1. You gotta live there.
Sorry folks, the VA loan won’t help you buy that investment property or vacation home in Lake Tahoe. The VA requires that you occupy this home as your primary residence, generally within 60 days of closing.
BUT, if you’re able to snag a duplex or multi-unit property you can certainly live in one unit and rent the others which is a quite popular and super-savvy real estate move for a lot of my first-time buyer military peeps.
Sidenote – the VA does offer a few exceptions to the 60 day occupancy rule. Example: you’re retiring in 9 months or you are currently deployed. Like (insert analogy here) each situation is unique so just call us to discuss specifics.
2. No HGTV projects PLEASE!
We love Chip and Joanna too but if you’re planning to buy a major fixer that needs a lot of TLC the VA loan may not be for you as there are a few basic requirements the VA has regarding condition.
It’s primarily designed for properties in move in ready condition, including single family homes, townhouses, condos and even some multi-unit properties which is pretty awesome. FYI: multi-family houses have some additional requirements with regards to reserves, rental income, etc. so just call us to go over these specific deets.
3. Say NO to Mortgage Insurance.
Mortgage insurance or PMI is a monthly fee you typically pay with other loan programs if you’re not putting at least 20 percent down. With the VA loan you will not have any monthly mortgage insurance EVER which can mean a savings of hundreds of dollars per month. MY PERSONAL FAVORITE
4. WTFF = What the Funding Fee?
While there’s no monthly mortgage insurance with VA loans there is a little (can be quite large) fee called a funding fee. This fee helps the VA goin’ strong and is required on both purchase and refinance loans. The good news: it can be rolled into the loan amount and waived entirely for those brave folks with service-connected disabilities.
5. The VA Doesn’t Lend Money.
That’s right. You’ll get your loan through a mortgage broker or bank but the VA will provide a nice little guaranty of up to 25% of the loan amount to the bank. It’s this guaranty that gives lenders the piece of mind and confidence to issue these bomb a$$ rates and terms to the men and women who keep us safe.
6. More lax credit requirements.
Got a boo boo on your credit? We understand and one of the great things about the VA loan is a credit blemish won’t automatically disqualify you from getting a VA loan. The waiting period after a Chapter 7 bankruptcy can be as little as two years compared to four years on a conventional loan.
7. Not a one-time benefit.
You can use your full VA entitlement over and over again as long as you pay off the existing VA loan each time. There are even a few cases where you may be able to obtain more than one VA loan at one time but it’s best to call us to discuss these requirements.
8. Not just anybody can co-sign.
Many loan programs let you get a loan with just about anybody. Unfortunately, that’s not the case with the VA loan. Having a co-borrower who isn’t your spouse or another veteran with VA loan entitlement will require a down payment. This could be a problem if you’re living with boo thang but haven’t put a ring on it just yet.
9. No pre-payment penalties EVER.
Yep, you can send extra payments any time you want, saving you a crap ton in interest over the life of your loan. Wanna channel your inner Suze Orman? Set up auto payments to send a little extra every two weeks. Even an extra $100/mo can save tens of thousands in interest over the life of the loan.