The VA home loan is set up so a vet can purchase a home for $0 down. This is possible because VA will allow a vet to get a 100% loan, guaranteed by the government, and will not allow a vet to pay buyer fees. VA loans typically offer veterans excellent interest rates which are often offset by a lender by charging discount points.
What are discount points?
The discount points are prepaid interest that has to be paid to make up for the difference between the FHA/VA rate and the current rate charged on conventional loans. These points cannot be added to loan amount to be paid the vet. Discount points must be paid by the seller or the lender.
Who pays the discount points?
VA discounts points are really prepaid interest in disguise. The vet does not pay any discount points. The seller and/or lender would have to pay these discount points so that the vet can obtain the loan. This payment is a matter of negotiation between veteran, lender, and seller.
How much is a discount point?
Each discount point is equal to 1% of the loan amount. The seller would pay this amount with the sale proceeds during the escrow process. Motivated sellers should consider allowing buyers to purchase their home with a VA loan.
What about loan origination fees?
The vet can pay the origination fee to obtain the VA loan. Typically these fees are added into the vet’s loan at closing.
Can I use my VA Home Loan more than once?
Often times a vet will think they can only use the VA loan eligibility one time. This in NOT true. In most cases a vet can use their VA loan eligibility more than once as long as the vet is credit worthy, has not defaulted on a previous VA guaranteed loan and their previous VA loan was released by VA.
What are VA Funding Fees?
VA Funding Fees are a way the government offsets the cost of the VA loan program so tax payers aren’t footing the entire bill. The first time you use your VA eligibility with nothing down the funding fee is less than the subsequent use funding fee. If you put money down the fee is reduced more. Typically this fee can negotiated so part of it is paid by the seller and/or added to they vet’s loan.
Are VA loans complicated and hard to get?
Finding a home that will qualify for a VA loan and preparation are key. You must be credit worthy to get a VA loan.
Are VA loans time consuming?
You be the judge… True story: I wrote an offer for a vet on a short sale on January 16, 2010. Bank approval received February 3, 2010 (18 days later). VA loan closed on February 27, 2010 (20 days later). Total time: 38 days to buy a short sale and close VA!!!
I’ve personally used my VA eligibility several times. I believe it’s one of the BEST loan programs out there. I know the VA process works!
If you’re a vet and would like more info about using your VA eligibility, contact me for more information. If you’re interested in meeting the VA Loan Specialist I worked with to close a VA loan in 20 days, contact me and I’ll connect you!!!
Another great VA source is http://www.homeloans.va.gov/lgyfaq.htm