Home buying is a thrilling and exciting milestone in an individual’s life. However, the process can be intimidating if you are not well-informed. If you want to know about VA Loans in California, you need information and guidance, you have come to the right place. Continue reading to get complete details about VA Loans California Programs, eligibility, benefits and related articles.
VA Loans Overview
VA Loans or veteran affairs loans is a zero down payment mortgage option exclusively offered to veterans, active duty service members, and surviving spouses. Though backed by the DVA (Department of Veterans Affairs), these loans are issued by private lenders in California and around the US.
The veteran loan programs were created in 1944 by the government. They were introduced to make it easy for returning military members to buy homes without an excellent credit score or a down payment. Over the years, VA programs have offered over 25 million loans helping veterans and their families buy and refinance their homes.
Advantages of Home Buying Programs for Veterans
VA loans offer distinct benefits to veterans over traditional loans. Here are the advantages of VA loans:
No Down Payment Needed
First-time homebuyers may need at least 3.5 to 5 percent down payments for financing, but VA borrowers don’t have to save big to pay a down payment. VA homeowners loans require zero down payment. This further means that veteran homebuyers don’t have to incur added monthly PMI expenses, which means they can save more money at the end of each month while realizing their homeownership dream.
No Private Mortgage Insurance
Also known as PMI, this is predominantly required in traditional loans and is for borrowers who finance over 80 percent of their house value. However, veterans don’t have to buy private mortgage insurance. As the government backs VA loans, private lenders don’t require buying PMI.
Less Stringent Qualification Requirements
Qualifying for a VA loan is easier as compared to a traditional loan. You don’t need a strong credit history to apply for a veterans affairs loan. Additionally, it is easier to qualify for a VA loan at a competitive rate.
Closing Cost Limits
Though all mortgage loans come with a closing cost and fees, VA loans protect veterans from these charges. Other parties involved in the transaction must cover some fees and costs under VA loans. This makes home-buying more affordable for veterans.
In fact, veteran affairs first-time home buyer programs give borrowers a chance to ask sellers to pay the loan-related closing cost up to four percent in concession. It primarily covers prepaid taxes and paying off collections. However, please note that it is negotiable, not guaranteed that the seller will necessarily agree to your request.
Types of VA Loan Programs
Here are the different types of home buying programs for veterans:
VA Purchase Loan
This loan can be used by service members and veterans alike to buy a new or an existing home with zero down payment. This loan program can be used to buy:
- Single-family homes
- Manufactured homes
- Newly constructed home
However, the guidelines and policies may vary from lender to lender.
VA Interest Rate Reduction Refinance Loan (VA IRRRL)
Commonly known as VA streamlines, this loan is a low-cost refinance program that may not even require income verification, appraisal or credit underwriting in some cases. This loan however, is only for veterans who already have a VA loan.
VA Cash-Out Refinance
This VA homeowners loan helps qualified home buyers to refinance their mortgage and take out home equity cash. This loan is available for veterans whether they have a VA loan. With this loan, you can refinance up to ninety percent of the value of your home. Isn’t that great?
This VA energy-efficient mortgage loan empowers veterans to borrow more money if they need to make their home’s energy efficient. Veterans have the flexibility to finance up to $6000 to pay for qualified improvements such as solar cooling and heating systems, heat pumps, thermal windows.
How to get a VA Home Owners Loan?
Here’s a step-by-step guide to qualifying for veteran loan programs:
1. Find a Lender Who is VA-Approved
Not every lender offers VA loan programs. These programs are only provided by lenders approved by the Department of Veterans Affairs. Therefore, do some legwork to find a VA specialty lender with extensive knowledge about the Veteran Affairs loan process and efficiently facilitate the process.
2. Obtain COE
COE is the certificate of eligibility. Only an experienced and approved lender can help you obtain it. It is essential to understand that the certificate of eligibility provides proof that the borrower will meet initial standards for VA loan eligibility. Plus, it lets the lender know the entitlement amount the borrower can receive (the amount that the DVA will guarantee on the VA loan).
It is optional, but you can spare yourself from unpleasant surprises that may come later during the underwriting process if you pre-qualify.
4. Go House Hunting and Sign an Agreement
The next step is to work with a real estate professional to find your dream home. Allow the agent to negotiate seller-paid fees and sign a purchase agreement to move forward with the VA loan process. The lender then processes your application and orders a VA appraisal. Once approved, get ready to move in.
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