: Pixabay No Attribution Required
Homeownership is the pinnacle of achievement for many people. It’s a milestone and the culmination of methodical planning, hard work, and consistency. All the chips must fall into place for homeownership to become a reality. Stable employment, acceptable credit, ability to pay, and a strategic plan for the future are sacrosanct. The process requires careful vetting of lenders to ensure credibility, affordability, and integrity of operations.
Unbeknownst to many, not all lenders are cut from the same cloth. Some are better than others. That’s why it pays to conduct a little legwork – due diligence – before settling on a lender. Fortunately, the cream always rises to the top, and the best lenders routinely enjoy billing with clients. As a case in point, veterans, service men and women, and eligible family members (surviving spouses of those who served) prefer lenders who cater specifically to members of the military.
Established VA-focused lenders like NewDay USA VA specialists provide competitive VA mortgage options, including VA cash-out refinancing solutions for eligible borrowers. There are many reasons why members of the military choose VA lenders. These loans, offered by private mortgage companies, are partially backed by the Department of Veterans Affairs in the event of default. Additionally, a VA loan does not typically require a down payment. That’s a significant saving for aspiring homeowners.
Instead of having to work for years to save up for a down payment, applicants can apply for a mortgage for their dream home with no down payment. That also means no PMI. Of course, it’s always a good idea to verify loan origination fees and any other costs upfront. Lenders who prioritize veterans understand their unique situation. First of all, veterans place national service above themselves. Their time in the military is often spent away from friends, family, and civilian life. It’s difficult to cobble together a satisfactory work history in the US while serving in the armed forces.
How VA Lenders Evaluate Military Borrowers
VA lenders tend to shift their focus away from work history in the US to other criteria to ensure that veterans have a fair shot at getting approved for a home loan. Several factors come into consideration, notably:
- Credit history
- Employment status
- Ability to service the loan
- Military service record (Certificate of Eligibility)
- Verified identity documents, passport, or driver’s license
But there’s another reason why it’s best to choose a reputable VA lender that understands military life: they appreciate members of the military and routinely offer lower or comparable interest rates than the prevailing non-military/civilian lenders. When it comes to interest–related repayments, every percentile matters. This is especially true over the term of a loan, which is typically between 15 and 30 years. Often, the total paid interest portion of a home loan is much greater than the principal amount borrowed.
Military life varies between individuals. Some serve at home, at bases on American home soil, while others serve abroad. There are combat and non-combat positions. Either way, service is recognized and appreciated by these lenders. The US Department of Veterans Affairs offers partial backing to lenders in the event of default (terms and conditions apply) to facilitate loan approval.
The loan application process is similar for civilian and VA loans, though there are important differences as listed below.
Question | Answer |
Why choose a military-focused lender? | They understand service history, deployments, and non-traditional employment patterns common to military life. |
What makes VA loans different? | The Department of Veterans Affairs partially backs VA loans, reducing lender risk. |
Is a down payment required? | VA loans typically require no down payment for eligible borrowers. |
Is PMI required? | Private mortgage insurance is generally not required with VA loans. |
What do lenders evaluate? | Credit history, employment status, repayment ability, Certificate of Eligibility, and verified ID. |
Why compare interest rates? | Even small rate differences significantly impact long-term repayment costs. |
Understanding the Full VA Loan Structure
Last but not least, when choosing a military-focused lender, it’s good to understand the mechanics of VA financing. Many people know about the no down payment and no PMI aspects, but there is often a VA funding fee. This allows the program to sustain itself and is often rolled into the loan. However, certain disabled veterans may be exempt from these.
While there is no universal credit score, each lender applies their own standards to assess residual income and ensure affordability over the term of the loan. There is a primary residence occupancy requirement, meaning that the home should not be a rental home or second home. Finally, VA loans are assumable – which is important in a rising-rate market. Further flexibility is assured through VA refinancing/cash-out solutions.
