American Residential Lending specializes in VA loans, which are loans guaranteed by the Department of Veterans Affairs (VA). These loans were established to provide transition assistance and other benefits to men and women who served or are serving in the Armed Forces of the Nation. This includes the Army, Navy, Air Force, Marines, Reservists, National Guardsmen, and certain surviving spouses. Also, if you are a disabled veteran, you may qualify for additional benefits on a VA home mortgage loan.
A VA loan can be used to buy a home, build a home and even improve a home with energy-saving features such as solar or heating/cooling systems, water heaters, insulation, and other energy efficient improvements approved by the lender and VA.
Veterans can apply for a VA loan with any mortgage lender that participates in the VA home loan program. A Certificate of Eligibility from the VA must be presented to the lender to qualify for the loan.
Some of the benefits of the VA Mortgage Loan Program are:
- Negotiable interest rate
- No money down for loans up to $417,000
- No PMI (Private Mortgage Insurance)
- Government limits the amount of closing costs and origination fees lenders can charge, as well as appraisal fees
- There is no limit to the number of times a veteran may use the program
- Right to prepay loan without penalties
- Mortgage can be taken over (or “assumed”) by the buyer when a home is sold.Counselling and assistance available to veteran borrowers having financial difficulty or facing default on their loan.
- Closing costs comparable – and sometimes lower - than other financing types
- Counselling and assistance available to veteran borrowers having financial difficulty or facing default on their loan.
When considering applying for a VA loan, keep in mind the following:
Qualifying for a VA Mortgage Loan
The Veterans Administration offers excellent qualifying standards. The VA does not use credit scoring in their analysis of the loan. Even if you have experienced some financial difficulties in your life that caused your scores to be low but have maintained a good payment record over the past year or so, you may qualify for a VA mortgage loan. This can be a tremendous savings compared to the cost of conventional loans when the borrower's credit scores are low.
VA Mortgage Loans may be refinanced
VA mortgage loans have built-in features that allow the loan to be refinanced to a lower interest rate without all of the criteria normally associated with a conventional loan. This is called an Interest Rate Reduction Loan (or VA Streamline); the veteran can secure a lower interest rate without any credit checks, appraisal, and income or asset verification and can roll the costs of the transaction into the loan so there are no out of pocket costs.
Assumable VA Mortgage Loans
VA loans are also assumable. If the person assuming the mortgage is a veteran with VA eligibility, the original veteran will not be giving up the amount of eligibility that they used to get the loan at the beginning. Veterans should use great care and closely investigate the terms of an assumption before allowing someone to assume their mortgage. It is too great a benefit to give up.
The VA Funding Fee
Although mortgage insurance is not required, the VA charges a funding fee to issue a guarantee to a lender against borrower default on a mortgage. The fee may be paid in cash by the buyer or seller, or it may be financed in the loan amount.