VA loan program is come out from the GI Bill of Rights. This bill helps qualifying veterans to get a federally guaranteed loan without any down payment or mortgage insurance. It is arranged by selected “VA Approved Lenders” for veterans to purchase a home.
There are many facts about VA home loan that people do not know. However, they are essential to know by every interested candidate taking this loan. Some of the important things regarding such loan can be discussed as under:
Where a VA loan can be used?
It can be utilized for buying new homes. The types of property that can be purchased through it, are the town homes, single family or condominiums in VA approved projects.
Benefits of this loan
The biggest advantage of this loan is that you can purchase residential property through this loan without having any finance. Except for a VA funding fee, there is not any monthly private mortgage insurance (PMI) related to this loan. Such loan is easy to get in comparison to traditional loans as no pre-payment penalties are required in it and its interest rates are also low.
Qualifying process of a VA loan
Generally, people see VA loan just like any other loan in respect to the qualification as well as the approval process. However, different lenders have different guidelines in respect to a VA loan program.
Interest rate of the loan
An interest rate of this loan is set by the open market instead of VA. The rate of interest is also subject to change from time to time.
Amount Of loan that can be taken
This loan can be taken as much as a person is able to afford it to make monthly payments as determined by the guidelines of VA. You will find in these guidelines – credit rating, residual income, total debt to income etc.
Limit of maximum amount of the loan
There is no limit for its amount. However, the maximum loan amount devoid of down payment as well as assuming the full entitlement can be approximately $417,000.
Occupying A house Is Essential By The Borrower
It is essential to occupy the house by veteran within sixty days of closing the loan. If the borrowers fail to do so or falsely make a claim for this, then they may have to pay severe penalties.
Any closing costs related to the purchase of a house can not be included into the loan
Closing costs, on a purchase transaction, is not allowed by VA to be included in the loan amount.
Role of loan approval in affecting the credit scores
The decision and guidelines of VA are not based on credit scores. However, most of the lenders must have a minimum credit score requirement to approve, process as well as fund the loan. You can also take the help of some VA home loan specialist in places like Utah to know their ways of administering this element of VA loan.
Credit history affects and determines the loan
The creditworthiness of a loan applicant is always considered by the VA lender. The lender will consider the borrower’s last twelve months history of credit prior to loan application for taking a decision. A good history would determine the ability of a borrower for making the required payments of the loan. In opposite to this, if credit history is not good, the applicant might not be considered as the right candidate for the loan program.
About VA funding fee
The VA uses VA funding fee to offset claims against the loan program due to defaults. It is collected by the VA through various VA loan transactions. The Veterans who fail to meet the exempt requirements are required to pay this fee.
If you do not have any past experience and knowledge about VA loans, it is good to take the assistance of some mortgage loan brokers in Utah. Their expert team know which lender is good to submit a loan file and how to get the loan fast. They can also help their clients to save thousands of dollars on their VA Mortgage Loans in Utah.