Pensacola is certainly a huge military town and the VA loan is unquestionably the best mortgage option available today for VA home buyers. Below we will discuss some things new VA home buyers, and existing VA refinance borrowers will want to know.
First a little history lesson, the Florida VA Loan came about in 1944 through the original Servicemen’s Readjustment Act also known as the GI Bill of Rights. The GI Bill was signed into law by President Franklin D. Roosevelt and provided veterans with a federally guaranteed home with no down payment. With more than 25.5 Million veteran’s eligible or VA financing, the VA loan is still an excellent source for affordable 100% financing to eligible veterans.
HOW THE VA PROGRAM WORKS
VA will guarantee a maximum of 25% of a home loan amount up to $104,250, which limits the maximum loan amount to $417,000 in Pensacola FL. The purchase price, plus the funding fee (2.15% for first time users) may be financed for a combined 102% loan to value. VA guaranteed loans are made by approved lenders, such as banks, savings & loans, or mortgage companies to eligible veterans for the purchase of a home, which must be for their own personal occupancy. The guaranty means the lender is protected against loss if you default on the loan. The guaranty replaces the protection the lender normally receives by requiring a down payment and mortgage insurance allowing you to obtain favorable financing terms. Please note before applying, the VA program now requires a minimum 620 credit score, except for the VA Streamline IRRL Refinance seen below.
BENEFITS OF VA LOANS
- TRUE 100% FINANCING (No down payment required) for home purchases. All of Pensacola, Duval, Clay and St. Johns County is eligible
- Less restrictive credit guidelines than conventional financing
- First time homebuyers allowed
- No mortgage Insurance (this saves hundreds of dollars monthly)
- No income restrictions
- Veterans who served on active duty and have a discharge other than dishonorable after a minimum of 90 days of service during wartime or a minimum of 181 continuous days during peacetime.
- 2 years requirement if the veteran enlisted and began service after September 7, 1980 or was an officer and began service after October 16, 1981
- 6 year requirement for National guards and reservists with certain criteria and there are specific rules concerning the eligibility of surviving spouses
- If you are now on regular duty (not active duty for training), you are eligible after having served 181 days unless discharged or separated from a previous qualifying period of active duty
- If you are an un-remarried spouse of a veteran who died while in service or from a service connected disability
- If you are a spouse of a serviceperson missing in action or a prisoner of war
- A surviving spouse who remarries on or after attaining age 57, and on or after December 16, 2003, may be eligible for a VA purchase loan.
VA REFINANCE OPTIONS FOR ESCAMBIA COUNTY RESIDENTS –
The VA streamline refinance (also known as the VA IRRRL program -which stands for Interest Rate Reduction Refinance Loan) is a great option to refinance your Pensacola VA loan with minimum hassle or documentation. Some simple facts and guidelines about the VA streamline refinance program include:
- The VA streamline has less documentation than a full refinance and many times the lender can close faster with less documentation than a full refinance.
- Many mortgage lenders can do a VA streamline without requiring an appraisal. The VA does not require an appraisal, credit information, or underwriting, but your some VA approved lenders may require some or all of these items.
- It is possible to roll all closing costs and fees into the new loan so there are no out-of-pocket costs when doing a VA streamline.
- One rule for the VA streamline is that the new monthly payment must be lower than the previous loan’s monthly payment. One exception to this rule is when you are refinancing an adjustable rate mortgage or the new loan term is less than the old one.
- Your new interest rate must have a lower interest rate than the previous loan. An exception is if you are refinancing from an adjustable rate loan.
- With the VA streamline program, your new loan can be a fixed rate or adjustable rate loan.
- A VA funding fee is usually required.
- The VA streamline program allows for energy efficient improvements can be refinanced into the loan, up to $6000.
- Your monthly mortgage payment may increase if you finance energy efficient home improvements, finance your closing costs including the funding fees, finance points, or get a higher interest rate if you move to a fixed rate loan.
- The VA streamline program does not allow you to receive any cash out at the loan closing.
- You must be current on your existing VA mortgage and not have had more than one 30 day late mortgage payment within the past 12 months.
These are just the highlights of the VA streamline loan. Many people have questions about the VA streamline loan, so here are a few frequently asked questions. Please read even more VA refinance FAQ’s here.
What are the interest rates for VA loans (and the VA streamline program)?
Rates as of Fall 2014 are the lowest we have seen in a long time. Now may be a good time to let our VA loan specialist evaluate your loan and see if a refinance makes sense.
Does the VA IRRRL program require a credit check and or an appraisal?
The VA itself does not require an appraisal or credit check when doing a VA streamline, but that doesn’t mean that a lender will not require it. Requirements for appraisals and credit checks will vary by lender – which is just one more reason to shop around when thinking about getting a VA loan.
Do I have to use my current loan company to do a VA refinance?
Many people hear about the VA streamline program through their current lender and assume that the only way to go through the program is through their current lender. This is simply not true. With the VA streamline, you can use any VA approved lender – which is why it makes all the sense in the world to work with a LOCAL Florida based VA mortgage company.
Can I do a HARP refinance with my current VA Loan?
The HARP program is for people who are currently in a loan that is owned by Fannie Mae or Freddie Mac. In short, if you are in a VA loan you are not going to be eligible for HARP. Each mortgage type ( VA, FHA, USDA, Conventional) have their own corresponding refinance programs.
Can I get cash back or cash out on a VA Refi?
Not on the IRRRL program. The program is designed to help VA homeowners lower their rate with the least amount of paperwork possible and not to provide any cash back from the equity in their home. However, there is a cash out VA refinance option available to homeowners that have significant equity.
Have some lenders waived credit score requirement for a refi?
For some refinance programs, some lenders do not require a minimum credit score requirement for a refi. Each lender will have their own requirements for each program, so you will want to be sure you don’t assume that all lenders have waived the credit score requirements for all loan programs.
Does the IRRRL VA streamline require an appraisal?
Most will not require a new appraisal under the IRRRL program. If you are in a situation where you owe more than your house is worth, then you will want to do a VA IRRRL without appraisal, we can help!
Is there a no closing cost option?
Some lenders can offer a no costs or reduced costs option for the VA streamline. Contact us to learn more about the VA streamline no closing costs options here, what the difference is and which one is right for you. Please read more VA refinance FAQ’s here.
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