This has been an interesting week in politics and in honor of Veteran's Day, I decided to remind people that VA loans are a wonderful way to purchase a new home. Those that serve our country in the military have a wonderful benefit called a VA loan. It allows you to purchase a home with zero down and no monthly mortgage insurance!
VA loans are typically a lower interest rate than conventional loans, there are reduced closing costs and no monthly mortgage insurance. There is a VA funding fee that is added to your mortgage. This fee will vary based on whether or not you have used the loan before and if you are making a down payment. If you are using your VA loan for the first time and putting zero down, the VA funding fee is 2.15% of the mortgage amount. However if you decide to put 5% down, it lowers your funding fee to 1.5%. If you have used your VA loan before, the VA funding fee may be as much as 3%. If you have a VA related disability, your funding fee may be reduced or waived.
VA loans are assumable to anyone that can qualify for the mortgage. If you sell your home and allow someone to assume that mortgage, you do limit your access to a new VA loan. The amount of your current mortgage will affect how much you can qualify for using your VA benefits again – until that original loan is paid off.
VA loans are available to those that have served in any branch of our military including the Reserves and National Guard. Unmarried surviving spouses may also be eligible. The amount of time served is what determines your eligibility. The time required is:
- 90 days during wartime
- 181 days during peacetime
- 6 years in the National Guard or Reserves
In Minnesota, if you are a disabled vet, you may also be eligible for reduced or eliminated property taxes. Once you have purchased your home, talk to the county tax assessor to find out what you can do. There is typically a form that you need to fill in, but if you can eliminate your property taxes, that can help you lower your mortgage payment even more!
If you feel you have earned your VA benefits, talk to your loan officer about the possibility of using a VA loan to purchase your new home. Not every lender will do a VA loan, so you may need to check with more than one lender, but they are a great option to finance a home with.
And I also want to thank those that have served our country – I truly appreciate your sacrifices and your family's. Thank you. Have a wonderful Veteran's Day!