VA Home Loans: What You Need To Know
When it comes to home loans, you probably have a lot of questions. What requirements are necessary for you to be approved? How do you apply? Don’t let not knowing the answers to these questions worry you. There are many professionals trained to answer your questions and help you understand VA home loans and what you need to know before applying.
Poor Credit
When you apply for a VA loan, there’s usually more leniency with your credit score. If your score is lower than you would like, you may still be eligible for a VA loan. VA lenders will still run a credit check to look at your history, but they tend to approve people who keep a credit score of at least 620. If you have that, they’ll also look at your payment history to ensure you’ll be able to make regular payments on the loan.
VA lenders tend to be more forgiving when it comes to past credit issues. Don’t worry if you had a home that foreclosed or if you filed for bankruptcy. Additionally, the waiting period for approval is usually shorter than if you were applying for a conventional or FHA (Federal Housing Administration) loan.
No Down Payments
Typically, with a standard FHA loan, you’d have to put down somewhere between 3 and 5%. However, if this home will be your primary residence, you won’t have to put money down to get started with a VA loan.
Lower Rates and More Refinance Options
On average, a 30-year fixed-rate mortgage secured through a VA loan will have lower interest rates than those of a conventional or FHA loan. Your closing costs will also be lower. There are also restrictions on what a VA lender can charge regarding fees for attorneys, real estate agents, penalties, and inspections.
There are several reasons to seek an IRRRL (interest rate reduction refinance loan). You may eventually want to refinance your loan to lower your monthly payments and interest rate or exchange your fixed-rate mortgage for an ARM (adjustable-rate mortgage) to save money in the short term. Though you also have the option to refinance with a conventional loan, it may be easier with a VA loan. Many times, an IRRRL does not require an appraisal or money out of pocket during closing with a VA loan.
Mortgage Insurance and Transferring the Loan
With a VA loan, you won’t need mortgage insurance. If you were to get a conventional or FHA loan, you would have to obtain private mortgage insurance and put more money down. If for some reason you ever need to have someone else take over your loan, loan assumption is an option for qualified buyers. This allows you to transfer the VA loan to someone else who will assume the liability for the existing loan.
Applying for a VA loan has a lot of benefits. There are many established rules and guidelines in place to help you determine the details of VA home loans and what you need to know before you proceed. Streamline Mortgage is a hard money lender in Reno that specializes in providing a wide range of home loans options, including VA loans. Use this information to assist you in deciding on your loan options today!