7 VA Loan Tips for Homebuyers in 2021
Serving in the armed forces is one of the most honorable experiences many men and women can have. Being in the military comes with a lot of perks and benefits. One of the most overlooked benefits by both Veterans and service members buying a home through a VA loan.
A VA loan is a mortgage guaranteed by the U.S. Department of Veterans Affairs (VA) issued by private lenders and available only to veterans, active-duty service members, and their eligible spouses. As a government program, it has to be mired in red tape and has to underperform on promised benefits, right? What we found, however, is that the VA loan program mostly lives up to the hype. In fact, for many who qualify for it, it’s the only way they could buy a house.
Some of the advantages of buying a house through a VA loan are: low-interest rates and closing costs, $0 down payment, and the option to forgo private mortgage insurance (pmi).
Additionally, the VA did not set a minimum credit score. However, having stellar credit can help to attain rock bottom variable or fixed rates. For peace of mind, be sure to get a free copy of your credit report and check for errors before applying. If you notice anything suspicious in your report, you can hire a credit repair company to help or you can remove the inaccurate items yourself.
Even though VA loans are more popular now than before, it is still different than a traditional loan. Over 1.2 million homes were purchased with VA loans 2020 — a record volume since the program was first launched in 1944. For some reason, VA loans have acquired an unfair and baseless reputation for being a hassle–the application process is complicated, they take longer to close than conventional loans, and the VA is a mess.
The team at Money.com created a list of 7 tips for veterans to be aware of if they are looking into buying their dream home in 2021!
1. You can get started without the Certificate of Eligibility (COE)
- A COE is issued by the U.S. Department of Veteran Affairs and is proof that you are eligible for the VA home loan benefit
2. Your credit score still matters, but it’s not everything
- Lenders tend to be more flexible with VA loans
3. Make sure you have enough saved
- You are still responsible for certain closing costs (i.e. application fees, insurance, inspection fees, real estate taxes, and more)
4. Shop for a VA lender and get pre-approved
- Look for reputable lenders that exclusively cater to military members, veterans, military spouses, and their families – compare all offers
5. Find a real estate agent that’s VA-savvy
- Contact your VA regional loan center and ask if they can recommend a VA-savvy agent in your area.
6. Choose a property that’s VA-approved
- Properties purchased through a VA loan can’t be used as vacation homes or investment properties; condos must meet certain requirements
7. Close the deal only when you’re ready to move in
- Interested homebuyers must complete the VA’s minimum occupancy requirement
Estefania Guzman is part of the outreach community team at Money.com. She has previously worked with local businesses with their marketing and operations endeavors.