What are VA Home Loans?
Are you a veteran? Colorado Lenders can provide you with the necessary information needed to obtain a VA home loan. VA loans are insured by the Department of Veteran affairs to reward veterans with their service by offering better-than-average terms on their home mortgage.
How am I determined to be eligible for a VA Home Loan?
To determine a buyer’s eligibility for Veteran status, a Certificate of Eligibility (COE) must be obtained. Generally, those who qualify for VA loan status have completed one of the following:
- Have served for 181 days active duty or more during peacetime.
- Have served for 90 days active duty or more during wartime.
- Six years or more in the National Guard.
- Surviving spouses may be eligible for a VA loan.
You can also visit the Veteran Affairs website to obtain more information regarding eligibility.
How do I calculate my VA entitlement remaining and funding fees?
To define entitlement would be to state the loan amount given to a homebuyer by the government, and it is that amount which is free from subjugation to down payment. Going on, difference from the home loan amount is then subject to 25% down payment, considered to be a funding fee.
So, we can calculate out someone’s entitlement by taking the loan limit for the county (in Colorado they are capped at $417,000) and divide it by 4.
You then take the quotient from the last answer and subtract it by the current entitlement used (if current entitlement has not been used, us $0).
Taking the difference of the previous equation, you multiply it by 4, and that is the maximum loan amount you can get without a down payment.
So given our example in red, we can see that this person (assuming they used $50,000 of entitlement already) can get a $217,000 home loan with no money down, or they can obtain a $250,000 home loan and pay $8,250 down in funding fees.
As we can see from the previous example, because VA loans have such high funding fees after the entitlement that that FHA loans do not, but as compared to the FHA loans, VA loans do not require monthly mortgage insurance. You can see a VA funding fee table below to help you all out.
Is a cash-out VA refinance right for you?
A cash-out VA refinance is a special loan and very useful for homeowners. Colorado Lenders partners with certain banks who are able to offer the 100% VA cash-out refinances.
Here is why it is so special:
- A homebuyer may refinance their existing first and second loans into one loan with a much more favorable rate, and no monthly mortgage insurance. This can often save a substantial amount of money per month and pay the principal down on the loan quicker.
- Take cash-out. Currently, no other non-private loan allows a homebuyer to take 100% of the cash-out of the home with such a favorable rate. We always recommend sound planning and caution when doing so but the benefits can be worthwhile if done correctly.
- Pay off credit cards and/or other debt that has a much higher interest rate. This is a good long-term solution to getting rid of debt. Because of the funding fee, borrowers must understand that it is only worthwhile after some years down the road.
Colorado VA Home Loans
Homeownership is a great way to build wealth and VA knows this. Therefore, over the years they have thoughtfully, and successfully, created the VA home loan program to benefit Veterans who have served our country.
Colorado Lenders is always ready to help answer questions and provide guidance along the way.