5 Things to Know about VA Loans

You’ve put in years of service into the military and now, after taking advantage of the GI Bill, you’re in the first few years of a new and exciting career you simply love. What’s more, it’s time to buy a home, something very much appreciated after being deployed from place to place, having to cart everything you own from one location to the next.

Orlando is the perfect place, with so much to offer and plenty to offer you and your partner, like Gay Days at Disney, and, it’s also where there are new and recently built communities. That means it’s highly likely you’ll get a great deal, especially if you obtain a VA loan.

VA Loans versus Other Mortgages

One mistake that some veteran home buyers make is to mismatch their home loan with the property they want to purchase. For instance, if you’ve find a home that is perfect for your commute, in a community you like, but needs quite a bit of work to make it livable, a conventional, FHA, or VA loan are not the mortgage products for you and that particular residence. In this case, a 203(k) loan would be a good fit because this type of mortgage covers the purchase and necessary repairs.

“Only certain types of properties can be financed with VA loans, and each home must meet the VA’s ‘minimum property requirements.’ Familiarity with the VA’s property criteria leads to a focused house hunt and a quick close.” —Real Estate.com

This is because those mortgage products are for purchases of homes which do not need any significant repair or rehabilitation. There are a number of restrictions that come with different debt instruments, so it’s wise to learn about those requirements before you apply for a home loan.

In addition, you should be willing to be flexible with the type of property you will ultimately purchase–you might have to give up one item on your wishlist to get another higher in priority.

Five Things to Know about VA Loans

A common misconception about VA loans is that anyone who has served in the armed forces is eligible. While that’s true in a broad sense, it’s not necessarily the only criteria. Though the veterans’ administration does not loan money directly, it does insure or back mortgages made by lenders. Here are five things you ought to know about getting a VA home loan:

  1. Eligibility guidelines. To be eligible, you must meet the following conditions: served at least 90 days during wartime, served at least 181 days during peacetime, served at least six years in the National Guard or Reserves. What’s most important to know is that there are exceptions and lenders work to make applicants eligible.
  2. No down payment. Unlike conventional mortgages and FHA backed loans, which require 5 percent and 3.5 percent down respectively, VA loans do not require a down payment. FHA mortgages require borrowers to pay private mortgage insurance, or PMI monthly, if there’s less than a 20 percent down payment. VA backed mortgages do not require PMI.
  3. Purchasing a primary residence. While there are mortgage products for purchasing something other than a primary residence, such as an income rental property or vacation home, VA loans are for primary residences.
  4. Few repairs and livable conditions. As mentioned above, a VA loan isn’t for a borrower who wants to purchase a fixer-upper, however, a home that needs minor repairs and/or updates to meet lending conditions is acceptable, so long as those things are taken care of prior to closing.

The last thing you should know about VA loans is that there’s no prepayment penalty. So, if you put just $100 toward the mortgage per month, you’ll be saving thousands of dollars in long term costs of the home loan.