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How Do VA Mortgage Loan Programs Work? 

How Do VA Mortgage Loan Programs Work? 

If you're a veteran or active duty service member, chances are that you qualify for a VA home loan. The major advantage that VA mortgages offer is that neither money down nor mortgage insurance is required. This is because the VA does not actually issue loans, but guarantees them with participating lenders who set their own interest and point rates among other criteria.

Eligibility for VA Mortgages

VA loans are for principal residences in move-in condition only, with very few exceptions. Veterans, active service members, National Guard and Reserve members, and surviving spouses need a Certificate of Eligibility (COE) before finding approved lenders. You can apply online, by mail, or through your lender. More information can be found on the VA website.

Funding Fee

Because there is no down payment or mortgage insurance, a funding fee (usually about 2% of the loan balance) is required if your VA loan is approved. It can be rolled into your mortgage amount, and is waived if you are a veteran with service-connected disabilities.

Other Benefits of the VA Mortgage Program

If you have a history of bankruptcy or foreclosure, it does not preclude you from being approved for a VA mortgage. You can repeatedly use your VA entitlement if you move or decide to sell. You aren't restricted to obtaining a VA loan once provided that subsequent properties are eligible primary residences.

There is also no penalty for prepayment, which offers the opportunity to cut thousands of dollars off your loan balance just by increasing your monthly mortgage payment. It will all go directly to the principal without penalty.

For more information about VA mortgages, contact the pros at Midland Mortgage today!

Posted Dec 14, 2016 by Midland Mortgage Corporation