I am a 20+ year Veteran of the United States Navy; it was an honor and privilege to serve our great country, and it’s an honor that many other Americans have had. Our dedication to the service of our nation and the great state of Kentucky comes, at times, with sacrifices, long hours, hard days and even injuries that can plague us for years. Too often, Veterans either forget or are unaware of some of the benefits we have earned, like the VA-backed home loans and refinances. There are a lot of misconceptions about these benefits and I hope to clear up some of them.
First, if you are currently working with a Realtor or mortgage lender, and you have not told them or they have not asked if you are a Veteran, stop reading this and tell them now! Second, if you are a Veteran and have not explored the option of financing your new home or refinancing your current home using this benefit, you could be missing out on substantial savings. To understand this earned benefit, there are a couple of things you need to know: The VA is not a bank and they do not lend money; they only guarantee the money that a lender gives you for a home up to 25% of the purchase price. The other key thing is your eligibility for this benefit; eligibility is shown through a Certificate of Eligibility (COE) which can be obtained through the VA, or through a lender like me, in most cases.
With a VA-backed home loan, they guarantee (or stand behind) a portion of the loan you get from a private lender. If your VA-backed home loan goes into foreclosure, the guaranty allows the lender to recover some or all of their losses. Since there is less risk for the lender, they are more likely to give you the loan under better terms. In fact, nearly 90% of all VA-backed home loans are made without a down payment. Lenders follow the VA standards when making VA-backed home loans. There are three basic VA-backed loans: A purchase, a cash-out refinance, and an Interest Rate Reduction Refinance Loan (IRRRL).
A VA-backed purchase loan offers no down payment, provided the sales price does not exceed the value of the home, and better terms and interest rates than other loans typically available from private banks and mortgage companies. You also have the ability to borrow up to the Fannie Mae/Freddie Mac conforming loan limit on a no-down-payment loan in most areas – and more in some high-cost counties. A recent change based on The Blue Water Navy (BWN) Vietnam Veterans Act of 2019 PL 116-23 made it so VA-guaranteed home loans will no longer be limited to the Federal Housing Finance Agency (Federally-established) Confirming Loan Limits if you have full entitlement available. No private mortgage insurance (PMI) or mortgage insurance premiums (MIP), few closing costs, which may be paid by the seller, and no penalty for early payoff.
A VA-backed cash-out refinance loan may help you to take cash out of your home equity to pay off debt, pay for school, make home improvements, or take care of other needs to include hardships felt during the current crisis. You can also use this refinance loan to refinance your non VA-backed loan into a more secure VA-backed loan. The last basic type of VA-backed loan is an IRRRL. The IRRRL is a streamlined refinance with the goal of lowering your monthly payment by getting a lower interest rate, or making your monthly payments more stable by moving from a loan with an adjustable or variable interest rate to one that is fixed. To be eligible for an IRRRL, your current loan must already be a VA-backed loan.
There is more data than I could ever add into one article, but the point is – if you are a Veteran and you are not using the earned benefit, you need to consider this as not only a viable option, but one of the best ways for you to realize the dream of home ownership. I know here at Ross Mortgage Corporation we value our nation’s Veterans; we thank you for your hard work and dedication. We do not charge any Veteran origination fees on any VA-backed home loan or refinance, and if you are greater than 10% service connected through the VA, the VA waves their required funding fee. If you are exploring home ownership, you need to liquidate some money from your home equity for improvements or additional purchases, or if you want to lower your monthly payments, call me. We believe everyone wants a home and no one wants a mortgage; we want to help you realize your dream of home ownership. I can be reached at muptegraff@rossmortgage.com, via text and voice at 270-629-5043 or by going to my website at www.iapprovevets.com.
-by Michael Uptegraff
Certified Mortgage Advisor and Licensed Loan Officer in KY, TN, MI, LA, IN, GA, NMLS#2009403