A guide to VA Home Mortgage Loans
Is a VA Mortgage Right for Me?
With a VA Home Mortgage Loan you may be able to borrow as much as $417,000 toward the purchase of a new home or use that money to refinance an existing home mortgage loan.
Some other uses for your VA Home Mortgage Loan:
- Building a home, buying a manufactured home (whether it includes a lot or not)
- Renovating a home
- Refinancing a previous VA Home Mortgage for a lower rate
- Refinancing a manufactured home in order to purchase a lot.
These are just a few of the things you can do with a VA Mortgage, so call Homestar Financial to see if a VA Mortgage is right for you.
VA Mortgages have many advantages over other types of home mortgage options:
- protection against unfair or discriminatory lending practices
- A mandatory one-year warranty for new homes and manufactured homes
- Compensation for structural defects if a new home was built under VA or HUD inspection
- No repayment penalty
- Fees and charges limited to those approved by VA
- Greater flexibility in the event of temporary inability to comply with the terms of the mortgage.
Do I Qualify for a VA Home Loan?
To obtain a VA home loan you must first request your Certificate of Eligibility. To do this you will need to fill out VA Form 26-1880, available only from the Winston-Salem Eligibility Center. You may qualify for this certificate if you are a Veteran, on active duty, in the guard or reserves, or a military spouse. While this Certificate of Eligibility is necessary to apply for a home loan, it does not guarantee approval. If your service record matches any of the following categories, you are likely eligible for a VA mortgage loan.
Eligible active duty service includes:
- World War II
- Vietnam
- Korean Conflict.
- Iraq and Afghanistan (if you served no less than two years or your total length of active duty)
- If you are currently serving on active duty and have been doing so continuously for 90 days, you are eligible.
- If you have served during peacetime for no less than 181 continuous days, or were discharged for a service connected disability, you are eligible for a VA Mortgage Loan. (For specific dates regarding peacetime and wartime service, consult the Department of Veterans Affairs website.)
- Some types of Guard and Reserve duty also qualify.
Call Homestar Financial with any eligibility questions you may have.
How do I Apply?
For the savvy home buyer, the loan process begins well before scanning the real estate pages for the ideal house. In fact, it’s difficult to determine which house is right for you without first determining how much house you can afford. This is done by the “pre-qualification process”. Contact one of Homestar Financial’s many qualified professionals to help you determine what price range you should be looking in. To make this estimate as accurate as possible, you should have as much information about your income and assets on hand as possible.
If you are purchasing a home or refinancing please have copies of:
- Your last two paychecks or paystubs (husband and wife)
- Your W-2’s from the last two years
If you are self employed, include:
- Tax returns from the last two years
- A copy of your business license to verify last two years or a letter from a CPA stating that they have done your taxes for the last two years
If you are on a fixed income include:
- A copy of your 1099
- An award letter from S.S.I. or the V.A.
- Bank statements to show direct deposit or a copy of your check
The following are needed only if you are refinancing:
- The HUD Settlement Statement from last closing
- Your most current mortgage statement
- The front page of your Homeowner’s Insurance)
Once you complete the optional pre-qualification process you can begin shopping for a home with a better idea of what you can afford.
Once you have found the right house for your needs, you will draw up a purchase contract (your realtor will assist you with this part of the transaction). This contract will solidify the terms of the sale agreed upon by the buyer and the seller. This contract is also known as a “purchase agreement” or “sales agreement” contract. It will cover such things as any liens existing on the property, disclosures, inspections, pre-closing maintenance, and the preparation of closing documents.
Since the amount of the home loan cannot exceed the value of the property, the VA must conduct an appraisal. This is generally done at the request of Homestar Financial. If the asking price of the property and the appraised value match up, then it is time to finalize the loan process.
When Homestar Financial obtains an approval for the loan they will explain what’s expected of you with regard to the terms of the mortgage and the details of the monthly payments. When the VA is notified of the loan they will modify the Certificate of Eligibility accordingly before returning it.
This process may vary depending on location and there may be some unanticipated costs, so don’t hesitate to call Homestar Financial and let us help guide you through the process.
Helpful Tips
Get a Credit Check (click here)
A surprisingly high percentage of credit reports contain inaccuracies. To make sure that yours is not one of them, request a credit report and look it over for errors. You should get a report that features information from the three major credit bureaus. Should you find an error, contact the credit bureaus and ask them to fix it. If you don’t take this important step your lender will make far-reaching decisions based on false information, and this could cost you a lot of money.
Determine Your Price Range
Before you go house hunting, you should find out how much house you can afford. Pre-approving your VA Home Mortgage Loan amount is a good way to do this. Once you’re pre-approved you can narrow your home search. When you find the home you’re looking for, pre-approval indicates to the realtor that you are serious about buying a home. This will give you an advantage over others who did not have the foresight to get pre-approved.
Consider an Adjustable Rate Mortgage
If you do not plan to stay in your home for an extended period of time, an Adjustable Rate Mortgage (ARM) might be your best mortgage option. The initial rate of an ARM is usually lower than that of a Fixed Rate Mortgage, so there are some short-term savings opportunities. Once the initial rate expires, however, your interest rate may increase up to one percent per year and up to five percent for the life of the loan. As a result, the long term rate changes may offset the lower initial rate. So, if you’re planning to stay in your home for ten years or more you may want to choose a Fixed Rate Mortgage, which offers more stability and predictability. Determine what your situation is before you decide whether to opt for a Fixed Rate or an Adjustable Rate Mortgage. Ask the professionals at Homestar Financial to help you find the right loan for you!
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