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How do you buy a house with a VA loan in Papillion NE?
How do you buy a house with a VA loan in Papillion NE? We can help. Here is what you need to know.
What is a VA loan?
A VA loan is available to active duty and veterans who meet certain criteria. It is a private loan guaranteed by the Veteran’s Administration. If you meet the criteria it is an excellent loan program for buying a house with little or no money out of pocket.
Who is eligible for a VA loan?
A VA loan is available for service men and women who served 90 consecutive days of active service during wartime or 181 days of active service during peacetime. It is also available for active member of the National Guard or Reserves who’ve served for 6 years or more. If you’re married to a service member who died in the line of duty or as a result of a service-related disability you may also qualify. A local lender can look up your Certificate of Eligibility to see if you qualify.
The VA loan is only used for primary homes…But…
An eligible VA buyer can only use the VA loan to purchase their primary home. However, at a later date they can move out and purchase another house. The VA homeowner can then convert the primary home into a rental with the existing VA loan. If the VA buyer has enough eligibility left, they can take out a second VA loan.
What are the advantages of a VA loan?
The VA loan offers low rates and a no down payment option. Unlike other loan programs, the VA loan does not have Mortgage Insurance. An eligible VA buyer can also get a loan with less than perfect credit and a debt to income ratio that is higher than Conventional financing. VA allows sellers to credit the buyer up to 4% of the purchase price to cover closing cost and escrows. The VA loan is a military benefit for service and provides low rates and fees to eligible buyers with no down payment and possible nothing out of pocket.
How much is the VA Funding Fee?
In most cases, VA charges a funding fee. This is a fee rolled into the loan for use of the program. How much you pay depends on how many times you’ve used the program, type of service, and down payment.The funding fee is 2.15% of the loan amount for first time users with no down payment. It drops to 1.5% with 5% down and 1.25% with 10% down. For Reserve and National guard first time users the fee is 2.4% with no down payment, 1.75% with 5% down, and 1.5% with 10% down. For subsequent use of the VA loan the funding fee jumps to 3.3% with no down payment. Veterans with disabilities might be exempt from the funding fee. The Certificate of Eligibility will let us know for sure.
What are the disadvantages of a VA loan?
The VA loan is a fantastic program with great rates and no Mortgage Insurance. However the funding fee can be a big chunk of money. If you are buying a $400,000 house and it is the second time using the program the funding fee would be $13,200. If a homeowner plans to only live in the house for a few years it might not be worth paying that large lump sum fee. It is important to sit down with your local loan officer to discuss the best loan option. It might not always be VA.
How can a VA buyer apply for a Certificate of Eligibility?
Request a COE from your lender. Lenders have access to a database which can produce your COE within minutes.
Apply for the COE online at VA.Gov. You’ll have to log into your account and navigate to the COE application page.
Mail in your application. Print out this form, fill it out and include applicable proof of eligibility.
Why is Papillion NE a great place to use your VA loan?
Papillion is very close to Offutt Air Force Base so the VA loan is a frequently used program in the area. In areas less familiar with the VA program, sellers and seller agents may be reluctant to accept a VA offer. This is due to the misconception that VA loans are more difficult or have more issues. Agents and sellers in Papillion are more familiar with the program.
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