The VA is not a lender, but they have an approved network of lenders who are “VA approved” to lend money under the VA mortgage loan program. While the VA doesn’t actually lend money, they are still important to the mortgage program because the VA insures the VA loan in the event of a default. Because of this government backing, lenders are excited to lend money under the VA loan program guidelines and requirements to Veterans who qualify.
The VA mortgage loan program is popular with many Veterans and active military members regardless of what state they live in. The VA loan program is available in all 50 states and is one of the most common ways that military service members (active or retired) finance their homes. Two of the biggest reasons the VA loan is so popular is the fact that 1.) it allows for 100% financing which means zero down and 2.) no mortgage insurance is required with VA loans. In addition to these two big features, VA loans typically have low fixed rates and have an “easy” (that word can be relative) refinance program called the VA IRRRL refinance which requires less documentation than a traditional refinance.
VA Mortgage Highlights
Highlights of the VA mortgage loan program include:
- 100% financing for new home purchases
- No mortgage insurance required
- No prepay penalty for VA loan
- VA loans have similar closing costs to other loans, even though they offer 100% financing
- A one time funding fee is charged ”“ but can rolled into the loan
- You can use a VA loan to buy a home, build a home and even improve a home with energy-saving features such as solar heating or cooling systems, water heaters, insulation, weather-stripping, storm windows/doors or other energy efficient improvements approved by the lender and VA.
Certificate of Eligibility (COE) is Required
In order to be approved for a VA loan, the borrower must be able to provide a Certificate of Eligibility. This can be obtained directly from VA and the certificate must accompany the loan file when the loan is underwritten. Many borrowers have questions about the COE and these questions are usually easily handled by their loan officer.
The VA Streamline Program
For people who have VA loans currently, when interest rates drop the VA loan program has made it as easy as possible to refinance and take advantage of lower rates. Lowering your interest rate means that you will save money each month as well as over the life of your loan. The most popular refinance program for VA loans is called the VA streamline refinance – and the official name for it is the VA IRRRL. The VA streamline refinance program has reduced paperwork, may not require an appraisal and is designed to let you get a lower interest rate in the easiest possible way.
The VA Cash-Out Refinance Program
It is also possible to get cash-out when refinancing, but you can’t do it under the VA streamline refinance – you can refinance under the VA cash-out refinance. The VA cash-out refinance is for Veterans who want to convert the equity in their home and put the money to use in other areas. It is possible to get 100% of your home’s appraised value in the form of a check or to pay off other non VA mortgage debts.
VA Loans: How To Save The Most Money
Whether buying a home or just trying to refinance your existing VA loan, there is one simple trick you can do to make sure you get the best possible deal: shop around. Speaking with multiple VA approved lenders about your situation can often lead to saving significant amounts on getting your loan done. Shopping lenders is easy, free and only takes a few minutes. Get a free VA loan quote today.