VA loans have encountered a few myths that just won’t let go despite being debunked again and again. The only reason the myths stay alive is because of their superficial plausibility.
Myths are deterring many homeowners from taking VA home loans. There is a notion that the process is too long, yet veterans don’t have time to go through the hassle of doing it.
Types of VA Loans
It is prudent to look into what type of loan program would best suit your needs and those of your potential sellers. Some of the different kinds of loan programs available are:
The Streamline VA Loan
It has no downpayment and goes by the assumption that the borrower will receive military pay to qualify.
The Interest Rate Reduction Refinancing Loan (IRRRL)
For those with a VA loan and want refinancing to take advantage of a better rate and loan tenure.
The Cash-Out Refinance
This is a means to borrow more money than you currently owe on your home by borrowing against what you already own. This cashback can be an excellent way to pay off high-interest debt or credit cards.
VA Loans Eligibility
The process starts with obtaining a Certificate of Eligibility (COE) issued by the Department of Veteran Affairs verifying that a person is eligible for VA home loans.
The VA has set guidelines for what qualifies as a VA loan. To be an eligible veteran, you must have been honorably discharged from active duty or served at least 90 aggregate days during wartime periods. In addition, you need not have seen combat or suffered an injury in battle. Finally, you ought to have a discharge other than a dishonorable discharge.
How do you get a VA Loan?
The first step is to shop for the best lender and determine which repayment plan fits your needs and lifestyle. For example, the Standard Repayment Plan offers the same fixed monthly payment for 30 years and does not charge additional servicing fees.
Graduated Repayment Plan allows smaller payments during the first ten years, when your income may be lower.
It is prudent to research and shop around for the best mortgage options with affordable rates. Here is where the VA funding fee calculator comes in handy. The calculator will help you generate the expected fees and installments for comparison purposes.
After you’ve chosen a plan to fund your VA loan purchase, your lender will help you fill out a Certificate of Eligibility (COE), which is proof that the government has approved you for a VA loan.
Debunking VA Loan Myths
VA loan myths are rampant, but here are the facts about them:
Myth 1: One of the biggest myths about this loan program is that it is only for veterans. The truth is that anyone with a COE and meets the VA’s guidelines for eligibility qualifies.
Myth 2: You have to buy a starter house with a VA Loan: False. You may use your VA loan eligibility to buy the home you want, so long as it meets most of the guidelines set forth by lenders.
Myth 3: There are too many documents needed to apply for a VA Loan: All you need is proof of military service, a Certificate of Eligibility, and verification of your income.
Myth 4: VA loans are not suitable for large purchases: VA loans are good for any purchase or refinance so long as it is a primary residence.
Myth 5: VA loans are bad for debt consolidation: VA Loans do not have any minimum debt to income ratio restrictions to apply for debt consolidation.
Myth 6: VA loans require large down payments: This is false as VA Loan guidelines do not require a down payment.
Myth 7: You can only get one VA loan: Once approved, you may use a VA loan for any number of purchases or refinances so long as you meet eligibility requirements.
Myth 8: You cannot get a low-interest VA Loan: Veterans will qualify for interest rates at or below-market rates.
The truth is “VA Loans” are not loans for veterans only. The Federal Government can lend money to an eligible veteran or another person at low rates and require no down payment.