When financing your home, the options can seem overwhelming and complex. Opinions and information abound, making it difficult to find the choices that might be best for you.
Fortunately, Cobalt CU recently presented a webinar about whether a Veteran Administration Guaranteed Loan (also known as VA financing or VA loan) could be a good option for you. Alan Stoltenberg, Vice President of Mortgage Lending, and Sue Mohr, Director of Mortgage and Business Development, share straightforward information about what’s involved with this type of financing and common myths that crop up when it comes to VA loans.
Read on for a summary.
What are the benefits of a VA loan?
A loan guaranteed by the VA can be used to buy a home that you’ll use as a primary residence, or it can be used to refinance an existing mortgage. The program offers several benefits:
- Equal opportunity for all qualified veterans
- No down payment unless lender requires it or if the purchase price of the home is more than the reasonable value of the property
- No mortgage insurance
- One-time VA funding fee can be included in the loan
- Veterans receiving VA disability compensation of at least 10% are exempt from the funding fee
- The VA limits certain closing costs
- The VA loan can be assumed by a qualified person
Excuses for not using VA loans
Despite the program’s benefits, many veterans don’t take advantage of VA loans even when it may be the best route for them. A few of the excuses or myths surrounding VA loans include:
- Belief that most borrowers aren’t eligible because they’re not active military; however, you can be retired, a reservist, a National Guard member, or a surviving spouse.
- Misperception that interest rates are higher on a VA loan because it’s guaranteed by the government; in reality, VA loans are competitive, similar to other types of financing.
- Mistakenly thinking the seller will incur extra fees if buyer is using VA financing. Actually, closing costs on a VA loan are almost identical to a conventional loan.
- Belief that approval “is a nightmare” of complications; the approval process is no more comprehensive than other types of loans. In fact, the VA doesn’t simply look at your debt-to-income ratio or a credit score. It examines the expenses you incur to get a realistic understanding of your finances. This is often a much better method of knowing if you’ll be able to afford the home.
- The misperception that VA loans are only for lower-end borrowers.In reality, the limit, $417,000, is the same as for a conforming conventional loan.
- Belief that VA loans aren’t for new construction. It’s true that in order to apply a VA loan to new construction, the builder needs a specific certification, but gaining this certification is simple and many builders have already done so.
- Mistakenly thinking that VA loans are evaluated and issued by out-of-state groups or have to be done online. The reality is, Cobalt CU’s local team is fully equipped to issue and service VA loans.
The Veterans Administration looks for ways to approve loans for veterans, not deny them. Similarly, Cobalt CU is committed to providing the best service possible for veterans, and that includes helping to guide them through any loan process.
The webinar ends with a Q&A with more information on funding fees, the pre-approval process, and qualification details.
Have you applied for VA financing? Share what you’ve learned in the comments.