Your Trusted VA Home Loan Broker
You may be asking yourself, what is a VA Mortgage Loan? As a home buyer, there are plenty of ways to ease the process of gaining loan approval and ensuring favorable lending terms. Building a strong credit score, reducing your debt-to-income ratio, and saving for a sizeable down payment are just a few.
However, certain groups can also take advantage of loans designed just for them. If you are a veteran, an active-duty service member, or a surviving spouse of such, you may be eligible to apply for and receive a loan backed by the U.S. Department of Veterans Affairs (VA).
For the average home buyer, a traditional mortgage loan would likely be federally backed by Fannie Mae or Freddie Mac, up to a certain amount. However, VA Loans are federally guaranteed by the VA and are designed to provide housing assistance for veterans and their families. As such, they have different terms and restrictions than typical mortgage loans.
With federal backing, lenders are able to deliver favorable terms for eligible borrowers, knowing that risk is limited because VA will pay at least a portion of the loan if the borrower defaults. This allows veterans and their families to enjoy affordable options like a low or no down payment and lower interest rates. Because of this, you may have an easier time buying a first home, purchasing a larger home, and/or minimizing monthly payments when you qualify for a VA loan.
Who is Eligible for a VA Home Loan in Colorado Springs?
VA home loans are available to eligible veterans and active-duty service members of all military branches, as well as the Reserve and National Guard. Surviving spouses may also be eligible to receive a VA loan. However, there are some restrictions.
Eligibility for specific benefits may depend on the length of service/commitment, duty status, and of course, the character of service. For example, veterans who were dishonorably discharged are not eligible to take advantage of VA loans.
In addition to VA guidelines for eligibility, many lenders have their own requirements. Although their risk is alleviated by federal loan backing, they still want to make sure borrowers are capable of repaying the loan, and they may have specific requirements concerning a borrower’s credit score, income, and debt-to-income (DTI) ratio. If your credit is poor, you don’t make enough money to cover monthly mortgage payments, or you carry high debt already, you may not qualify for a VA loan, despite meeting VA criteria.
How Do VA Loans Work?
VA loans work very much like other loan types in that you apply. You must qualify, based on lender criteria, and you must prove an ability to pay in order to gain approval for your home loan. Your loan will be issued by a private lender, such as a bank or mortgage company, not the VA, although the VA guarantees a portion of the loan (depending on the loan amount). However, you will need to find a reputable lender that offers VA loans, and a VA mortgage loan broker can help.
There are many perks to choosing a VA mortgage loan in Colorado Springs, but one you may not know about is that this benefit can be used an unlimited number of times – not only when you purchase your first home but when you sell it and buy another home, and another. However, VA loans can only be used for a primary residence, so you may not be able to use this loan for, say, a vacation home or investment property (like a rental home). There is no limit to the number of years you may qualify for a VA loan during or following service.
What Can a VA Loan be Used For?
As noted above, VA loans can be used to purchase a primary residence. However, your VA mortgage loan in Woodland Park may also be used for specific improvements to your home, such as a loan to install energy-saving features like solar panels, updated HVAC components or a water heater, new insulation, new weather-stripping/caulking, storm windows and doors, and more. The VA must approve these improvements before you can get a loan for home improvements.
Using Your VA Loan Benefits More Than Once
So, you used a VA loan to purchase your current home. How can you use it again? There are several ways to take advantage of this benefit multiple times. The first and most common is to sell your home, pay off the VA loan, and then apply for a new VA loan for your next home purchase.
You may also apply for another VA loan if you simply pay off the mortgage on your first home, keeping in mind that the property any VA loan is issued for must serve as your primary residence. In other words, the home that is paid off could become a secondary home or a rental property. Another way to secure successive VA loans is to sell your current home to a qualified veteran buyer who can assume your original VA loan.
VA Loan Limits
When you consider using a VA home loan in Woodland Park, as opposed to a traditional loan, you probably have questions about limits to the loan amount. If you’ve never used your VA loan benefit, you’ve paid your loan in full, or you’ve suffered a foreclosure but still paid the loan in full, you have full loan entitlement.
What does this mean? Can you get approved for a loan of any size? You can get approval for a VA loan of any size a lender is willing to offer, but you should know that the higher the price tag, the lower the percentage of the loan the VA will guarantee, and this may limit what some lenders are willing to offer with no down payment.
Obtaining a Mortgage from a VA Home Loan Broker
In many ways, the process of obtaining a VA loan is similar to other loan types, but there are a few specifics you should know about. First, you must obtain your Certificate of Eligibility (COE) through Veterans Affairs. Next, you’ll want to prepare by gathering pertinent documents, including employment and tax information for the past two years, as well as banking, savings, and investment documents.
Before you apply, you should also check your credit score and credit history. Before applying for any loan, it’s wise to make sure you meet credit score and DTI ratio criteria for lenders you’re interested in. You also need to choose an approved VA lending institution and seek out the best terms, and a VA home loan broker can help. With all of your ducks in a row, you’re ready to apply and get approved for your VA mortgage loan.