There are two main types of financing options for a Veteran to take advantage of their VA benefits.
INTEREST RATE REDUCTION LOAN
The first is an Interest Rate Reduction loan known as an (IRRRL), more commonly known as a VA Streamline Refinance. A VA Streamline allows a Veteran to refinance and reduce their interest rate with very little requirements.
CASH OUT REFINANCE
• A Veteran can streamline the existing VA Loan with no income or asset documentation required.
• No Appraisal Inspection required
• No Termite Inspection required for (Applicable) states
• No private well test for (Applicable) states
BENEFITS OF A VA LOAN
ENERGY EFFICIENT MORTGAGE (EEM), one of the greatest parts of the VA loan process is the availability of incentives for Energy-efficient improvements. Veterans can utilize an Energy Efficient Mortgage (EEM) allowing them to tack on up to $6000.00 to their loan amount for certain energy improvements. Obtaining a home energy audit is a great first step toward determining whether this option makes sense for you.
Less stringent requirements for qualifying. Since the Department of Veteran Affairs only oversees the loan program and does not issue loans, the agency does not set or enforce credit score minimums. However, most VA lenders use credit score benchmarks to judge a borrower’s risk of default and typically look for a credit score of at least 580-600. Some lenders offer as low as 500 with a (DU) Desktop Underwriting approval which is an automated system your loan is run through and Manual Underwrites as low as a 560 credit score.
Better interest rates than other loan types. The VA’s guarantee provides lenders with a sense of security that allows lenders to charge competitively lower rates.
No down payment. Qualified Veterans can obtain a VA loan without making any down payment.
No Mortgage Insurance, VA loans allow you to finance to 100 percent of your loan to value with no monthly mortgage insurance.
Lifetime Benefit. One of the most common misconceptions about the VA mortgage program is that it’s a one-time benefit. Those who’ve earned it can use this program over and over again throughout their life. It’s even possible to have more than one VA loan at the same time.
No Pre-payment penalties. VA Borrowers can pay off their VA Loan early with no fear of getting hit with any prepayment penalty.
Foreclosure Avoidance. VA loans have been the safest loan on the market for most of the last eight years. That’s pretty remarkable considering that about 8 in 10 homebuyers don’t put any money down. The VA mortgage program has emerged as a safe harbor for several reasons, including the VA’s residual income guidelines. The Department of Veteran Affairs has done an excellent job supporting veterans in jeopardy and working to ensure they remain in their homes. Those efforts have helped more than 500,000 veterans avoid foreclosure since the housing crisis.
When dealing with VA loans it’s always best to contact a company familiar with military benefits to ensure you are getting the most accurate information. You can contact a VA home loan specialist at A Mortgage Nation at (888) 831-2160.
We are here to help and guide you through every step of the way.