Quite often, military men and women must relocate their families because of deployment orders, and for this reason, it can be a trying task for some families to build a strong financial profile. The Department of Veterans Affairs recognized this and decided one way they could give back was to offer the VA Loan program, which has allowed over 20 million active duty and veteran service members to purchase the home of their dreams.
Benefits of the VA loan program have been tailored to fit the specific needs of service members by offering a zero down payment option to qualified applicants. If a down payment is required, it is generally not above 5 percent, which is still much lower than conventional loans usual 10 to 20 percent. Other benefits of the VA home loan program include:
VA loans can be used for the purchase of a single-family home, a VA approved condo, or to refinance your current residence. However, potential applicants must keep in mind that VA loans can only be used for their primary residence, and cannot be used for investment properties. VA Loans have no maximum loan amount; however, there is a maximum that the VA will guarantee. This limit is set at $417,000 limit for the majority of the country, but some areas are designated as high-cost counties, and those areas limits can eclipse $900,000. For a service member to be eligible for the VA loan program they must fall under one of the following:
Those who wish to refinance using their VA Loan benefit have several options to consider, such as the cash-out refinance and the Interest Rate Reduction Refinancing Loan (IRRRL).
It is the borrower's decision if or when he or she will refinance their loan, since market conditions change daily. It is important to carefully consider all the options and to speak with a VA loan specialist or a financial planner before refinancing your home.
If refinancing makes sense, the VA Loan offers many benefits, such as lower monthly payments or the ability to use a cash-out refinance that allows the borrower to take cash out of the home without taking any money out of his or her pocket.
In addition, the Veterans Benefits Improvement Act of 2008 provides borrowers the ability to take out up to 90 percent of one's current loan-to-value with the Cash-Out Refinance.
By doing this, one is free to use the money to make repairs to his or her home, pay other bills, or perhaps save the cash for future use; many also choose to refinance in order to get a lower interest rate.
An IRRRL is often referred to as a "streamline" and is a popular choice among VA Loan borrowers. In order to do an IRRRL, one must have used the VA Loan on the property he or she intends to finance. The interest rate on the new loan must be lower than the rate of the current loan, except if one is choosing to refinance an adjustable rate mortgage (ARM) to a fixed rate mortgage. Unlike the cash-out refinance, the borrower is not allowed to take out any cash with an IRRRL.
To learn more about your VA Loan benefits, complete our simple form.