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Aug, 18

The VA Home Loan Benefit 10 Things to Know!
By Home Team Hawaii Aug 19, 2018

The VA Home Loan Benefit 10 Things Veterans Should Know! 

Helping our veterans and service members with their VA Home Loan benefit is a daily mission for us. When it comes to our active military members and veteran buyers it is always an honor to serve those who have served us.


VA Home Loan Benefit


Don’t you think you should own a piece of the soil that you’ve protected?


Yet, less than a decade ago (in 2012) a statistical report from the VA showed that less than 15% of VA eligible buyers had taken advantage of their VA home loan benefit.


Above all, we believe the major reason why there is a very small amount of VA eligible buyers is due to the lack of education veterans receive while in service and the minimal information received from the VA upon exiting the military.


When compared to Conventional, FHA, and Loans…

…Hands down, the VA home loan benefit is the best possible loan you can obtain for your mortgage.


Furthermore, when it comes to VA eligible buyers (active military and veterans) the VA said that 8 out of 10 buyers could not have qualified for a conventional loan.


For these reasons, we wrote this article so you can get educated about:


“The VA Home Loan Benefit: 10 Things For You to Know About”


Let’s get started!


VA Home Loan Benefit 1: Does Not Require A Down Payment


Occasionally, we’ll find out from our military and or veteran buyers that they are under the misconception of being required to put down money when using the VA home loan benefit.


You’ll Be Glad to Know:

That this is far from the truth.


VA eligible buyers receive 100% financing for the purchase of their owner-occupied home.


In Hawaii, the City and County of Honolulu’s loan limit allow for an eligible VA buyer to make purchases of up to $721,050.00 for this year.


You’ll still have to qualify with your lender to see what you can borrow but that’s a lot considering your VA home loan benefit has as little as $0 for down payment!


There are VA Jumbo loans that can go over a million as well, but the requirements are different. If you want to know more about the VA Jumbo loan feel free to reach out to us anytime by calling or scheduling an appointment with us.


In Contrast to Other Loans Down Payment Requirements:

  • FHA (Federal Housing Administration) Loan= minimum of  3.5% down
  • Conventional Loan= minimum of 3% down

If you want a free mortgage calculator for your VA Home Loan Benefit read our article here: http://blog.chime.me/www-hawaiipropertyfinder-com/your-mortgage-calculator/


VA Home Loan Benefit 2: No Private Mortgage Insurance (PMI)


One of the best incentives for using your VA home loan benefit is that there is no PMI (private mortgage insurance).


You may be wondering “What is PMI (private mortgage insurance)?


Simply Put:


PMI (private mortgage insurance) is insurance that is paid by you against yourself in the event you were to default on their own mortgage.


To give you a rough idea of what PMI will cost you:

For every $100,000 a buyer borrows for their mortgage at a 4.5% interest rate on a 30-year term, he or she will pay around $80 for private mortgage insurance.


Here’s how it works:


When a buyer uses the conventional and FHA loans they must put 20% of the purchase price as a down payment on the loan or they will receive PMI (private mortgage insurance).


As explained above, you can certainly put down as low as 3% down for the conventional loan and 3.5% down for the FHA loan…


…But if you do not put down 20% for these types of loans you will receive PMI (private mortgage insurance) payments as well.


Up front, the mortgage loan balance needs to be at 80% and the equity in the home needs to be 20% or higher to avoid PMI (private mortgage insurance).


Here’s the crazy part:

If you cannot afford to put down 20% on the conventional or FHA loans up front, the banks will require you to wait to take the PMI (private mortgage insurance) off, until your loan balance is down to 78% (instead of 80%) to have it taken off…


…And once you do pay down the balance to 78%, you have to actually call the bank and make the request to remove the PMI (private mortgage insurance). The bank will not normally do this for you automatically.


It Gets Better For You Though:

For the Va home loan benefit, not only is there no down payment, but there’s no PMI (private mortgage insurance either).


This makes home ownership much easier for the VA eligible buyer!


If you want to see a BAH calculator and learn what you’ll really make here in Hawaii click here:


http://blog.chime.me/www-hawaiipropertyfinder-com/bah-calculator-hawaii-what-you-really-make/


VA Home Loan Benefit 3: Non-Allowable Closing Costs


Not only is the VA home loan benefit best in quality, and can be obtained in a timely manner, but it also has lower costs.


If an eligible VA buyer chooses to pay for costs at closing and or a seller does not want to pay those closing costs, the VA home loan benefit decreases the number of costs owed by the buyer at closing.


Here is a list to ask your VA Home loan mortgage professional about:


  • Attorney fees that extend beyond interest rate lock
  • Tax service fees
  • Loan paper preparing
  • Settlement fees
  • Document preparing fees
  • Conveyance fees
  • Loan closing
  • Loan broker fees

When using other conventional loans, a buyer has to pay these fees…


…But for the VA eligible buyer, they are considered to be non-allowable and you will not be required to pay them.


Ask your VA mortgage professional about how helping you with costs as well because they will usually cover the non-allowable closing costs, but again, you’ll need to verify with them about it.


Also, we can refer many VA mortgage professionals that we trust and know will help you with your VA home loan benefit.


Remember to reach out to us when you’re finished reading this article.


VA Home Loan Benefit 4: No Pre-Payment Penalty


There are a variety of ways homeowners can take advantage of paying off their mortgages faster than 30 years.


By paying off your mortgage faster than 30 years you can save tens of thousands of dollars in interest payments.


Did You Know:


Many other loan types (conventional, FHA, etc.) can have pre-payment penalties.


Meaning if you try to pay the loan off early the bank will charge you a penalty fee because they know you’re not paying the full amount of interest in the time a conventional loan was originally established (30-years).


Reason for it:


The banks want to collect some of that interest before you part ways and become mortgage free…


…And that’s why they created pre-payment penalties in the first place.


News Flash:


The VA home loan benefit eliminates pre-payment penalties all together!


If your buying your first home soon read more about the homeownership process here: http://blog.chime.me/www-hawaiipropertyfinder-com/a-step-by-step-guide-homes-for-sale-hawaii/ 


VA Home Loan Benefit 5: Can Have Lower Interest Rates

VA Home Loan Benefit


On average, the VA home loan benefit has lower interest rates than other conventional loans.


Check with your lender, but from our experience, the VA home loan benefit can be about a half of a point to a whole point (0.5% to 1%) lower than the other conventional loans.


Here’s the Great News:


On a conventional loan, if you don’t have the best credit or a huge down payment, the buyer is usually penalized by having to take a higher interest rate.


However, the VA home loan benefit is set up to protect the buyer so they don’t over-leverage themselves.


Note:


The VA eligible buyer can also buy down their interest rate as well. It will cost an additional out of pocket expense, but knowing this allows for a lower monthly payment if it makes sense at that time. You can talk to one of our mortgage professionals to learn more.


VA Home Loan Benefit 6: Assumable VA Home Loan

VA Home Loan Benefit


Did You Know?


Eligible VA Home Loan benefit users can take advantage of assuming other users interest rates.


For Example:


Suppose you are buying a home for $500,000 from a seller who has a VA home loan mortgage.


Let’s say that today’s interest rates are around 4.5%.


If you took the loan on the $500,000 with today’s rate of 4.5%, your current mortgage payment would be around $2,500.


Next:


Using the same example above, let’s say the seller’s current VA home loan mortgage rate (that the seller received when they purchased) on the home your buying from the seller was 3.5%.


If the seller is willing to do it, the seller can let you assume the same mortgage interest rate and now your mortgage payment will only be around $2,250, which would save you around $150 every month.


What You Should Know:


In this situation, you could be the seller as well…


…And what you should know is if a seller allows another eligible VA borrower assume the seller’s lower mortgage interest rate…


…The seller will not be entitled to use their VA home loan again until the buyer (new owner) pays off the mortgage so that the money is given back to the seller’s entitlement amount.


However, the seller can ask the buyer for a higher purchase price in return.


For the buyer, having a lower interest rate can potentially save tens of thousands of dollars over a 30-year mortgage loan term.


VA Home Loan Benefit 7:                              Can Have Funding Fees Waived

VA Home Loan Benefit


As you’re now aware, costs are usually lower than other loan types. However, the VA home loan benefit does charge a funding fee.


The VA Funding Fee works out like this:


A funding fee of 2.15% of the loan amount (with no money down) is applied on the very first time the VA home loans benefit is used.


If the VA eligible buyer puts down 10% the fee is cut in half to 1.25% instead.


On all subsequent home purchases, meaning second, third, fourth, etc. using the VA home loan benefit, there is a 3.3% funding fee charged on the loan amount.


Here’s the catch:


If you have a 10% disability rating from the VA (or higher) the VA funding fee is waived.


You will need to show your mortgage professional the supporting documentation to prove you are eligible to have the funding fee waived.


VA Home Loan Benefit 8: Use Multiple Times

VA Home Loan Benefit


Many VA eligible buyers Ask Us this Question:


“Can I buy another home with my VA home loan?”


Answer:


“Of Course, You Can!”


As long as the VA mortgage is paid back you can continuously use the VA home loan benefit.


Here are four ways you can pay the VA mortgage loan off to buy another home: 


  1. Sell your home and once you receive the money in escrow, and pay back the VA mortgage, you can use it again.
  2. Pay off your mortgage in time and buy another.
  3. You refinance your home with a different loan type, and once the new loan pays off the VA loan you can buy another property.
  4. If you haven’t maxed your county limit usage, and you qualify with the lender to borrow again, you can buy a home after one year of living in your current home.

The VA home loan benefit makes it easy for you to buy multiple homes!


Also, you can learn about why Oahu has some of the most expensive real estate in the nation…


…And you can take advantage of what’s on the market with your VA Home Loan Benefit by clicking below: http://blog.chime.me/www-hawaiipropertyfinder-com/homes-for-sale-oahu/


VA Home Loan Benefit 9: Guaranteed By The Government

VA Home Loan Benefit


One of the primary reasons behind why the VA home loan benefit is such a good loan:


Is because of the fact that it is backed by the government.


What does this mean?


The government generally guarantees up to 25% of the VA home loan in the event you defaulted on your loan.


The VA home loan benefit is guaranteed in the amount of up to, but not to exceed $417,000…


…In the event, you were to default on your VA home loan benefit.


Formula:


$417,000 multiplied by 25% = $104,250


Most Noteworthy:


This is another reason why the VA home loan benefit has awesome incentives in comparison to other loan types. In comparison, that’s why the requirements are not as strict. 


Therefore:


We know you’ll probably agree with us that it’s best to use this loan if you’re a VA eligible buyer!


VA Home Loan Benefit 10: Use To Pay Off Debts


“Bringing debts to a zero balance, by wrapping the debts into your mortgage, having lower payments, while buying a home?”


Yes, that’s correct!


Did you know?


That when using a VA Home Loan:


You can use up to 4% of the total purchase price on a home to pay down any of your debts.


Here’s an Example:


You have $16,000 worth of debt (car, loan, and credit card, etc.) and you’re approved for $450,000


You buy a home for $400,000.


4% of $400,000 is $16,000.


The offer price on the home will be $416,000 ($400,000 for the home and $16,000 for the debt) and the seller will credit you back $16,000 in escrow for your debts.


The new balance on the mortgage at that point would $416,000…


…But now you paid off your debts!


On a 30-year mortgage, your payments on the $16,000 will be much lower.


Exceptional Value You Can Rely On:


The Bottom Line:


We will accomplish the mission with you!


In using your VA Home Loan Benefit, know that you can always rely on us to help you!


Thank you for your service to our country…


…Now it’s our turn to serve you!


Here’s A Bonus:

VA Home Loan Benefit

We are certified Military Relocation Professionals!


Above all, you should “Sign Up Below” and schedule an appointment with us today.


We look forward to serving you with all of your VA Home Loan Benefit Needs!


“Thank you for reading this post.”


 


 


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