Top 4 Mortgage Options For Veterans

Buying a home is a significant chapter in anyone’s life. The whole process can bring both excitement and stress, even to service members and their families. But members of the military may face unique challenges that can make securing a mortgage loan difficult. Luckily, this feature will explore various options for veterans.

Primarily, VA loans were made for veterans, servicemen, and surviving spouses. But there are other loans such as FHA, USDA, and conventional loans for retired soldiers to check out for their property financing needs. They’re included here as alternatives in case VA mortgage loans don’t fit into the situation of one service personnel applicant. You can inquire at reputable lenders similar to SecurityAmericaMortgage.com for more information and to see what type of home loan’s a perfect fit for your situation.

Mortgage Loans Available For Veterans

Are you a United States (U.S.) service personnel? Or do you happen to be a partner of a loved one that’s currently serving in the military? Continue reading below to learn more about the possible mortgage options that are available for veterans.

VA Loans

If there’s a mortgage option specifically for those in the military service, it’s VA loans. It’s one of the benefits of serving in the military. VA loans are both available for veterans and active military service personnel if they qualify and meet a number of requirements set by the loan. Surviving spouses and national security employees can also apply for the VA loan.

VA loans are available through a program established by the U.S. Department of Veterans Affairs. VA loans allow veterans to buy homes with little down payment or none and a competitive interest rate. They can do so without any private mortgage insurance too.

There are different types of VA loans:

Cash-Out Refinance Loans

Cash-out refinances loan is a type of VA loan that allows applicants to borrow against equity. They can use the money to improve homes, pay off debt, and fund education. It opens a new mortgage for a more significant amount and converts home equity into cash.

Home Purchase Loans

This loan assists a veteran in purchasing a home with a lower interest rate. It doesn’t require mortgage insurance or a down payment.

Interest Rate Reduction Refinance Loan

Known also as a VA streamline refinance loan, it offers a lower interest rate through refinancing an existing loan with a fixed-rate term. Holders can also turn a formerly adjustable-rate mortgage loan interest into a fixed-rate agreement.

Native American Direct Loan

A loan applicable to eligible Native American veterans allows them access to funding for the construction, purchase, or to make home improvements in homes sitting on federal trust land.

While VA loans are designed for veterans, there are other types of mortgage loans available to them if they decide to look for alternatives. The following are other mortgage loans that veterans can turn to.

FHA Mortgage Loan

Another reason to choose FHA loans over other options is that they are similar to VA mortgages supported by the government (particularly the Federal Housing Administration) and have lower interest rates. And like VA loans, they don’t allow penalties even if you could pay off the loan earlier.

FHA Streamline Refinance

This type of mortgage loan includes the FHA Streamline Refinance alternative. It works by helping qualified borrowers pay monthly mortgage payments by lowering the interest rates. It’s a quick and simplified process that sometimes allows borrowers to skip appraisal before closing.

If you want to apply for FHA Streamline Refinance, here are the advantages you can expect from this loan:

• It’s a chance to refinance despite owing more than the value of your home, which is also known as an underwater mortgage. The amount you receive is based on the outstanding balance, so you can still use streamline refinance even if your home value has declined.
  • You can lower your monthly payment. FHA has strict guidelines that borrowers must follow to secure a loan. One of them is that you can’t extend the loan to 12 years. The interest rate must also be reduced when extending the loan to lower payment. But one exception to the rule is if your mortgage is originally an adjustable-rate mortgage.
  • You can avoid a home appraisal. While an assessment is a way to determine the fair market value, FHA Streamline Refinance doesn’t need it because the loan amount is determined by what you own and not the current home value.
  • Credit checking and paperwork are limited. There are two types of Streamline Refinances. The first is credit qualifying – which requires you to submit income documentation for the lender to check. The second is non-credit qualifying, where the lender checks your credit score.

USDA Loans

If you prefer a loan type that doesn’t require you to put down money first, you can opt to apply for a USDA mortgage loan instead. Like VA, it’s also backed by the US government via the Department of Agriculture and has lower interest rates. The following are some basic rules that apply to government mortgages:

• The loan shouldn’t be used to purchase investment property;
• Occupancy is required; and
• It’s required to have a demonstration of need.

Nevertheless, USDA isn’t for everybody.

The loan type has limitations on household earnings and income caps. The property for purchase must also be in an approved rural location. You’d be happy to know that areas approved by the USDA can be found in most places across the country.

To see if a property is in an eligible area, you can head to the official USDA website and click on the program links. Choose the Property Eligibility Program link. Selecting the Rural Development Program will direct you to the property eligibility screen for your preferred Rural Development program.

Understand that the maximum loan amount might be lower than the loan limits of the VA mortgage though. Yet USDA loans are still a worthwhile option you should look into.

Conventional Loans

There’s a conventional loan type that is similar to VA mortgages. It’s a mortgage loan that isn’t known to many veterans but one they can turn to for property purchases.

While it’s not officially a part of the VA loan program, it’s meant to function similarly to a VA loan. An excellent example of this home loan is a military members’ credit union home loan. You don’t have to put up a down payment with this loan. It has a fixed interest rate, and the lender pays private mortgage insurance.

The state doesn’t get involved with the Navy Federal Loan even if the features are available through the VA mortgage loan. A veteran applicant doesn’t use the VA mortgage entitlement. They can still apply for a loan with similar features and terms to the VA loan.

Conclusion

Veterans have a few alternatives to VA loans that they can explore. Different people have different needs and situations, making these options ideal for them. Those who want to apply for a mortgage must understand each loan type before proceeding. It’ll help them choose the best option for them while saving time and money.