It’s not hard to find something good to say about VA loans. Backed by the U.S Department of Veterans Affairs (VA), these home loans have several positive qualities. As The Mortgage Reports points out, there’s no down payment needed, no mortgage insurance requirement, advantageous loan terms, and relaxed qualifying for borrowers. There are also certain built-in consumer protections, including a ban on prepayment penalties and limits on closing costs. Finally, there’s the fact that VA loans aren’t cookie-cutter products. There are several types of VA loans available. Could a VA loan be the ideal tool for your housing needs?
Types of VA Loans
As Military.com reports, VA loans got their start as part of the Servicemen’s Readjustment Act, which was passed by Congress in 1944. The program has undergone many changes since that time, and it continues to evolve and adapt to better meet the needs of the service members and veterans it is intended to serve. Offering various types of VA loans is one way that the VA works to help eligible VA borrowers reach their housing goals. What options do people hoping to use the VA loan program have to choose from?
VA Purchase Loans
A VA purchase loan is a popular pick. With this type of VA loan, eligible borrowers get a chance to secure a home loan with all the many advantages that VA loans are famous for, including 100-percent financing, competitive interest rates, and favorable loan terms. That can make it easier to reach your goal of buying the home that you want sooner. Using a VA loan will mean that you must purchase a home to serve as your primary residence. In addition, the property must meet certain standards and has to go through an appraisal process. However, you aren’t limited to simply purchasing an existing home. You can use a VA purchase loan to accomplish a variety of housing goals:
- Purchase a single-family home.
- Purchase a home with up to four units.
- Purchase a home and secure funds to improve it.
- Purchase land and build a new home.
- Purchase land and/or a manufactured home.
- Purchase a condo in a VA-approved building or community.
- Make changes or improvements to make your home more energy-efficient.
VA Interest Rate Reduction Refinance Loans
If you’re already a homeowner and are looking to refinance, the VA offers two options. The VA interest rate reduction refinance loan, or IRRRL, is also known as the streamline loan because of the quick, easy, and efficient approach it takes to getting applicants approved. While you’ll still need to meet eligibility requirements, you generally don’t have to go through the typical appraisal and underwriting processes. That helps you save time, paperwork, and money. However, IRRRLs do have their limits. For starters, you can only opt for an IRRRL if you already have a VA loan, the IRRRL will replace your existing VA loan, and you can verify that you either live in or used to live in the home that will be covered by the loan. In addition, IRRRLs cannot be used to access home equity.
VA Cash-Out Refinance Loans
The VA cash-out refinance loan may not have a streamlined application process like the IRRRL, but it’s easy to argue that it makes up for that with a broader appeal. For starters, it’s designed to serve a wider pool of borrowers. While the IRRRL is only an option for people with VA loans, the VA cash-out refinance loan can be used by eligible borrowers looking to refinance either a VA loan or a non-VA loan. Also, as the loan’s name makes clear, this form of financing is a solid choice for borrowers who want to cash-out some or all of their home equity during the refinancing process. To qualify, borrowers must be eligible for VA loans, meet the standards set for credit and income, and plan to live in the home that is being refinanced.
The VA loan program is still evolving, so working with a loan expert who is familiar with all of its ins and outs is essential if you want to get the most out of the housing benefits that you’ve earned with your service. At PrimeLending Denver, we always pay careful attention to the details that matter. Contact us today to discuss your housing goals.