Americans demonstrated their patriotism by voting, and our nation’s veterans demonstrated their love of country by fighting in wars to give us that privilege. A grateful nation created a lasting memorial to their bravery when it established VA loans in 1944 as part of the original Servicemen’s Readjustment Act, better known as the GI Bill of Rights.
It’s a tribute that lives on and allows anyone who served in our armed forces and was honorably discharged to receive a very special mortgage deal. And although the interest rates on all mortgages are attractive these days, these special VA loans come with the advantage of no down payment. And that’s a rarity these days.
I’ve been writing about VA loans for more than a decade, and in that time they’ve grown ever more popular. They are not just a one-time deal. A veteran can turn to this program as many times as she or he moves to a new home. And, suddenly, mortgage lenders are becoming aware that VA loans are a great marketing tool.
Daniel Chookaszian, a senior home lending adviser (NMLS: 227832) at Chase in the Chicago area, has been my expert in VA loans over all these years. A former volunteer chaplain to disabled veterans, he is a longtime specialist in VA loans. (He can be reached at 847-648-7107.)
The rules for VA loans have basically remained the same over the years, with a few modern improvements.
–No down payment is required. And in recent years, VA loan limits have increased to include so called “jumbo” loans.
–There is no private mortgage insurance (PMI) required to be paid by the borrower, as there would be in a traditional loan with less than 20% equity as a down payment. That insurance is designed to protect the lender if the borrower defaults. But since the VA guarantees these mortgages to the lender, there is no need for the borrower to pay this extra premium each month.
–The rates are low, currently below 3% on a 30-year fixed rate loan, and less on a 16-year loan, if you have reasonably good credit. And although there are closing fees, such as the VA funding fee, they can be rolled into the mortgage amount. Plus, the home seller may agree to pay title and inspection fees because they know this loan will close, since VA buyers are given pre-approval.
–You can do a cash-out refinance of an existing loan. As with other mortgages, a VA refinance can take out extra money to pay off credit card debt, or perhaps a child’s student loan.
–You can use a VA loan multiple times, even if you’ve paid off your original VA loan or sold your home. Or you can use another VA loan to buy a more expensive home or a retirement condo.
–Surviving spouses of veterans can get VA loans after the death of a spouse who died while in service or from service-related injuries, providing they have not remarried.
To start the process of qualifying, you need to apply for a Certificate of Eligibility (COE) using VA Form 26-1880. To complete this application, you’ll need to supply the names and addresses of all employers for the previous two years, along with your W-2 forms and pay stubs. You can get all these forms and more information at VA.gov, or call the Department of Veterans Affairs at 877-827-3702 (option 7).
As an honorably discharged veteran, you are entitled to an American flag for your casket and a headstone for your grave. But the most helpful reward is one you can use — many times over — while you are alive: a VA mortgage loan. Whether you’re hoping to buy a first home or move up to a larger one, whether you’re moving to a warmer climate for retirement or a senior living condo, the VA loan will make your life easier and less expensive if you qualify. And that’s The Savage Truth.
(Article written by Terry Savage)