The Unites States Veteran's Administration has made available a series of lending opportunities to military personnel who have served in active duty in the Marines, Navy, Air Force, Army and Coast Guard, and have not received a dishonorable discharge. Generous VA purchase, refinance and streamline loans can save the U.S. veteran significant money over the life of the loan with lenders eager to compete with lower interest rates and the "no down payment" policy applied to some purchase agreements.
Some of the benefits from a VA purchase loan for the veteran's primary residence include restrictions on the amount of closing costs applied to the mortgage, no penalty for early loan balance pay off, and offers an assumable mortgage to qualified candidates who wish to assume.
The VA refinancing program resembles the private sector loans that enable the home owner to pull cash from the property's equity and refinance even when the payments are in delinquency. However, the new terms and conditions will be regulated by the private lender.
The streamline refinance option, or IRRRL, allows the veteran to change a short-term ARM to a long-term fixed mortgage, with no cash out of pocket. In some cases, the lender may require a property appraisal and check the applicant's credit score.
The VA lending procedure is similar to a traditional mortgage loan in that the VA recipient is entitled to a property appraisal. The approximate market value of the home is estimated on the CRV, or certificate of reasonable value and the paperwork is sent to the lending institution for approval. In most cases, the VA will accept appraisal certificates from appraisal companies that have been in business for at least five years.
The veteran may purchase a home at any market price, however, the VA lending system does not grant a loan balance to exceed the CVR findings. The over-budget difference in cost may be paid in cash or carried by a private lending institution. In situations where the CVR price is higher than the asking price, the veteran does not have to make a down payment on the property.
The qualified veteran may select a long-term fixed rate loan to extend to a maximum of 30 years and 37, or choose a an ARM. Applicants for the short-term ARM must adhere to VA regulations that require the loan to have a limited up or down interest rate of 1 percent, a final interest rate cap not to exceed five points above the initial interest rate at signing, and ensure the monthly payments will adjust on the annual date if signature.
To apply for a VA housing loan, the applicant must fill out a "certificate of eligibility" or complete the VA Form 26-1880 along with papers verifying active duty since September 16, 1940. In addition, you must include copies of your military separation papers. Select a real estate agent to help you with the house hunting and sign the purchase agreement. Call your local VA lending office and apply to the mortgage agency of your choice. The VA will take it from there, and you're ready to move into your new home.