Why you should weigh your options

Like any considerable investment, purchasing a home will be a long-term commitment. Therefore, homebuyers’ shop for all the potential offers in the market to fit their financial situation. Understandably, veterans want to make the most of their benefits as service members through federal-backed opportunities. However, these perks won’t always be the best choice for all situations.

When You Should Not Use VA Loans

Although you can use a VA loan as many times as possible, there will be an additional 3.6% funding fee for your second purchase. This can be a disadvantage if you’re eligible for better loan options in the market. Additionally, you can’t use VA loans for investment properties. You can only use VA loans if you plan to use the property as a primary living space. Another drawback of the VA loan is that there’s a general cap on how much money you can borrow. This value changes annually and will vary, depending on where you live in the US. For most areas, the maximum amount currently is at $765,600 in 2020.

When you should use VA loans

VA loans are the federal government’s benefit to service members to purchase affordable housing. However, there are situations when you’re better off with conventional mortgages in the market. For example, VA loans are beneficial if you cannot afford to pay a down payment. Unlike traditional mortgage loans, you won’t have to pay a minimum of 3% to buy your home.

Most lenders will require you to get private mortgage insurance (PMI) if you can’t handle paying less than 20% for your down payment. This goes separate on your current loans and can add hundreds of dollars on top of your monthly payments. Through VA loans, you won’t have to worry about PMI requirements, regardless of your capacity to pay your down payment.

How to apply for a VA loan

You must go through several extra procedures to ensure your eligibility for a VA loan. First, you must meet the eligibility criteria, depending on where you fall under the military and era of service. Next, you must obtain a certificate of eligibility (COE) to prove that you qualify for a VA loan. You can get this by filling up forms through your account in the eBenefits web portal. However, you’ll need to register yourself in DEERS before you open an account. Finally, you can present your COE to your chosen lender. Different lenders will still have varying rates and loan terms, which is why you must research which ones give the best VA loans for your purposes.

Your VA Loan Lender on O’ahu

It’s necessary to go through every viable option, especially when you’re making a significant purchase. For this reason, it’s beneficial to partner up with mortgage brokers who can go the extra mile in finding great deals for your buying purposes.

HI Velocity Mortgage is a mortgage company on O'ahu that can broaden your options on the market. We can find the best loans available to suit your buying needs. Schedule a free consultation with us today by contacting (808) 727-1055.