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What You Need To Know About VA Loans Before You Buy



One of the greatest and most popular benefits of serving in the military is being eligible for VA loans. However, it’s difficult to take full advantage of this benefit if you don’t know exactly what it is! Instead of remaining clueless, learn about VA loans and why you shouldn’t miss out on this amazing benefit.

What Are VA Loans?

VA loans are home mortgages that are fully backed and funded by the Veteran’s Affairs office. They allow service members and veterans to borrow money for a house, even if they don’t have the traditional 20% down payment saved. Additionally, veterans who use their VA benefits to buy a home don’t need to worry about paying private mortgage insurance, or PMI, which can save hundreds of dollars a month. There is currently a limit on the amount that can be borrowed using VA loans. The limit is typically $417,000, but the VA takes into consideration local housing markets and allows for a higher limit in some areas of the country.

What Kind Of Bank Can Help?

Nearly any type of bank can help potential homeowners find VA loans, including big national chains, mortgage brokers, credit unions and local banks. Some service members and veterans find that it can be easier to work with smaller banks near their military bases or large, national banks that cater to military members and their families. Before you choose a bank to help you find VA loans, ask if the mortgage officers are experienced in VA loans. This will help ensure that the process is a smooth one, without a lot of bumps caused by a mortgage officer who is inexperienced with working with the VA.

Are There Hoops To Jump Through?

If you’re considering using VA loans to buy a home, it’s important to let your realtor know. The home you’re interested in purchasing will need to be appraised by an appraiser who’s been certified by the VA. This is done because the VA wants to make sure that the home is safe and livable, but also that it’s worth what the seller is asking for it. If the home’s value does not meet the asking price, the seller will either have to come down in price or appeal the appraised value using comparative homes in the same area.

If there are damaged items found in the home inspection, the seller may be required to fix them before the VA will guarantee the loan. These can include things like installing smoke alarms, repairing termite damage and more. VA loans don’t guarantee that the home is free of problems, however, so it’s important to get a good home inspection and go over the report line by line with a qualified real estate agent who can tell you whether something is strictly cosmetic or has the potential to become a problem down the road.

What’s The VA Funding Fee?

Although borrowers don’t need to worry about a down payment, they do need to pay a VA funding fee. This is currently 2.15% for veterans who are using VA loans for the first time and 3.3% for second time borrowers. This fee can be rolled into the cost of the mortgage or paid at closing.

Why This Doesn’t Mean You Can Default On The Loan


Some veterans think that VA loans can be defaulted without consequence. After all, the loan is secured by the VA, so you don’t need to worry about it, right? Wrong! Because the Department of Veterans Affairs backs VA loans, the VA will pay the bank for the remainder of the loan. However, that doesn’t mean you’re off the hook. You will still owe that money to the VA, even after they liquidate the home. The VA can garnish your wages, including your military pay, social security and civilian pay if you’ve defaulted on VA loans in the past.

VA loans can be excellent benefits to serving in the military and they are something all service members should consider when it’s time to buy a home.

            














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