Low VA mortgage rates and common-sense underwriting have helped boost VA lending to an 18-year high. For today's military borrower, for purchase and for refinance, the VA loan is often the most sound, more cost-effective mortgage program available.
What is a VA Loan?The VA loan is a mortgage program for veterans of the U.S. military. Structurally, a VA loan resembles most other loan type -- as a homeowner, you borrow some amount from the bank, then make monthly payments until the borrowed amount is paid-in-full.
However, the VA loan bears distinct advantages over its conventional and FHA mortgage cousins.
The first advantage of VA loans is that they require no money down on a purchase. Home buyers using a VA loan can finance up to 100% of a home's purchase price so long as the loan size is within the VA loan limits for the given area.
VA loan limits are typically $417,000 but may range up to $729,750 in "high-cost" areas such as northern Virginia and Potomac, Maryland.
A second advantage of VA loans is that monthly mortgage insurance is never required. No matter how large or small your downpayment, you do not pay monthly mortgage insurance with a VA loan. This is in stark contrast to the FHA, for example, which has raised its mortgage insurance requirements four times in four years.
The VA offers a better long-term "deal" to its homeowners as compared to the FHA.
And, lastly, the VA's loan approval process is among the most flexible of today's common loan types. Underwriters are given discretion to approve VA home loans which may otherwise fall outside of traditional mortgage guidelines.
To be granted VA loan entitlement, veterans must have served at least 181 days during peacetime; 90 days during war time; or, 6 years in the Reserves or National Guard. Spouses of service members killed in the line of duty are often VA-eligible, too.
VA Loans : Lower Downpayments, Simpler UnderwritingAs compared to last year, VA loan volume rose 51%, according to data from the Department of Veterans Affairs. The popular Interest Rate Reduction Refinance Loan (IRRRL) program was the most common VA loan program -- proof of the veritable VA Refi Boom.
The IRRRL mortgage is the VA's version of the "streamline refinance". In general, no credit verification is required; no home appraisal is required; and, no underwriting is required.
With few exceptions, the main qualification standard of the VA IRRRL is that the new mortgage rate must be lower than the current one. In today's low mortgage rate environment, lowering your VA mortgage rate has been a breeze.
VA mortgage rates have been below 4 percent for most of 2012.
To get a sense of how mortgage rates are influencing VA refinances nationwide, consider that more than a dozen states saw VA loan volume increase by at least 60 percent in the most recent fiscal year -- and they weren't all military-heavyweight states, either.
- Utah : 98% increase in VA loan volume
- Hawaii : 89% increase in VA loan volume
- Rhode Island : 76% increase in VA loan volume
- New Hampshire : 73% increase in VA loan volume
- Delaware : 70% increase in VA loan volume
- Virginia : 69% increase in VA loan volume
- Nebraska : 67% increase in VA loan volume
- California : 65% increase in VA loan volume
- Massachusetts : 65% increase in VA loan volume
Get Approved For A VA MortgageFor today's veteran and active military members, the VA Streamline Refinance program remains a simple way to refinance. And, for buyers, the VA loan program is absolutely worth a look. VA loans permit 100% financing and monthly mortgage insurance is never required.
With mortgage rates low and underwriting loose, gaining a VA approval has never been more simple. Get started with a rate quote.