What You Need To Know About VA Loans
Did you know that in 2017 there were over 18.2 million veterans in the United States? America’s veterans served our country, and we owe it to them to offer an important and valuable VA loan. As a QLMS partner, you can help military families make homeownership a reality with greater ease and convenience. One of our most successful partners asks every client: “Are you or your spouse a veteran?” Don’t forget to ask so you can open up new opportunities to the men and women who have given so much. To help you, we’ve gathered the top things you need to know about VA loans. There’s a common misconception that VA loans are confusing and time-consuming. Because you’re a QLMS partner, we’ll work with you and your clients to make it simple and easy.
Know The History Of VA Loans
In 1944, President Roosevelt signed into law the Servicemen’s Readjustment Act, also known as the GI Bill, that provided special benefits to those who serve our country. The United States has the most comprehensive system of assistance for veterans of any nation in the world. The Department of Veterans Affairs is a government-run military veteran benefit system. The primary function is to support veterans in their time after service by providing benefits and support. One of the key benefits is the VA Home Loan Guaranty Program, designed to help veterans achieve the American dream of homeownership.
Only a small percentage of originators have become as proficient in VA lending as they have in agency and FHA loans. For originators who want to expand their production, it’s a smart move to get ahead of their competitors by aiming higher on the VA product knowledge curve.
No Down Payment Required
While mortgage rates have dropped, the majority of new home inventory is still priced at the mid-to-high end of the market. For new home buyers, saving for a down payment can be a bit daunting. This is especially true for VA eligible clients who may have been recently discharged from the military. But, did you know that 90% of VA loans are madewith nothing down? This puts your VA home buying clients in a position to purchase sooner rather than later. The benefit to you: A closed loan with no delays. As a QLMS partner, there are two important VA loan benefits you can offer your clients: no down payment and lower-than-average interest rates.
No Mortgage Insurance
Unlike FHA mortgages and high loan-to-value ratio (LTV) agency products, VA loans do not have a mortgage insurance premium.While VA loans do have a VA “funding fee,” this is usually added to the loan amount up front. VA eligible clients who have a service-connected disability are exempt from the funding fee.
In most cases, if you comparatively calculate a VA loan PITI against other conventional loans, the resulting full payment amount of the VA loan may surprise you and be very attractive for your clients who are veterans.
Limits On Closing Costs
Closing costs payable by the veteran are limited by regulations to a specific list of items. These fee items are called “allowable fees” and are determined as reasonable and customary by every local VA office. All other costs in the transaction are considered nonallowable and may generally be paid by a seller, the lender via a lender credit, an agent or any other party. QLMS covers any nonallowable costs and disclosures and doesn’t charge any underwriting fees, which helps our veterans enjoy a more hassle-free mortgage experience.
More Lenient Credit Requirements
While credit profile standards are a significant factor among all mortgage products, VA lending generally offers a slightly relaxed set of credit score limits. VA lenders are typically looking for a FICO®Score of approximately 620, generally around 100 points lower than what buyers will need for typical conventional financing. Moreover, while access to mortgage credit is thawing somewhat, it’s still tough for many veterans and military families to build the credit profile necessary for conventional financing. For those would-be buyers, VA loans continue to fulfill their original mission and are quickly becoming the “go-to” mortgage option for our veterans.
Attractive Refinancing Options
For clients with an existing VA loan, you can provide refinancing, which is a great option with current interest rates dropping. A VA loan refinance typically allows for little or no out-of-pocket costs, faster closings and less documentation than an average home loan. One of the most attractive options: Your clients can refinance up to 120% of their home’s value.
Become A VA Loan Expert
Gone are the days when originators had to operate a business near a military base to become experts in VA mortgage lending. QLMS is here to assist our partners in helping military families achieve homeownership with more flexibility and convenience.
As a successful broker, you’ll want to become an expert on VA loans so you can confidently offer its significant advantages to your clients. You’ll be helping those who have given so much for our country, and you can make a difference in their lives – for today and years to come. Have you had a positive experience offering a client a VA loan? Tell us about it by leaving us a comment.