VETERAN AFFAIRS LOAN: HOW SERVICEMEN CAN USE IT TO BUY A HOUSE

It goes without saying that service members and veterans have earned the right to find a place to live. When the need for a home comes, VA loans would be a grateful way to support their purchase. Strategy Properties is here to give an extensive guide on everything there is to know about VA loans to fund your home purchase.

VA LOANS: AN OVERVIEW

This is a type of loan that is guaranteed in part by the U.S. Department of Veteran Affairs. The primary purpose of this loan is to help military families to either purchase a property or fund home improvements.

Being backed by the government, lenders have a somewhat relaxed approach to it since they find that there’s only a small risk on their part. Depending on the borrower’s credit score and ability to fulfill the loan, most of the terms would be favorable. Most eligible borrowers can even purchase a home with 0% down payment, low interest rates, and without having the need to worry about private mortgage insurance (PMI).

Eligible borrowers who can apply for the loan are current service members, veterans, and surviving spouses who meet the requirements. The good thing about this loan is that borrowers can use this benefit for every home they purchase. In other words, it isn’t just a one-time thing. Aside from buying a home, it can be alternatively used to turn property equity into cash for refinancing or renovations.

ELIGIBILITY

There are three basic requirements for the loan application, starting with:

DEPARTMENT OF VETERANS AFFAIRS REQUIREMENTS

You need to meet one or more of the following:

• Has served 90 consecutive days of active service during wartime

• Has served 181 days of active service during peacetime

• Has served 6 years of service in the National Guard or Reserves

• Spouse of the service member who has died in the line of duty or as a result of a service-related disability

CERTIFICATE OF ELIGIBILITY

To set things straight, you wouldn’t necessarily need a COE on hand for your application. The purpose of this document is to provide your lender with confirmation that you qualify for VA loan benefits. Also, most lenders are able to pull an applicant’s COE through the VA’s system. There are ways in order to obtain this, namely:

• Application through a VA approved letter

• Online application through the VA’s eBenefits portal

• Direct mail application with VA Form 26-1880

Nearly all applications are requested electronically nowadays where most of the certificates are handed out almost immediately. The process usually takes a couple of minutes to complete proof of military service.

Depending on which branch you’ve served, there are specific documents that you need to obtain for a COE to be given out. The required forms for each service type are:

• DD Form 214 - also known as a Report of Separation. This is mainly for veterans and current or former activated National Guard or Reserves.

• Statement of service - for members who are on active duty and current National Guard or Reserves (never activated)

• NGB Form 22 and 23 - Form 22 (Report of Separation and Record of Service) and Form 23 (Retirement Points Accounting and Proof of the Character of Service) are for the discharged National Guard

Other documents to take note of for discharged reserves are DARP Form FM 249-2E or ARPC Form 606-E (Army Reserve), NRPC 1070-124 (Navy Reserve), AF 526 (Air Force Reserve), NAVMC HQ509 or NAVMC 798 (Marine Corps Reserve), and CG 4174 or 4175 (Coast Guard Reserve).

Can spouses obtain a COE?

This depends on whether the surviving spouse is receiving Dependency and Indemnity Compensation benefits. For those who are, they must fill out VA Form 26-1817 or a Request for Determination of Loan Guaranty Eligibility - Unmarried Surviving Spouses. Along with this document, they should have a copy of the veteran’s separation paperwork.

For those who aren’t receiving benefits, they need to fill out VA Form 21P-534EZ or Dependency and Indemnity Compensation, Survivors Pension and/or Accrued Benefits. The surviving spouse also needs to provide a copy of their marriage license and the veteran’s death certificate (DD Form 1300 - Report of Casualty) along with the separation paperwork.

LOAN CREDIT AND INCOME REQUIREMENTS

A VA loan doesn’t have any minimum credit score requirement for eligibility. However, lenders often set a score of 620 to apply. Borrowers need to maintain a certain amount of income over each month after all necessary expenses have been paid such as typical family needs, transportation, food, and medical care.

In addition to the creditworthiness of the borrower, the lender needs to review their credit history to determine their willingness to pay. If you’ve managed to make timely payments for at least the last 12 months, this is more than enough for your ability to repay future credit obligations.

I’M READY TO BUY A HOME, WHAT’S NEXT?

Food for thought before you proceed. The VA underwrites homes that meet their property requirements. There would always be an appraiser to make sure that the home that you’re after meets certain codes when it comes to sanitation, safety, and structural integrity standards.

Also, there should be a contingency clause in the agreement in cases where you couldn’t secure a VA loan. From this point on, the home buying process is just like any other! After taking deep consideration over all the paperwork that needs to be done, there comes a point where everything might be a little too overwhelming. Strategy Properties is here to satisfy the needs of our clients in a smooth and seamless manner, especially for our uniformed members. With our portfolio of properties, we assure you that every home is up to code and has met all the standards set by the state of Michigan. To learn more about our services, contact us at (734) 224 - 5454 or send us an email at .