VOLUME 1 / ISSUE 1 WINTER 2024
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VA HOME LOANS: TIPS, TRICKS, AND WHAT TO WATCH OUT FOR
BY SARAH AMYOT
One well-deserved benefit for active military service members, veterans, and certain family members is the opportunity to use a VA loan for home purchasing. A VA loan is a government-backed mortgage option issued by a lender, such as a credit union, bank, or mortgage company. Because the VA guarantees (or stand behinds) a portion of the loan in the event of a foreclosure, lenders are more comfortable with offering VA loans because they’re less risky. This means potentially having no down payment, competitive terms, and interest rates, no need for private mortgage insurance (PMI), and fewer closing costs. Having recently assisted my parents with purchasing their new home with a VA loan, here are some tips, tricks, and what to watch out for: A Certificate of Eligibility (COE) is required , but don’t let that stop you from beginning your search for a new home. The COE confirms that you are eligible for a VA loan. The easiest way to get this is by asking your lender – most lenders can obtain it quickly. Otherwise, you can request one from your eBenefits portal. Good news is that once you have the COE, it never expires. Although you will most likely not have to pay a down payment, don’t forget about the closing costs – which means there will be expenses at settlement. There’s a misconception that because it’s a VA loan, there are no costs or associated fees. Some fees include a VA funding fee, loan origination fees, application fees, and more, so make sure you have money on hand to pay at closing.
Shop around for a lender. Interest rates and terms vary from lender to lender, even for a VA loan – be sure to ask for a loan estimate, which will tell you important details about the loan.
An appraisal is mandatory (and comes with a fee!). The lender will request a VA-approved appraiser to look at the home to determine if the home meets the VA’s minimum property requirements. This ensures that the home you want to purchase is worth the investment you (and the VA!) are making. An appraisal is different from a home inspection, which is not mandatory, but highly recommended. Don’t get scammed! Veterans and their spouses are unfortunately a target for VA home loan scams. Be vigilant of fraudulent calls and mailers from companies who claim to be affiliated with the VA, the government, or your loan service provider. These folks often try to get you to refinance your home, modify your loan, or pay your loan using a money order or electronic transfer. They will often us a s care tactic (like saying your home is in foreclosure) and force you to make hasty decisions. Never give out personal information to someone who contacts you out of the blue. You cannot rely on caller ID, because scammers can mask their phone numbers.
Check out the VA Home Loan Buyer’s Guide for more information about VA loans.
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