VA Loans Do’s & Don’ts: (Part 2)
In our last blog entry, we went over the concept of VA Loans, and the benefits they provided to veterans looking to find and purchase a home. Alongside that, we also went over when one should apply for a VA Loan. In today’s blog entry, we’ll be returning to this topic and going over when you shouldn’t apply for a VA Loan.
When You Shouldn’t Use a VA Loan
Despite the many benefits that VA Loans provide, like many other loan plans, there’s a time and place for when one should properly apply for one. If you’re looking to pursue applying for a VA Loan, here are some things to consider. If you have you have any of these financial issues, your chances of applying for a VA Loan are less advantageous.
- You’re buying a property that isn’t eligible for a VA Loan:
Not all properties are exactly eligible for VA loans, even though all single-family homes are or should be eligible. Make sure to go over with your lender on which properties fall under being eligible for VA Loans. Most lenders can request or get certain properties to be, but it can often be a time-consuming and challenging process.
- Your purchase is too expensive:
Like all previous loans, VA Loans come with limits that can make it sometimes difficult for veterans to buy inexpensive real estate markets. These limits are often determined by the county you live in and can vary widely. Ask your lender and see what these limits are.
- Your down payment is less than or equal to 20%
If you make a down payment that’s big enough to avoid paying PMI, you should compare your rates and terms on both VA Loans and Conventional Home Loans. The upfront funding fee for VA Loans could make the loan more expensive because of it.
- You’re using a VA Loan for the second time around:
Due to the VA funding fee being based on several factors (which includes whether you’ve had a VA home loan in the past), it follows to go with traditional financing for a second property purchase. However, if the veteran in question does not have a VA disability and has used a VA loan prior to, there will be a 3.3 percent funding fee from the VA, which in turn can offset any of the benefits of using a VA loan and will make the choice of using a conventional loan more reasonable.
At the end of the day, VA Loans are a great way for veterans to properly finance their homes, but only through proper research and working alongside your fellow lender can you take proper advantage and know exactly when to go for said loan.
That’s all the time we have for today, but if you liked this blog and want to know more about our services, contact our offices today. We’re more than happy to talk with those wanting to know more about the processes behind mortgages and loans. Until next time and from all of us at Mortgages Done Right, have a good day.