May 24, 2021
Memorial Day is typically a day that signals the beginning of the camping and vacation seasons. How might we be changed, if this year, we genuinely express gratitude for all the brave, committed men and women who have given so much? Their willingness to serve – both Veterans and Active Duty Military – allows us to enjoy the freedoms we so quickly take for granted.
This Memorial Day, let’s give thanks for these heroes!
Devoting one’s life to serving your country is a very proud and important commitment for a U.S. citizen. While a hazardous and often treacherous act of service, the road of a U.S. armed forces member is also rewarded with benefits. One of those benefits is the government-backed VA Home Loans, which allows private lenders to offer eligible members a better deal for their homes.
VA loans distinguish themselves from conventional home loans due to generally lower interest rates and credit score requirements for those who apply. VA loans also do not require down payments, and although they still require closing costs, these are typically lower than your average home loan closing costs.
While there will be some additional hoops to jump through, the group at C3 and Tim Avery Real Estate is prepared to walk you through every step of the process to make sure our active-duty and veterans receive the lowest rates for their Northern Colorado homes.
What is a VA Loan and How Does One Qualify?
A VA loan is Department of Veteran Affairs-backed mortgage loan issued by private lenders such as banks or local lenders. They are available only to active-duty military personnel, veterans, and eligible spouses.
It is estimated that around 6% of total active-duty and eligible service members, including veterans used their VA loan benefits during 2020.
Many veterans relinquish their benefits due to a lack of awareness about the application process and too much red tape. Due to the VA’s stricter requirements for home safety, also known as the Minimum Property Requirements, many eligible members opt not to go through the VA in order to acquire the home they want and not necessarily one the VA would approve.
There are certain criteria a property must meet in order to be considered for the VA program, for example, a VA loan cannot be offered for a second home, rental or vacation home. Additionally, condominiums may have to be pre-approved by the VA before veterans or service members can apply for a home there.
To begin pre-qualification for a VA loan, eligible members must first obtain their COE, or DD Form 214. You can also request it directly from the VA’s eBenefits Website.
Why Consider a VA Loan for Properties in Loveland, Fort Collins and Northern Colorado
There are several perks to utilizing a VA loan to buy your property. Some of the main advantages of VA loans are the ability to forgo private mortgage insurance [PMI], as well as lower closing costs and better rate of approval despite higher debt.
Private mortgage insurance can cost anywhere from 0.5% to 1.0% of the cost of your home, added to your monthly payments, so this benefit alone is enough to save borrowers thousands of dollars in the long term.
Waiving your down payment is also a great way to save money and keep some extra cash in your pocket for after-move expenses.
On the other side of the coin, lenders still recommend putting up to 20% or more of the total value of your home down, if possible, though this requirement is waived for VA home loans. Obviously, if you are in a position to do so, the more money you can put down, the sooner you’ll be able to pay off your mortgage.
Knowing how much house you can afford will also help you develop a realistic budget for you and your family.
Your Credit Score and VA Loans
Another amazing perk of VA loans is that lenders can be more flexible with regard to your credit score. Interest rates are generally lower for VA loans than Conventional, because the federal government gives lenders the ability to charge competitive rates.
Due to the recent COIVD outbreak, the three major credit bureaus are now offering free access to your credit reports through their websites. This helps borrowers gain a practical understanding of their financial situation and check-out the credit profile that their chosen lender will use to set rates.
Seven Tips for Veterans Considering the VA Loan Program
Here are 7 summarized VA Loan tips to consider before applying for a home mortgage loan through the program.
- Start the mortgage process without the Certificate of Eligibility [COE]
- Talk with your real estate professional to secure a list of lenders* who specialize in VA loans.
- Select a lender with whom you are comfortable and request a pre-approval certificate before requesting the COE since this is verified later in the application process.
- Pay attention to your credit score
- Although lenders are more flexible under the VA program, your score still has an impact on your final offer.
- Make sure to prepare for the process of acquiring a home by paying off any outstanding debt possible and clearing negative items from your credit reports. Your lender will help you in knowing what should be paid off prior to qualification and closing.
- Don’t forget closing costs
- A common misconception is that VA loans don’t require closing costs – do not fall for this!
- You are still responsible for certain out-of-pocket expenses, such as mortgage fees, real estate fees, and appraisals.
- The VA funding fee ranges between 0.5% – 3.60% and can only be waived by meeting certain criteria
- Shop for best rates and service
- Take ample time to browse through available lenders and find the best rate and terms
- You want a lender who communicates effectively and consistently. Again, your Realtor® should be a huge help in this area.
- Find an experienced VA real estate agent
- Finding an agent that is familiar with the VA loan process will make it all that much easier for you.
- Choose a VA-approved property
- Certain properties like condominiums need to be verified beforehand by the VA in order to meet their safety requirements
- Secondary homes, rental homes, or vacation homes are not approved under the program
- The benefit is reusable under some circumstances
- Make plans to move in promptly
- One requirement of the VA is that the service member (or his family) must make plans to move into the property within 60 days of closing the deal.
How to Find the Best VA Loan in Northern Colorado
While the federal government insures all VA loans, they do not actually loan you the money for your future house. Applying for a VA loan still requires working with a bank or mortgage institution. And as with all government loan programs, there’s always a little more paperwork.
Luckily, the C3 and Tim Avery Real Estate team will walk you through this entire process without hassle! I have a list of chosen lenders* who have proven to be reliable for Colorado military veterans and active service members. Together, we can find the proper licensed VA mortgage lender to make certain we find the right house and best deal for you!
