What is a VA Loan? Is it Right For You?
With Joint Base Lewis-McChord to the south, NAS Whidbey Island and NS Everett to the north, and the Bremerton Naval Shipyard, the Puget Sound Region and Western Washington are home to many military families. Because of the nature of military life, we often see clients moving into the region who are looking to buy their first home. Since 1944, VA home loan guarantees have been used to buy more than thirteen million homes. So, for some, a VA loan will help. But what exactly is a VA loan?
First, it’s important to realize that the Department of Veteran’s Affairs (commonly called the VA) does not make loans. The VA guarantees the loans, which minimizes risk to the lender and reduces their loss in the event of foreclosure.
A VA loan can be used to purchase an existing home (house, condo or townhouse) OR one under construction. A VA loan can also be used to refinance an existing mortgage.
The VA no longer establishes a maximum interest rate. Rather, VA loans are guaranteed at an interest rate agreed upon by the buyer and the lender. Discount points, which are used to buy down an interest rate, are negotiable and may be paid by the buyer or seller. However, this may cause more money to be due when the deal closes (or, at signing, as we say in real estate).
There are no restrictions on the number of times a person may obtain a VA home loan. There must be, however, enough entitlement to obtain the loan. You will also have to obtain a Certificate of Eligibility (COE) which you can apply for on the VA website.
Once the home has been sold and the loan paid off or assumed by a qualified borrower, the veteran can then apply for his/her full entitlement to be restored. You may also have multiple homes using VA loans simultaneously.
Finally, recently passed legislation increased the guaranteed and maximum loan to:
- Pierce County: $517,500
- Thurston County: $417,000
If you think you qualify for a VA loan, but aren’t sure, just ask us. We can help you decide which type of funding/financing is right for you.
