Eleanor Osborn's Blog
We all know that buying a home is expensive. For first-time buyers who don’t have the luxury of equity for a down payment, it can be difficult to find a way to finance your home without taking on a huge interest rate and mortgage insurance.
Fortunately, loan programs like those offered by the U.S. Veterans Affairs can be a godsend. However, there is a great deal of confusion around who is eligible for VA loans and how to acquire them.
So, in today’s post, we’re going to cover some of the frequently asked questions of VA loans. That way, you can feel confident in knowing whether or not it’s a good financing option for you and your family.
VA Loans FAQ
Who is eligible for a VA Loan?
VA loans aren’t just for veterans. Most members of the military, including Reserve and National Guard members can apply. Additionally, spouses of service members who died from a service-related disability and those who died on active duty can apply as well.
How long do you have to service to be eligible?
The VA defines eligibility as having served no less than 90 days of service during wartime and 181 days of continuous service during peacetime.
Who are VA Loans offered by?
Like any other loan, VA loans are offered by private lenders. The difference is that VA loans are guaranteed by the government. That means that the federal government takes on some of the risk of lending to you, therefore making it possible to secure a loan with little or no down payment.
Should I make a down payment on a VA loan?
If you have the means, making a down payment will almost certainly save you money in the long run. If you can put down 10% of your total mortgage amount, you can also significantly reduce the VA Funding Fee.
Will I have to pay private mortgage insurance?
Private mortgage insurance (PMI) is something that borrowers pay on top of their mortgage payments and interest. This additional insurance helps borrowers buy a home with a small down payment. VA loans allow you to secure a mortgage without PMI.
Are VA loans different for active duty, National Guard, and Army Reserve members?
Each type of service member is eligible for a VA loan. However, there are some minor differences regarding the VA Funding Fee. With no down payment, an active duty member would pay 2.15% of the loan amount in fees. National Guard and Army Reserve members pay around 2.40% with no down payment.
What does my credit score need to be to get a VA loan?
The VA doesn’t have a set minimum credit score. However, the private lenders that offer the loan do. On average, the lowest credit score that you can secure a VA loan with is around 620. That being said, a higher score will secure you a lower interest rate, saving you money over the lifetime of your loan.
27 WASHINGTON GREEN, Walpole, MA 02032
Buying a home is a huge deal. First-time buyers transform from renters to owners in a single transaction, a change that has far-reaching implications about how you see yourself.
Being an owner grounds you in your community.
When you buy a home, you create deep community connections in a way renting never can. After all, when you’re a renter, your relationship to the actual property and structure are less personal. You don’t own it, so if something goes wrong, you call the landlord—the owner—to make repairs. If the wind blows shingles off it is the owner’s insurance that handles getting a new roof. When a natural disaster strikes you know someone else will take care of it.
Now, as the owner, all these things are yours to manage. When you live in the property that you own, you are your own landlord. You’re the property manager in charge of repairs. The buck stops with you!
Don’t let all that responsibility deter you, though. It is that very sense of duty that creates pride of ownership. While your home doesn’t define you, it does represent you in the neighborhood and to your community. And with the responsibility come all the rights of ownership as well.
Every payment you make toward your mortgage principle adds value—equity—to your home. Each time you maintain your home and yard, you’re helping it retain that equity. As a renter, your payment went to the owner’s equity. So, if you make improvements to your home, and continue to pay toward the principle, that equity accrues to you.
Equity increases when the community or neighborhood becomes more desirable so that the fair-market value goes up. Increases due to economic growth and demand add up to more value for you … instead of an increase in your rent payment that goes to a landlord.
Being an owner helps your bottom line in other ways too.
The most predictable thing about renting is that rent will go up. That means any increase you might get to your wages or salary must go toward rent rather than something else you’d like to have. If you have a fixed mortgage, the basic cost of your housing remains the same year over year. When you receive that cost of living adjustment or new position with a bump to your income, you can spend it on improvements to your home to further increase its value, pay off some other debt, or spend it on something else entirely. It gives you choices.
Because you appreciate your property, it appreciates in value.
If you've never owned a home and would like to explore the possibility, start by contacting a real estate agent and get the conversation started.
15 CROSS STREET, Medfield, MA 02052