Take a Look at What's Inside
What Are VA Loans?
What Are The Major Types Of VA Loans?
What Is A Certificate of Eligibility, or COE?
Who is NOT required to pay the VA funding fee?
What are Joint Loans?
Does My Military Discharge Affect VA Loan Eligibility?
Can I Use My VA Eligibility More Than Once?
Can I Buy a Rental Property With A VA Loan?
Can I Buy a Farm With a VA Loan?
How Does Divorce Affect VA Loan Re-Eligibility?

 

What Are VA Loans?

As the video says, the name is misleading - they're not loans FROM the VA. The VA - short for US Department of Veterans Affairs - is the Federal military veteran benefit system. The VA administers benefits and services for Service Members, Veterans their dependents and survivors. Programs related to home loans are one of their key services. The VA is not a bank; they do not provide home loans themselves. But they do guarantee a portion of home loans provided to veterans and other eligible people by banks and mortgage companies. These guarantees enable lenders to provide more favorable terms. They are are commonly called VA Loans. They cover buying, building, repairing, retaining and adapting homes for personal occupancy by eligible Veterans and survivors.

 

What Are The Major Types Of VA Loans?

Major Veterans Affairs loan programs described in this video include: 1) Purchase Loans. These help eligible parties buy a home at competitive interest rates with little to no down payment and little or no private mortgage insurance. 2) Cash Out Refinance Loans which enable taking cash out of home equity to pay off debt, fund school or make home improvements. 3) Interest Rate Reduction Refinance Loans also called Streamline Refinance Loans can help veterans obtain lower interest by refinancing existing VA loans 4) Native American Direct Loans to help eligible Native American veterans finance homes on Federal Trust land. 5) Adapted Housing Grants to help veterans with service-connected disabilities buy, build or modify a home suited to their disabilities. Many states offer additional resources to veterans, too. Talk to your home lender about your situation.

 

What Is A Certificate of Eligibility, or COE?

The COE is the key document that verifies to lenders that someone is eligible for a VA-backed loan. Servicemembers, Veterans and National Guard and Reserve members may apply online or through their lender; most lenders have access to the system and can verify eligibility IF the VA has records on file. The VA also maintains a hotline for assistance. Surviving Spouses can use VA Form 26-1817 to request determination of their eligibility for VA Loan Guarantees. Your lender may be able to assist with processing or contact the VA for information this video did not address.

 

Who is NOT required to pay the VA funding fee?

This video could save some veterans thousands. VA loan applicants pay a funding fee - as of 2014, 2.15% of the total loan amount - which can be thousands of dollars. Some veterans and spouses are eligible for exemption. Broadly speaking, veterans who received disability benefits - current or former and who are NOT currently in debt to the government may be exempt from the funding fee. Some spouses may qualify as well. The key thing to understand is, exemption from the funding fee is NOT automatic! Borrowers must certify their veteran status, government debt, benefits and active service state on VA Form 26-8937. It￐s important to tell your mortgage company that they need to submit this form EARLY in your home-buying process - if they just look up your records without submitting the form the VA will not begin the review and approval process and your home purchase could be delayed by weeks.

 

What are Joint Loans?

When two or more veterans seek a VA loan additional rules and guidelines apply. This video explains the basics. Official VA guidelines state that strengths of one veteran related to income and/or assets may compensate for weaknesses of the other. BUT… satisfactory credit of one veteran cannot compensate for poor credit of the other. When one of the borrowers is NOT a veteran the guidelines are slightly different. In that case the income of the veteran has to be sufficient to repay their portion of the loan. Income strength of the non-veteran spouse cannot compensate for income weakness of the veteran in determining eligibility. Finally, for joint loans where any party besides the veteran and/or their spouse will hold title to the property VA review is required. The VA Lenders Handbook - VA Pamphlet 26-7 - has more details.

 

Does My Military Discharge Affect VA Loan Eligibility?

As you'll see in this video, discharge conditions can affect a veteran's eligibility for a VA loan. Veterans separated with a dishonorable discharge may not be eligible. If your discharge state is other than honorable or was changed, modified or corrected you may be able to pursue an appeal with the help of the local VA office. Be sure to have copies of your DD214 - Condition of Discharge form and any documentation clarifying conditions or changes in your discharge status. Lenders may not be familiar with the process so getting assistance from the VA is advised.

 

Can I Use My VA Eligibility More Than Once?

As the video explains - under the right conditions, yes. Eligible veterans may qualify for another VA loan, if you completed payments your old VA loan or your prior VA loan was paid in full AND you no longer own the property. In either of these cases, you will need copies of the paperwork such as a paid-in-fullᅴ bank letter or copy of the HUD-1 Settlement Statement. If you are still in the home you purchased with a VA Loan but at a prior high interest rate check into interest-rate reduction financing first which doesn't require re-establishing your VA loan eligibility - before pursuing a new VA loan.

 

Can I Buy a Rental Property With A VA Loan?

As the video says - NO. Buying rental property may be a great financial strategy but VA mortgages aren't intended for this purpose. The VA loan program started after World War II to help eligible veterans secure homes and that is still the primary aim. There are exceptions for houses still being built but the general rule with a VA loan is that you must occupy the house within 60 days of loan closing. So rental property loans will require conventional financing options based on income and credit.

 

Can I Buy a Farm With a VA Loan?

You can't buy a farm unless it has a farmhouse that is a substantial part of the farms value with a VA loan. VA loans are specifically for the veterans residence. A VA loan for a farmhouse does not require that the farm be active - there is no farming requirement but if income from farming is part of proposed loan qualification the veteran will be required to show that the farm business can turn a profit. Check into Federal and state-level programs - such as the Veteran Farmers Project - related to veterans and farming; they may be of assistance in your decision.

 

How Does Divorce Affect VA Loan Re-Eligibility?

This video highlights the rules. If a veteran with a spouse purchases a home with a VA loan they are not eligible for another VA loan until that loan is paid in full.If the veteran's spouse is awarded the property in a divorce settlement the veterans entitlement cannot be restored and they can't obtain another VA loan until their ex-spouse refinances the property and/or pays off the VA loan in full. If the ex-spouse is also a veteran they may be able to substitute their entitlement; consult with the VA for situations with this level of complexity.

 

These videos are for informational purposes only when thinking about buying or selling a house. These are not intended to supersede any information or transaction that you may be involved in with a Broker, Lender or other Real Estate Professional.