What we commonly refer to as the G.I. Bill was originally named the Serviceman’s Readjustment Act of 1944. Congress introduced this massive program as a way to assist returning soldiers in WWII to more easily assimilate back into civilian life. There were special funds available to start a new business or a farm along with other programs. Education and medical benefits were an important part of the Act. But perhaps the most popular is the VA home loan program. For those who qualify for this home loan and fit the special criteria there is no better mortgage program in today’s marketplace for those wanting to buy and finance a home in Phoenix, Arizona or anywhere in Maricopa County.
The VA home loan is only eligible for veterans of the armed forces, those with at least 181 days of current active duty, individuals with at least six years of service with the National Guard or Armed Forces Reserves and un remarried surviving spouses of those who have died while in service or a service-related injury. When the veteran first applies for a VA home loan there is an area where the borrower checks the loan will be a VA loan. However, the only documentation the VA will accept as proving VA home loan eligibility is by reviewing a copy of the Certificate of Eligibility issued by the Department of Veterans Affairs. The veterans can make this request at the VA or the approved VA lender can make the request on behalf of the borrower. When the lender makes the request the certificate can be retrieved electronically in a matter of moments.
Beyond the fact there is no down payment, 100% financing up to $424,100 in Maricopa County, the veteran is also restricted from paying certain closing costs as well. A lender can provide a list of potential closing costs but the veteran can only pay for an appraisal, credit report, title, origination fees, recording and a property survey. Every other cost must be paid for by the lender or the seller. Lenders can also adjust an interest rate on the loan and then provide a lender credit towards other closing costs as needed.
Another attractive feature of the VA home loan program is the government guarantee. This guarantee is financed by what is referred to as the Funding Fee and is calculated as a percentage of the sales price of the home. Should the loan ever go into default and the lender approved the original loan using proper VA protocol, the lender is compensated at 25% of the loss on the loan. The funding fee amount can vary but for someone buying and financing their first home in Phoenix or Phoenix County the fee is 2.15% of the sales price. If the sales price is $250,000 the funding fee is 2.15% of that amount, or $5,375. The funding fee however does not have to be paid for out of pocket and is rolled into the loan amount. Further, there is no additional monthly mortgage insurance payment as with other low down payment mortgage programs. Interest rates on VA homes are some of the most competitive around.
The VA loan can be used to finance a single family home, condo and townhome as long as the borrowers as a primary residence – VA cannot be used to finance an investment property or a vacation home.
VA also offers a verity of streamline IRRRL refinance and cash out refinance options. Eligible home owners can cash out up to 100% loan to value with the VA cash out refinance option.
When you consider there is no down payment, no monthly mortgage insurance, low fix rates and restricted closing costs, it’s easy to see why the VA home loan is the ideal option to buy a home in Phoenix, Arizona for those seeking a home loan requiring as little cash to close as possible. Questions? Please call us at ph: 800-871-2636