As a U.S. Veteran, you are entitled to special privileges when it comes to financing. With a VA loan, you can buy the home of your dreams and live comfortably. Many Veterans are relatively unfamiliar with VA loans, how they work, and what they can get out of them. Here is what every Veteran should know about how to get the most out of your VA loan benefits.
Introduction to VA Loans
One of the first things you should know about VA loans is that the application rate is very low.
Only 6% of the 21 million Veterans living in the United States take advantage of VA loans to buy a home. That means that there’s a lot of opportunity out there for Veterans looking for financing from the VA. The application rate is exceptionally low mostly because so many Veterans don’t know how to leverage VA loans.
Blue Water Navy Act
In the Blue Water Navy Act, Congress authorized the following changes to the VA Home Loan benefit beginning on January 1, 2020, for ALL eligible Veterans. The Blue Water Navy Act introduced a number of significant modifications that are largely beneficial to Veterans seeking financing through VA loans.
Here is a breakdown of these changes, what they mean, and how they will affect you as a Veteran.
What to Know About the VA Loan Funding Fee Change
At this time, there is a temporary change to the VA Funding Fee, which is a congressionally mandated fee associated with the VA Home Loan. Veterans and Servicemembers will see a slight increase of 0.15 to 0.30% in their funding fee (currently for two years), while National Guard and Reserve members will see a slight decrease in their fee to align with the fee paid by ‘Regular Military’ borrowers (permanent).
Veterans with service-connected disabilities, some surviving spouses, and other potential borrowers are exempt from the VA loan funding fee and will not be impacted by this change.
Overall, the VA loan funding fee change is relatively fair as it rewards injured Veterans and members of the National Guard Reserve. While the fee was increased for uninjured Veterans and Servicemembers, the increase is nominal and should not have a large impact on their ability to secure financing through VA loans.
How Purple Heart Recipients Can Save Money on a VA Loan
If you are an active-duty Servicemember who has earned a Purple Heart, your funding fee can be waived if you close on your home while still serving on active duty. This is perhaps one of the most significant changes to VA Home Loan programs.
Earning a Purple Heart represents a great honor and sacrifice. It is only fitting that Veterans with a Purple Heart are honored with easier access to financing a home.
Conforming Loan Limits
Another thing you should know is that there have been beneficial changes made to conforming loan limits that will give Veterans greater access when using their no-down-payment home loan benefits. Veterans seeking to obtain what is commonly referred to as a “jumbo” loan, or Veterans living in higher-cost markets, will no longer be subject to the Federally-established conforming loan limit maximums.
After January 1, Veterans may obtain no-down-payment VA-backed loans in all areas of the country, regardless of home prices. The benefits of this will be huge as it means you won’t have to save up for a down payment.
The down payment for expensive homes can be substantial and even act as a barrier that prevents folks from going after the home that they really want. By using a no-down payment loan and taking advantage of the changes to conforming loan limits that took effect after January 1st, Veterans can rest easy. You will have a wider range of options when house hunting and a higher chance of being able to finance the home of your dreams rather than having to settle for less. Let’s face it, Veterans deserve the best.
Advantages of VA Loans
There are several great advantages to financing your home with a VA loan. First, there is no requirement for monthly mortgage insurance on a VA loan which means you’ll save a lot of money on your payments.
The interest rates on VA loans are much lower than what you’d be paying if you applied for a conventional mortgage.
The credit requirements to qualify for VA loans are exceptionally low which helps Veterans gain access to financing that would have been denied to them otherwise.
Finally, VA loans offer special protections to Veterans that make it difficult to induce foreclosure. That added foreclosure avoidance protection helps Veterans keep their homes after working so hard to acquire them.
The Meridian Real Estate Group Is Here to Help
As you can see, Veterans can be well served by participating in this unique and specialized loan program. Let The Meridian Real Estate Group assist you in navigating VA loan requirements and procedures to ensure you get the most out of your VA Loan. We look forward to making your dream homeownership a reality.