Vital Information On VA Mortgage Rates

Veteran mortgages, or VA mortgages, are guaranteed by the Veterans Administration. The rates on these mortgages tend to be slightly lower than interest rates for conventional mortgages. Typical mortgage rates for VA guaranteed home mortgage loans are usually .25 percent to .5 percent lower than comparable interest rates for standard conventional conforming home mortgages - where the applicant is not a veteran of the military. There are a few more benefits of VA mortgages:

Home Loans Without PMI
United States veterans are allowed to finance 100% of the cost of a home without having to pay private mortgage insurance (PMI). This benefit is available to all American veterans that received an honorable discharge.  The benefit is also available for their surviving spouses - provided that the spouse does not remarry. The Veteran will need to provide the lender with the original DD214 as evidence to support the honorable discharge. 

No Up Front Closing Costs

Generally speaking, veterans are not required to pay closing costs at the time the home mortgage loan is made. Rather, veterans are required to pay a funding fee of 0% to 3.3% of the amount of the loan, which is then rolled into the mortgage. The funding fee replaces traditional closing costs, which generally run from 3 to 5 percent of a loan value. A veteran can get into a home for little or no money down, without having to pay additional high costs for their mortgage.

Streamlined Refinancing
Another benefit for a US veteran is the VA mortgages streamlined refinance. US veterans are allowed to refinance the mortgage on their current home loan to lower rates without having to re-qualify. Therefore, they are able to bypass common steps such as income verification, income documentation or home appraisals. The streamline offers a quick and easy way for a veteran to take advantage of lower rates and lower their monthly payment.

VA Loan Restrictions
VA home mortgage loans have a few restrictions that some general mortgages do not have. For example, you cannot get a VA mortgage with a “no document” or “no income verification” or “interest only loans” and home equity lines of credit. Furthermore, VA mortgage loan applicants are never allowed to receive cash back at the closing when purchasing a new home.

However, VA mortgages do allow for cash out refinance mortgage loans. With these types of loans, veterans may borrow up to 90% of the value of their home's value.

Credit History
When applying for a VA mortgage loan, most lenders will review the last 12 to 24 months of a veteran’s credit history. All applicants should be aware that bankruptcies, tax liens and collections could have a negative impact and cause their application not to qualify for a VA mortgage loan.

Maximum Loan Amount
US veterans are allowed to purchase homes with VA mortgages up to a maximum value of $417,000. If you are trying to purchase a home that exceeds that value, then you will need to pay cash for the difference at closing.

Lender Protection
Most VA mortgages offer benefits that most banks find unacceptable or too risky. Therefore, the Veterans Administration guarantees the loan in the event the veteran borrower defaults. You can apply for the loan with your lender and the  Veterans Affairs office will take care of insuring the lender from loss.

By allowing veterans to take advantage of 100% financing, easy qualifying terms and affordable interest rates, VA mortgage loans are but a small token of appreciation from a grateful nation.

blog comments powered by Disqus