Can I Refinance A Va Loan
The VA offers two refinance options, available exclusively to VA borrowers.
The VA Streamline Refinance also sometimes known as a VA Interest Rate Reduction Refinance loan allows qualifying military borrowers to drop their interest rate quickly and affordably, often without an appraisal or income/asset verification.
The VA cash-out refinance allows qualifying military borrowers to convert their home equity into cash. Sometimes borrowers can access as much as 100% of the equity in their current home.
How Long After You Buy A Home Can You Sell It
If you bought a house with cash, you can sell it any time you want, though there will be tax implications. However, if you financed the house, your lender may have clauses in your mortgage note that require you to live in the house for a certain time before you sell it or rent it out. This can be expressed in your mortgage documents as an owner-occupancy requirement clause. You may also be on the hook for a prepayment penaltyif you sell the house too soon after taking out a mortgage to buy it.
Can I Use My Va Loan To Buy A House For My Daughter
No. The children of veterans, deceased veterans and service members are not eligible for VA loans. In addition, preexisting VA loans may not be transferred to the children of veterans, deceased veterans or service members. This applies to dependent and nondependent children.
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So How Many Times Can You Use A Va Loan
Eligible veterans and military service members are able to use there VA home loan benefits over and over again. There is no limit on how many times you can use your VA loan benefit. This is a benefit you have earned for serving our country, and once you have earned it, it is a life long benefit you can use over and over again. You can restore your entitlement as often as you need as long as you sell the previous property and pay the prior loan in full. In some cases you can even keep your first home and buy a second primary residence if you are required to move for a job or a PCS situation. Everyones circumstances are unique, so give one of our VA home loan specialists a call at 855-956-4040 to find out more. We are here to serve you!
Is A Noclosing Cost Refinance A Good Idea
You might ask: Couldnt I just get a no-closing cost refinance?
This is a good question, but its important to understand how a noclosing cost mortgage works.
The benefit of this strategy is that you avoid paying closing costs out of pocket. The downside is that a noclosing cost refinance typically involves paying a higher mortgage rate to compensate for the lender absorbing these fees.
Or, the lender might simply roll the closing costs into your new mortgage, thus increasing your total mortgage balance.
So although a noclosing cost refinance lets you keep money in the bank, youll pay the price in other ways.
Still, it could be a good idea but only when a higher rate still results in monthly savings, or when rolling closing costs into the balance doesnt cut too much into your home equity.
And if you think youll sell in the near future, make sure you understand the refinance agreement before moving forward
Look for an owneroccupancy clause, prepayment penalties, and count the upfront cost to determine whether refinancing makes financial sense.
You should only refinance if youll see a real financial benefit not just a lower interest rate.
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Can A Loan Modification Hurt Your Credit
A loan modification can hurt your credit score, but how much it affects your credit depends upon how your lender modified your loan, and what the lender reported to the credit agencies. If the lender lowered the principal balance by initiating a second loan, that amount may appear on your credit as âcharged offâ which can damage your credit. However, most loan modifications only appear on your credit report in the form of the late payments that you missed before getting the loan modification. Either way, both options are preferable to a foreclosure which stays on your credit for seven years.
Va Loan Closing Costs For Sellers
It is a very common misconception that sellers should avoid VA buyers since they need to pay their closing costs. This is a myth. While seller concessions allow for the option to pay for some closing costs in order to negotiate the deal or opt for the ability to pay for closing costs rather than lower the overall price of the home, sellers are not required to pay any closing fees. It is true that VA loans dont require borrowers to pay for closing tax fees, application costs, etc., but the seller does not need to cover that. Often, these are included in the mortgage lenders fees, which are covered by the buyer. Ultimately, as a seller, you have the same concession options for any type of program and do not need to be concerned about paying for VA closing costs because you simply do not have to.
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Lowered Perception Among Potential Buyers
You also have to think about how it looks that youre selling your house so soon after buying it. This is why its not always a good idea to sell even if your local market has seen an impressive increase in demand. Your homes price may not go up all that much if buyers assume youre selling because something is wrong with it.
This is why you shouldnt risk trying to sell your own house if you havent owned it for long. While many experts would say that For Sale By Owner is never a good idea, this is especially true when youll need help marketing your home so buyers dont worry about the quick turnaround time.
Simultaneous Closings With Your Va Loan
Have you ever purchased a home before and used your VA home loan benefit? Has it been a while or maybe it was just a couple of years ago. If that was indeed your first purchase, you can certainly remember that there was a lot involved, right? Did it seem to you that the VA lender asked for more than they probably needed? Did they ask some relatively harmless questions that didn’t make sense why they were asking for a particular document or provide an explanation?
Getting a VA loan approved, in fact any home loan for that matter, means providing a lot more than just your loan application. Things such as tax returns, bank and investment statements and a new insurance policy was asked for and provided. It was sort of hectic at times, wasn’t it?
Anyone buying a home with their VA Home Loan for the first time can sometimes be a little surprised at the amount of information that needs to be gathered before a VA loan can be approved. In fact, once your file is documented, the printed version could be two or three inches thick!
But what if you’re involved in a simultaneous closing? What then?
The Simultaneous Close
When owners of a property sell, they typically buy another home in which to live, right? And the people that buy that seller’s home want the owners to move out when they’re supposed to, typically the day the loan papers are ultimately signed.
Vetting Your Buyers
Preparing Both Sides
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If I Already Used My Entitlement How Can I Use It Again
To fully restore entitlement, a VA borrower must sell the home and pay off the loan in full. But there is one exception: If the mortgage is paid off, it is possible to use a one-time restoration benefit and keep the home for use as a rental property or vacation home.
One of the biggest benefits of the VA home loan program is that it lasts a lifetime. Even if a Veteran has used most or all of their entitlement to purchase a home, that entitlement can be fully restored once the loan is repaid in full. Just submit an application requesting your entitlement be restored.
To sum it up, there are two ways to restore your VA entitlement:
Our LenderVeterans United Home Loans is a VA approved lender Mortgage Research Center, LLC NMLS #1907 . Not affiliated with the Dept. of Veterans Affairs or any government agency. Not available in NV. 1400 Veterans United Dr., Columbia, MO 65203. Equal Housing Lender
Can You Have Two Va Loans In The Same City
You cannot obtain two VA loans in the same city at the same time. The issue lies in the primary residency requirement attached to VA loans. When you take out a VA loan, youll need to live in the property. With that, it would be difficult or impossible to take out two VA loans in the same city without repaying the initial loan.
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How Does A Va Home Loan Affect The Seller
As a veteran or current military member, youre entitled to certain benefits as a result of your service. A VA home loan is one of them. These loans let you buy a house without using a down payment and typically offer lower interest rates and better terms than traditional mortgages. However, if youre planning on using a VA home loan in Colorado Springs to buy your dream home, you need to know how it will impact the seller.
Can A Va Loan Be Used For A Second Va Loan
Yes, you can use the VA loan benefit to buy a home more than one time. However, veterans seeking a second VA loan will need to consider the various stipulations. The VA loan program was designed to help military borrowers get into primary residences, not to purchase vacation homes or investment properties.
One way to buy another home with a VA loan is to prove a net tangible benefit. These reasons may include moving closer to a new duty station or downsizing your mortgage payment due to a financial change.
Additionally, you may use a reduced entitlement to acquire a second VA loan. Or apply for a restoration of your entitlement to take out a second VA loan.
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Va Loan For A Second Home: How It Works
Editorial Note: The content of this article is based on the authors opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.
Sometimes moving is a fact of life for members of the military. In that case, you might be able to use a VA loan for a second home with the tier 2 entitlement or bonus entitlement benefits in order to take advantage of the benefits that the Department of Veterans Affairs offers popular benefits to enable military personnel and veterans, including the ability to buy without a down payment and more flexible income and debt requirements.
Va Mortgage Entitlement Explained
VA loan entitlement is the amount of money the VA will guarantee on a home loan. This helps determine how much youre allowed to borrow before needing a down payment. Entitlement protection encourages lenders to offer VA loans with lower rates, no down payment and easier guidelines to qualify.
The entitlement amount is usually either $36,000 or 25 percent of the loan amount up to the conforming loan limit currently, $510,400 is the limit in most areas of the country, but its higher in some markets.
Eligible borrowers in most parts of the country have a primary entitlement of $36,000 and additional secondary entitlement of $91,600. That adds up to $127,600, says Sam Atapour, branch manager at Embrace Home Loans in Ashburn, Virginia.
When buying a home with a VA loan, some or all of this entitlement is used up in the mortgage. For instance, with a $200,000 loan, $50,000 of the entitlement is used. Say you want to carry two VA loans. The math is simple: $127,600 minus $50,000 of entitlement used on VA loan #1 equals up to $77,600 in entitlement that can be used for VA loan #2.
If you currently have a VA home loan, you may request a COE Certificate of Eligibility to learn if youre eligible to buy your next home with a VA home loan.
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You Cant Refinance While Your Home Is On The Market
Keep in mind, you cannot refinance your loan when you are actively trying to sell it. Some lenders require the home off the market for several months before they will refinance. This is to protect the lender. They want to do whatever they can to prevent taking on new loans that get paid off right away. Lenders make their money on the interest they charge. If you pay the loan off right away, the lender does not make anything on your loan.
How Does Using A Va Loan Impact The Seller
With so much of the population throughout Colorado Springs, Falcon, Peyton, Monument, Security-Widefield, and other areas consisting of military personnel ranging from Peterson Air Force Base to Fort Carson to Schriever Air Force Base and more, it is important to know how a potential VA home loan buyer will impact you as a seller. While VA home loans were designed to help brave military personnel, they were not designed to cover sellers. However, after almost eight decades after the original GI bill was formed, many concerns have been resolved so that VA loans may benefit both parties.
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Subtract Closing Costs From Projected Sale Price
Closing costs can eat a lot of your profits, especially when youre buying and reselling in a short period of time. Make sure you factor closing costs into the equation.
Buyer closing costs
Buyer closing costs usually total 2% to 5% of the purchase price of your home. You can find the total amount you paid to purchase your home by looking at your settlement statement. Note that its common for buyers to ask for sellers to cover closing costs as part of the negotiations, so its possible you didnt pay much when you purchased your home.
Seller closing costs
Closing costs for sellers can total 8% to 10% of the sale price. The bulk of this cost goes to commissions. The seller typically pays both their agents commission and at least a portion of the buyers agents commission, which together total 5% to 6% of the sale price. On a $200,000 home, that means your closing costs can range from $16,000 to $20,000.
The most common charges include:
- Agent commissions
- Attorneys fees
Do You Want To Pay Closing Costs
When you bought the home, you probably paid between 2% and 5% of the loan amount in closing costs. On top of that, you paid your down payment. If you refinance, you wont need to make a down payment, but youll likely pay closing costs. Do you want to cough up a few thousand dollars again, so soon after buying the home?
You may be able to get a no-closing-cost refinance, but that means youll take a higher interest rate. Lenders usually charge 0.5% more in an interest rate in order to take care of your closing costs. Usually, closing costs are like prepaid interest to the lender. Any fees you pay directly to the lender is money the lender makes up front. This way they can charge you a slightly lower interest rate for the life of the loan. If you dont pay those closing costs upfront, the lender takes a big risk and needs to charge the higher interest rate to make up the difference.
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How To Apply For A Va Loan
Obtain a certificate of eligibility: A VA certificate of eligibility shows a mortgage lender that your military service meets the requirements for a VA loan. A VA-approved lender can obtain the document for you, which is needed before the loan can close. You can also request the certificate from the VA online or by mail.
Find the right lender: Some VA lenders are tailored for borrowers with weaker credit, while others offer a larger variety of VA loan types. Get preapproved with more than one VA mortgage lender to compare their qualification requirements and mortgage rates.
Find a home: To purchase a primary residence with a VA loan, it must also meet minimum property requirements to ensure its clean, safe and structurally sound. Once you put in an offer on the house you want, the mortgage lender will evaluate your finances and order a VA appraisal to make sure the home meets all the requirements. Once your application and appraisal are approved, the final steps are to close on the loan and move into the house.
About the authors:Barbara Marquand writes about mortgages, homebuying and homeownership.Read more
Linda Bell is a mortgage writer and spokesperson for NerdWallet. She has won multiple awards, including one for a series on minority discrimination in the housing industry.Read more