Veteran Affairs (VA) loans is an excellent way of giving back to the brave soldiers who serve and protect the United States of America. A VA loan can help you secure a home for your family with a borrower-friendly, competitive interest rate.
There is no limit of compensation that can sufficiently equate to the sacrifice that the United States military personnel have given the country. However, after serving, many military personnel are ready to settle down in a permeant home.
One way to give back is to help them secure a home for their family for years to come. Through the US Department of Veteran Affairs, soldiers who have served can receive the benefits of VA mortgage loans.
Understanding VA Loans
The VA loans program was established to make homeownership affordable. The funds can be used for different purposes related to the property, including repairs and home improvements, property retention, construction of a home, or adapting it to make it suitable for personal occupancy. A critical aspect of VA loans that you need to understand is a private lender offers the borrowed amount, and the VA department covers a portion of the loan to make it accessible for individuals with the least stringent terms.
Types of VA Loans
There are several types of veteran’s home loans to cater to different needs of the eligible individuals. Weather you are ready to purchase a home or refinance with a reverse mortgage, there is a VA loan that can help!
- Purchase Loan
This type of loan is the most that many persons are aware of. The lenders offering VA purchase loans often provide reasonable interest rates on borrowing. Therefore, applicants can then find it affordable to buy a home or make improvements to an existing property. An advantage of VA-backed home-purchase loans is that you can get even when you cannot afford the down payment.
- The Native American Direct Loan (NADL)
This is a veterans loan offered directly to Native Americans or veterans who are married to a Native American spouseca, and they wish to purchase, repair, or build a home that lies in a Federal Trust Land. Furthermore, the veteran can use the loan to refinance an existing mortgage, thereby reducing your interest rates.
- Cash-Out Refinance Loan
The cash-out refinance loans allows one to substitute the loan with another one under different terms and conditions. The terms of this loan will enable you to get cash from your home equity or refinance a non-VA mortgage under a VA-backed loan.
- Interest Rate Reduction Refinance Loan (IRRRL)
This kind of VA home loan is particularly designed for individuals who already have an existing mortgage, and they want to make changes to their monthly payments or stabilize the debt. Refinancing means replacing the current loan you borrowed with a new on a somewhat flexible term.
Veteran Affairs (VA) Loan Limits
The Department of Veteran Affairs announced that it had set the VA loan limit for 2019 at $484,350. That’s the amount it will be able to guarantee in homes located on Federal Trust Land in most counties in the US. In some parts of the country, the loan limits are much higher, and you can get a VA loan guarantee the reaches up to $726,525. If you travel further south to the state of Hawaii, you’ll find even much higher VA loan limits.
How to Expand Your VA Loan Limit
If you find yourself living in a county where the VA loans extended can barely cater to the purchase of a home, you have the option of expanding the loan limit. All you need to do is to pay a percentage of the down payment. Here’s a example:
If perhaps your county of residence has a VA benefit of a maximum $550,000, and the home you’d wish to buy cost a higher amount of $700,000, you can expand the loan by paying 25% of the difference between the loan offered and the price value of the home.
- Loan limit – $550,000
- Price of Home – $700,000
- Difference – $150,000
- Percentage of down payment $150,000 x 0.25% = $37,500
Therefore, you’ll have to cover only $37,500 of the total down payment. By doing so, you can increase the amount of your VA benefits, get a more flexible interest rate, and no need for mortgage insurance whatsoever.