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NEED TO KNOW:  VA HOME LOANS

Submitted by Leisa Zeigler, REALTOR         

By Karen Jowers

kjowers@militarytimes.com

The number of veterans, including those still in service, using the Veterans Affairs home loan benefit has been increasing steadily over the last two years.

  1. The stat sheet. VA guaranteed 705,474 loans in fiscal 2016, up from 438,398 in 2014. That includes refinances—qualified veterans can refinance a loan for up to 100 percent of the value of the property. The average amount of the loan guaranteed in fiscal 2016 was $253,243; the total loan amount was nearly $179 billion.
  1. How it works. VA doesn’t make the loans, but it does guarantee them, which minimizes lenders’ risks and reduces their loses in the event of foreclosure. The money comes from private lenders who volunteer to participate; they set interest rates, discount points and closing costs. Rates vary among lenders, so it’s best to shop around. Get more details and eligibility guidelines at benefits.va.gov/homeloans.
  1. What you don’t need. Two big reasons VA loans are so poplar: There is no requirement for a downpayment, nor must users have private mortgage insurance.
  1. Key paperwork. One step in qualifying for the VA loan is receiving a certificate of eligibility from VA. The number of those issued has also been increasing: More than 1 million were issued in fiscal 2016, up from 806,000 in fiscal 2014. In many case, a veteran can get a certificate via eBenefits account (more at eBenefits.va.gov), and lenders can get a copy of the veteran’s certificate through the VA system. Officials advise that getting that certificate ahead of time can speed up the loan process.
  1. Closing time. There’s a common belief that VA loans take much longer to get to closing, but VA officials say that’s not borne out of statistics. According to Ellie Mae Origination Insight Report, the average time to closing for VA loans in July was 46 days, three days longer than the average for all mortgages and four days longer that conventional loans. That trend has held fairly steady over the last two years.

Another misperception is that all closing costs on a VA loan must be paid by the seller.  Not true, officials said. The law limits the closing costs, specifying the fees and charges the veteran can pay, but the seller is not required to pay all of the closing costs.

  1. Funding fee primer. Veterans purchasing a home pay a funding fee ranging from 1.25 percent to 3.30 percent of the loan amount and the funding fee can be included in the loan.

Some groups are exempt from paying the funding fee, such as veterans receiving VA disability compensation.

  1. Max Money.  There’s no maximum loan amount, but there are limits on the amount of liability the VA can assume. Those limits usually affect the amount of money an institution will lend. Limits vary by county. The 2017 limits are the same as the Federal Housing Finance Agency’s limits; get details via the loan-limits map at fhfa.gov/DataTools.

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