Thursday, April 1, 2021

5 Facts About VA Home Loans

5 Facts About VA Home Loans That You Should Know

Guest Post Myriel Legaspi

Most Americans dream of becoming homeowners are some point in their life. Government-guaranteed home loans have addressed many of the issues that have come up for potential homeowners. However, many real estate experts see VA home loans as the best government home loans available. Their consideration as the best government loans available is because they can do much more than buy a home.

If you are an applicant that meets the VA loan requirements, you must know how many things VA can do for you. We will go over five things that eligible applicants should know about VA home loans.

1.            Zero Money Down

Perhaps the most appealing thing about VA home loans is that eligible applicants can buy a home without paying a down payment. It is a significant benefit since most conventional loans have a down payment requirement of 20%. However, removing down payments does not entirely remove all of the initial costs from buying a home. Borrowers are still required to pay for money deposits, appraisals, and home inspections. 

Additional benefits from VA loans are lower interest fees, low monthly mortgage payments, no mortgage insurance premiums, and the ability to finance the funding fee.

2.            Finances the Construction/ Refinancing of a Property

Although most people who know about VA loans know about its home-buying capabilities, it is important to note that they can also finance the construction and the refinancing of a property. Both construction and refinancing loans have eligibility requirements.

  • VA Construction Loans

Any construction project financed by the VA construction loan requires land preparation before construction can begin. Because the VA cannot insure loans on vacant land, empty lots not prepped for construction are not eligible. 

  • VA Refinancing Loans

The VA insures two refinancing loans, and they are Interest Rate Reduction Loans (IRRRL) and Cash-Out Refinancing Loans. IRRRL offers loans of up to 100% of the current loan amount for eligible applicants. As the name suggests, cash-out loans offer cash options on home equity from a conventional and a VA home loan. Money from these cash-out loans can pay off debts, financial emergencies, and home improvements.

Borrowers who used a conventional loan to finance a property's construction have often ended up refinancing that property through a VA refinancing loan to enjoy VA loan benefits.

3.            VA Adaptive Housing Grants  

Veterans who sustained a life-altering injury due to their military service can use a VA grant to fund their property's adaptation to meet their disability needs. There are two types of grants insured by the VA and improve the applicant's quality of life.

The two types of property adaptation grants are the Specially Adaptive Housing (SAH) Grant and the Special Home Adaption (SHA) Grant. In the fiscal year 2021, SAH grants offer up to $100,896, and SHA grants have a limit of up to $20,215. In addition to the amount, both grants offer, SAH grants are for applicants who own or will own the property, while SHA grants are for applicants who might not own property.    

4.            Reusable Benefits

One of the best benefits from VA home loans is that their benefits are reusable with no current limit to how many times borrowers can use these loans. Eligible Veterans and Active Duty Service Members qualify for a set amount of entitlement. These entitlements are a specific amount that the VA insures if the borrower ends up defaulting on the loan. Additionally, there are no limits as to how many times entitlements are usable, and the only requirement is for borrowers to finish paying off previous loans. 

5.            Benefits Last a Lifetime  

Finally, VA home loan benefits earned last a lifetime for Veterans, Active Duty Service Members, and eligible spouses. However, these benefits were not lifelong in 1944 when VA home loans became part of the Servicemen's Readjustment Act. The permanence of these benefits came from the signing of the Veteran's Housing Benefits Improvement Act of 1970, signed into law by President Richard Nixon.   

Phil Georgiades is the CLS for VA Home Loan Centers, a government-sponsored brokerage specializing in VA home loans. Phil has more than 22 years of experience working in real estate professionally. For more information about VA loans or to submit a VA loan application, give us a call at (877) 432-5626.

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