Veteran Affairs (VA) Mortgage Loan in Florida
A VA loan is a $0-down mortgage option made available by private Florida home loan lenders and partially backed, or guaranteed, by the Department of Veterans Affairs (VA). Members of the military (active or retired) can use a VA loan to buy a Florida home or refinance an existing home loan.
For the biggest majority of military mortgage borrowers, VA home loans represent the most potent lending program on the home financing market. In fact, VA $0-down payment mortgages have helped more than 24 million service members become homeowners since 1944. However, even the most experienced VA borrowers and real estate agents often don't realize all the program's distinctive benefits and opportunities.
How is a VA Home Loan different Than an FHA Mortgage?
VA loans are different than FHA mortgages with two big distinctions. First, VA loans are only available to members of the armed forces and their immediate families, while FHA loans are an option for all Americans buying a home. The second distinction is FHA loans can be secured with as little as 3.5% down. At the same time, VA mortgages are available with ZERO dollar down financing. The Department of Veterans Affairs (VA) does not fund loans but backs a part of each loan against default. is what gives private lenders the confidence to extend $0 down financing and generous rates and terms.
Nevertheless, from a mortgage process standpoint, VA loans work fairly comparable to most other conventional loans, but with a few provisos.
Standard VA Loan Process
Step 1. Pre-Qualify a Home Purchase
Call your Fidelity loan officer, or a real estate agent to get a feel for how much home you can afford based on your income, credit, entitlement, and other financial aspects. Prequalification is just a discussion and not a formal lending process.
Step 2. Formal Loan Pre-Approval
Loan pre-approval is a key step in the home buying process. In this stage, lenders will verify income and financial information to get a strong sense of your buying power. The end result is obtaining a preapproval letter. These letters demonstrate to real estate agents and home sellers you’re a solid buyer who is likely to close on a home without any problems.
Step 3. Make an Offer on a Home
When you and your family find the ideal VA loan approved home, it’s time to make an offer and agree on a contract with the seller. What is unique about this stage with a VA loan is that it doesn’t require a good faith binder (or earnest money) since the loans don’t demand a down-payment.
Step 4. Order a VA-Approved Property Appraisal
Once under agreement, your lender will order a VA appraisal of the home. The VA appraisal is not a home inspection, but a VA prerequisite to make certain the contract home price meets fair market value and can be underwritten.
Step 5. Welcome to Your New Home - Closing
You’ll sign all kinds of legal documents and red tape at your VA loan closing, but also the keys to your next home upon completion. Congratulations!
Florida VA Loans – What Every Military Homebuyer Needs to Know
While how the VA loan works can be tallied up in a series of phases, there are many things about VA home loans that prospective borrowers aren’t typically aware.
- VA loans are recyclable. You can use your full VA mortgage benefit as many times as you wish as long as you continue to fulfill mortgage obligations.
- VA mortgages can’t be used in every situation. If you're proposing to buy a small business or a fixer-upper, the VA loan is not available. It's primarily intended for homes in move-in condition, including single-family homes, condos, and the like.
- VA financing is only available for your main home. You can’t use your VA loan benefits to buy a rental property or a vacation home. VA loans are for primary residences, although a property that has multi units and you live in one of them may apply.
- VA loans are not underwritten by the government. The VA isn’t a mortgage lender. Instead, the VA provides a certain amount of insurance to lenders on each qualified mortgage loan. This makes it attractive for private lender to issue mortgages with a certain amount of default protection.
- VA mortgages are attainable notwithstanding foreclosure. Military members with a bankruptcy or foreclosure can still get a VA loan.
- VA financing doesn’t require mortgage insurance (PMI). The VA’s guaranty removes the need mortgage insurance for down payments below 20%.
- VA loans have a mortgage fee. Loans from the VA come a funding fee to assist in funding the program. It is typically adding into the loan amount or can be waived entirely for those with service-connected disabilities.
- The VA doesn’t impose limits on borrowing amount. With the VA loan benefit, qualified veterans can borrow as much as a lender is willing to give them, all without the need for a down payment. That’s a tremendous benefit!
- There is no prepayment penalty with a VA mortgage. You can make additional payments any time you wish, saving you a ton in interest as you reduce principal. You can even structure your payments to automatically deduct a little extra every month. For example, just adding an additional $100 per month can trim years and tens of thousands of dollars from the principal loan balance.