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What You Need to Know About VA Loans

The VA loan program is an ideal option for veterans and active duty service members looking to purchase or refinance a home. Because these loans are guaranteed by the Department of Veteran Affairs, they’re easier to qualify for and less restrictive than conventional loans.

VA loans typically don’t require a down payment, though there are some credit requirements you must meet to be approved. Depending on your circumstance, you may also require a certificate of eligibility (COE), which you can request through the VA’s eBenefits website or via postal mail.

Your mortgage lender will assess your income, assets and debt-to-income ratio before approving you for a VA loan. They’ll also take into account your service history and how long you have been in the military.

With a VA loan, credit scores as low as 500 may be possible; however, lenders tend to favor those with scores above 620. A good credit score not only allows you to get the best interest rate possible but it also eliminates having to pay private mortgage insurance (PMI), which is required on most traditional loans.

When purchasing a house, research the market carefully and do your due diligence. Your lender will consider factors like debt-to-income ratio, desired home type, credit report and more when approving you for a mortgage.

The VA Loan Limit and Property Restrictions:
Most home buyers can utilize their VA benefits to purchase a primary residence; however, you cannot use them for investment properties or vacation homes. Furthermore, if you want to use the VA loan for refinancing an existing mortgage, they will require that it be for a principal residence.

Before you begin looking for a home, it is important to confirm your VA eligibility. Make sure you have both a Certificate of Eligibility (COE) and good credit score, plus at least two years of stable employment with at least a down payment.

VA-guaranteed mortgages can be obtained from a range of lenders, such as banks, credit unions and mortgage companies. When looking for the ideal option for you, consult with a mortgage provider who has expertise with VA loans.

It is essential to be aware that VA loans require a funding fee not other loans, meaning you’ll pay more at closing than with conventional or FHA loans. This fee helps the VA keep the program running and ensures a benefit for future service members.

AVA financing fees can range anywhere from 2% to 3.6% of the total amount borrowed, depending on your down payment and whether or not you’ve previously been a VA borrower. These fees may be paid at closing or financed into your mortgage, increasing both the overall cost of the loan and monthly payments.

A VA cash-out refinance is an opportunity to tap into your home equity and replace an existing VA loan with a lower interest rate. It’s becoming increasingly popular among first-time home buyers and homeowners looking to access their equity.

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