VA home loans are offered by VA home loan lenders and are backed by the U.S. Department of Veterans Affairs (VA). The VA works with its network of approved mortgage lenders to assist eligible borrowers with verifying eligibility for VA benefits and qualifying for home financing through VA programs. Applicants for VA mortgages must first obtain a Certificate of Eligibility (COE) from the VA. This certificate verifies that the named holder is eligible for VA home loan benefits, but it does not guarantee that loan applicants will be approved for a mortgage loan.
VA home loan lenders can usually help prospective borrowers apply for a COE. Once the COE is issued, home buyers and homeowners can work with VA approved mortgage lenders to find the home financing that best matches their needs. VA loan programs offer a range of benefits and loan options.
VA Loans Provide Affordable Home Purchase, Refinance Benefits
VA home loans require no down payments or monthly mortgage insurance, carry no prepayment penalty or unusual loan features, and are assumable by qualified buyers. VA home loan regulations are designed to keep loan costs in line and provide an affordable source of home financing for eligible servicemembers, military veterans and surviving spouses. Once you've chosen a VA mortgage lender, you can work with your loan officer to ensure that the terms of your home purchase are in line with VA lending requirements. Another plus: You can use your VA home loan benefit more than once provided that you are released from liability from your previous VA home loans.
You can use VA mortgages to purchase a new home or to refinance for various purposes like debt consolidation and home renovation. VA programs include grants for eligible veterans who have sustained certain permanent disabilities in the line of duty or disabilities brought about by injuries in the line of duty. These grants are available directly through the VA and can be used in connection with a home purchase or refinance when adaptations to a home are needed to accommodate a veteran's disability.
Interest Rate Reduction Refinance Loan: Its Name Is IRRRL
The VA IRRRL program lets VA borrowers refinance quickly and less expensively. This loan, which is also referred to as a VA streamline refinance or VA-to-VA loan, allows homeowners to take out a new loan at a lower interest rate without re-qualifying. The funding fee for a VA refinance is much lower than for a new VA mortgage. These are the requirements for IRRRL eligibility:
- You're current on your mortgage with no more than one 30-day late payment within the past 12 months.
- The IRRRL's monthly payment must be lower than the previous loan's monthly payment (unless you refinance an ARM to a fixed rate mortgage).
- You must not receive any cash out from the IRRRL.
- You must certify that you currently or previously occupied the property.
- You must have used your VA Loan eligibility on the property you intend to refinance (for example, if you assumed someone else's VA loan, you can't do an IRRRL).
- The VA does not require another credit check or appraisal because it already guarantees your loan. However, many lenders require a credit check and appraisal. If this is an issue for you, ask lenders what their requirements are when you get mortgage rate quotes.
VA Mortgage Lenders: Find Your Best Match
If your first application for a VA loan is declined, don't give up. VA mortgage lenders are required to follow VA guidelines, but they may add additional loan approval requirements (these may be referred to as "overlays"). This is why it's important to request multiple VA loan quotes; you can compare costs and contact lenders to learn more about loan approval requirements. Doing this "home work" before shopping for a new home or selecting a lender can save time and money.
Applying for a VA Certificate of Eligibility and a home loan may seem complicated. VA lenders can help you complete the process, so it's important to be comfortable with your lender and loan officer. Talking with several VA approved mortgage companies can help you find a lender that's right for you.