If you are thinking in your head, “Is a VA Loan Right For My Family” Then you’re in the right spot. We’re sure you’ll agree with us, whether you are purchasing your dream home or refinancing your existing home, selecting the right loan product is a crucial decision for laying down your family’s financial basics.
Our Silver Lake Realtors say there are a lot of loan choices. The one that was right for your friend or family member may or may not be the right one for you and your family.
It really actually depends on your situation and your financial goals, and it’s pivotal that you work with a trusted and experienced loan officer or mortgage broker, and a reputable Silver Lake Real Estate Agent.
Am I Even Eligible For A VA Loan?
By meeting one or more of the following conditions, you may end up qualifying for a VA loan.
- Have you served 181 days during peacetime (Active Duty)?
- Have you served 90 days during wartime (Active Duty)?
- Are you the spouse of a service member who was killed in the line of duty or as a result of a condition due to their military service?
- Have you served six years in the Reserves or National Guard?
Did you know that a certificate of eligibility (COE) is required before securing a VA loan? Typically speaking, a COE is obtained online by your mortgage lender in the course of pre-approving you for a VA loan.
Silver Lake Los Angeles Real Estate Agents often tell you that the VA is not an actual lender; veterans use the services of a mortgage company to get a VA insured and guaranteed loan.
In addition, a COE can also be obtained at your local Veteran Affairs office or by filling out a certificate of eligibility request form.
What Types of Loans Does VA Offer?
Most Silver Lake Los Angeles Real Estate Agents will tell you that VA offers fixed-rate loans with terms ranging from 10 years to 30 years. Additionally, VA also offers Adjustable Rate Mortgages, commonly referred to as ARMs. In addition, there are renovation loans where you can buy an existing property and renovate the home with a very favorable rate.
It is essential to note that the Veterans Administration does not make loans directly, but, in fact, guarantees loans created by lenders.
Do We Have to Make The Initial Down Payment?
Most of the time, a VA loan will not require a down payment. However, VA will give you an opportunity to make a down payment if you desire – not a bad idea if it’s within your budget and comfort zone.
Generally speaking, Silver Lake Los Angeles Real Estate Agents say the funding fee is lower if you make a larger down payment. The reductions come at 5% and 10% down payments.
Unlike other loans with no or low down payment alternative options, there is no requirement for mortgage insurance on a VA loan and the VA funding fee is “financed” or added to the base loan amount.
If you are putting down a larger down payment you may want to consider other loan options where a funding fee is not required. Our Silver Lake Realtors say this is specifically true if you are making a 20% or larger down payment.
Furthermore, the VA also guarantees jumbo loans so make sure you check that out especially if buying a home in a higher cost area of Silver Lake, CA where a larger loan amount may be required. However, not all lenders provide “jumbo” VA loans.
What Is A Funding Fee?
Above, we discussed that the VA itself does not make loans but guarantees them. When you take out a VA loan, you pay a funding fee to the lender that they turn around and pay to the VA. This fee tends to go into a pool that the VA uses to pay off loans that default.
Generally speaking, Silver Lake Real Estate Agents say the funding fee is paid by all Veterans that take out a VA loan based on a sliding scale except those who have had an in-service related disability. Next, the VA waives the funding fee.
There is also a lowered funding fee for Veterans doing a VA Interest Rate Reduction Refinance Loan (VA IRRRL ~ pronounced VA “Earl”). In laymen’s terms, that’s a refinance with no out of pocket closing costs and no appraisal is required.
That’s yet another benefit of obtaining a VA loan – down the road, you can refinance your current VA very inexpensively with a VA IRRRL (short for “VA interest rate reduction refinance loan”).