- The VA’s role in the mortgage process: Unlike what you may assume from the name, VA loans are provided by private lenders such as banks and mortgage companies, not the VA. The VA guarantees a portion of the loan, which allows private lenders to offer better terms to borrowers.
- The advantages of VA loans: They often include no down payment, no required private mortgage insurance (PMI), a limit on the amount vets can be charged for closing costs and possible assistance from the VA if the homebuyer has trouble making payments. “If the buyer’s agent is able to negotiate for the closing costs to be covered by the seller, they may not have to bring any money to the closing table,” say Mario Negron, Broker/Owner of RE/MAX Pioneers in Cypress, Texas.
- The fees that come into play: According to Robert Wolfe, a loan originator with and part owner of Motto Mortgage Apex in Beavercreek, Ohio, veterans financing their home through the VA are required to pay a 2.15% funding fee (Note: This is set to increase to 2.3% in 2020), which increases with multiple uses of VA loan benefits. A down payment can reduce the required funding fee, and a veteran is exempt from any funding fee if they have a 10% or more VA Disability. “The funding fee is more of an issue for subsequent users, or those reusing their VA loan benefits,” Wolfe says. “But subsequent users are often selling their current home, so they have the ability to have a down payment. A down payment of 5% or more, on a subsequent use, can substantially lower the required funding fee.”
- The family benefits too: Spouses and children of service members also make sacrifices while a loved one serves in the military. The benefits that come with financing a home through using a VA loan may mean the family is able to buy a bigger home or purchase in a stronger school district. “Many veterans can qualify for 10% to 20% more home because they save the extra monthly expense of PMI that is required on a minimal-down conventional and FHA loan,” Wolfe says.
For more information about the resources available through the U.S. Department of Veterans Affairs, visit their website at http://www.benefits.va.gov/homeloans/. Some states provide additional home-financing resources to eligible veterans, such as reduced property taxes. You can find out more here: http://www.va.gov/statedva.htm.
An experienced Realtor can help veterans and their families navigate through the VA loan process. Find a RE/MAX agent near you.
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