Congress Helps Vets Buying a House
October 22, 2012
va loan benefitsVeterans buying a house in NC have some new advantages thanks to the VA Bills passed by Congress before their recess. Included in the bill are provisions for disabled Vets, Parents (both married and single), and Surviving Military Spouses. The Military benefits to service members includes a 100% mortgage loan.
VA Closing Cost Basics, Changes
Unfortunately, Vets who have been out of the service forget to mention their service to the loan officer. This is a HUGE mistake! If you qualify for a VA Loan – ALWAYS tell the loan officer! VA Loans are 100%, no money down loans with the cheapest form of Mortgage Insurance. If you’ve already used your VA Loan Benefits, you can have your Eligibility re-instated to purchase another home.
Because PMI rates are where they are these days – a VA Loan is probably the CHEAPEST loan available! (Cheaper than USDA or FHA). Looking to borrow more than $417,00? If you make a small down payment, you may find that a VA Loan is cheaper than a Conventional loan
In today’s market, Sellers are generally paying for closing costs. Because of this, a Veteran often comes to closing with VERY few dollars out of pocket to pay for loan related expenses.
The one expense a Vet may be faced with is the VA Guaranteed Funding Fee (which we refer to as VA PMI), a mandatory charge the Department of Veterans Affairs applies to every loan. This fee, a percentage of the loan amount, helps pay for the loan program and keeps it self-funding. The VA waives the fee for borrowers with service-connected disabilities.
But congestion and long waits within the VA medical system have clouded the benefit. Military members preparing to leave the service may undergo a pre-discharge disability exam but wait months before receiving an official diagnosis and disability rating. In the mean time, those who use their VA loan entitlement to purchase a home are assessed the VA Funding Fee, which is usually financed into the loan.
va loans for disabled vetsCongress stepped up, recognized that this delay is causing issues, and will exempt from the funding fee any service member who is found eligible to receive compensation during a pre-discharge exam.
Parents Get New Consideration
In some very limited situations a Vet may be able to use this benefit for a Second Home. However, the VA loans benefits are designed with occupancy requirements meant to ensure these no-down payment, government-backed loans are used for primary residences.
Spouses are allowed to fulfill this requirement for a service member who is deployed or who can’t otherwise reside in the home within 90 days or so, after closing.
But that clearly isn’t an option for single parents and military couples who are BOTH serving elsewhere.
Congress recognized this issue, and indicated that single parents and married military couples can have a dependent child fulfill the occupancy requirement.
Surviving Spouses of Disabled Vets
The VA provides access to the loan guaranty program for spouses of veterans who died in the line of duty or of a service-connected disability.
The sad truth is that today, many Vets are living with permanent service related disabilities after discharge. Congress recognized that these very special Vets deserve more. With this recent change, VA loan eligibility will now extend to spouses of veterans who lived at least the last decade of their lives with a permanent service-connected disability, regardless of whether it led to their death.