VA Home Loans
Bluestar Mortgage of Schaumburg, offers VA Home Loans. Give us a call at 847-230-4030 to speak with a HELOC loan expert who can assist you in determining if a VA Home loan is the right option for you. You can also click on the schedule a free consultation button above.
What Is A VA Home loan?
Are you presently in military service or already a veteran and interested in securing a loan for your dream home? Then you are most likely to qualify for a VA home loan.
A VA home loan is a particular government-supported loan, specifically by the Department of Veterans Affairs (VA), solely accessible to and is a top benefit of military service and active-duty service members and surviving spouses. The VA home loan will permit you to be eligible for low cost regardless of your credit standing if you are searching for financing.
VA home loan does not necessarily need a down payment, and requirements are more lenient since private lenders who manage a VA home loan are being provided explicit security.
How Do VA Home Loan Operates?
The VA does not give a VA home loan but instead assesses and decides who can be eligible and which lenders provide them. Many forms of VA loans constitute few risks to lenders since a government agency supports them.
A VA home loan is regarded as a non-conforming loan due to its more precise credit requirements. The loan gives a lot of advantages compared to traditional conventional loans, including lower interest rates, more flexible financing requirements, and no down payment due at closing. Likewise, a VA home loan does not need a monthly mortgage insurance payment.
Who is entitled to a VA Home Loan?
It does not mean that everyone who has worked in the Armed Forces is eligible to apply for a VA home loan. Generally, you need to be able to substantiate one of the following conditions:
- You have served 181 days of active service during peacetime.
- You have served 90 consecutive days of active service during wartime.
- You have served more than six years of service with the National Guard or Reserves or ninety days under Title 32, with at least 30 consecutive days of those.
- You are the spouse of a service member who died in the line of duty or due to a service-associated disability.
A Certificate of Eligibility (COE)
A Certificate of Eligibility (COE) is a document your lender needs to determine if you are qualified for a VA home loan. You will need to show evidence of your service to secure a COE. The evidence you need to submit will depend on your military service, such as, among others, still being an active-duty member, a veteran, or a surviving spouse.
Required Documents and Forms for each service type
- Veterans. A veteran will be asked to provide a DD Form 214, which is the documentation that validates your military separation.
- Active-Duty Service Members. A statement of service is needed in applying for a VA home loan duly signed by a unit commander, a secretary, or a personnel officer. It must contain your full legal name, date of birth, Social Security number, your entry service date, if applicable, data on separation or breaks from service, and the corresponding name of the commander or personnel who handled the information.
- Current National Guard or Reserve Member. Same as the active-duty service members, a statement of service is also required, including all the necessary information.
- Discharged Member of The National Guard. They are required to submit NGB Form 22 or the Report of Separation and Record of Service for every term of the National Guard service. Likewise, an NGB Form 23 or the Retirement Points Accounting and proof of the character of service are needed for submission.
- Discharged Member of The Selected Reserve. A copy of the annual Retirement Points Statement is required if you are a separated or discharged member of the Selected Reserve. Proof of honorable service and discharge is likewise needed.
- Surviving Spouses. Surviving spouses who do not receive dependency compensation can obtain a COE provided they have their spouse’s DD Form 214, a marriage license, and the death certificate of their military spouses. A VA form 21P-534-ARE is likewise necessary to be printed and completed. While surviving spouses who get dependency compensation need to print and complete the VA form 26-1817.
VA Home Loan Eligibility Requirements
When you have been confirmed in meeting all the service documents, the following are the eligibility requirements for a VA home loan:
- Property Type. To conform to the VA home loan requirement, the property you plan to purchase must be your principal residence within 60 days of procurement. A VA home loan cannot be used for an investment property or vacation home.
- Credit Score. The VA does not entail a definite minimum credit score for a VA home loan and somewhat differs by a lender. Most lenders usually require a credit score of 620 to secure financing.
- Income. The lender will assess your debt-to-income ratio (DTI) to determine your capability to pay off the loan. Your DTI denotes the amount of your monthly income that will pay off your debt loan. The VA does not require limits on your DTI, but a few lenders probably will.
Benefits of a VA Home Loan
- Lower Interest Rates. Since the government supports a VA home loan, it holds lower risk for lenders and investors.
- No down payment is required. This means you do not have to worry about the amount of money usually paid in advance. These additional savings can be allotted for other home projects or fixtures.
100% Loan to Equity Value. If you plan to refinance your VA home loan, equity is not needed at a lower rate, even if you incur more on your home than its value.
- No Private Mortgage Insurance (PMI). VA home loan does not need a PMI or loan insurance. This means you can set aside between 0.5% and 1% of your loan amount yearly ’til you achieve the 20% equity.
Steps in a VA Home Loan Application
- Get a Certificate of Eligibility (COE). This is needed to qualify for your VA home loan since you will be required to show proof of your military service status.
- Obtain Preapproved. When purchasing a home, you should obtain preapproved early. This will provide you with a starting point to know how much money you can produce.
- Find a house. In a VA home loan, searching for a house is similar to other loan choices, i.e., the property you plan to purchase must meet the minimum property requirements of the VA, which differs based on the identified risks in the region. These requirements ensure that the property or house you have chosen to buy is structurally safe and sanitary. These requirements vary according to known risks in an area.
- Make an offer to buy. The moment you find a property you want, make an offer to purchase the home. It may neither be accepted, rejected, or countered by the seller, but if you agree on the offered price, a sale contract will be issued by an attorney.
- Go through VA Appraisal and Underwriting. The underwriters from your lender evaluate your finances and ensure eligibility for a VA home loan. The VA likewise needed an appraisal prior to loan approval which is rigorous compared to a traditional mortgage.
- Close on Your New Home. This is when you will finally get the loan and accept the keys to your new home, to which the VA appraiser approved the property requirements for your new home.
Connect with a Bluestar Mortgage VA Home Loan Expert
If you are interested in a VA home loan, call us at: 847-230-4030 to speak with a VA Home loan expert who can assist you in determining if a va home loan is the right option for you.