What you need to know: A Q&A with a VA Loan expert

Phil Jawny is a VA mortgage lending expert with 20+ years of experience supporting families on the path to home ownership.

We sat down with him to chat about some common questions about VA loans.

What is the difference between a VA loan and typical loan?

A VA loan is a loan with 1005 financing and no mortgage insurance is required, and less stringent credit qualifications, which helps to make it easier for applicants to qualify for a VA loan versus a traditional loan. VA loans also have lower monthly payments, require no money out of pocket, no down payment and offer lower rates. VA loans increase the affordability of buying a home for the buyer.

Who qualifies?

There are many common misconceptions about who can qualify for a VA loan. Veterans, active service members, reservists, National Guard members, Public Health Service officers and surviving spouses may be eligible for home loan benefits. There’s no limit to the amount you can borrow with a VA loan and there is no minimum credit score to apply for one.

Are there costs or fees associated with a VA loan?

Yes, VA loans have a funding fee that can be rolled into the mortgage or paid at closing. If you are a disabled veteran or have any disability on your certification of eligibility, the VA will waive the funding fee. VA loans are actually less expensive than traditional loans because the fees are much lower. There is also no down payment required for a VA loan and it allows qualified borrowers to purchase a home without the need for mortgage insurance.

Does the federal government then service my loan? Or is a bank? How does the VA play a role?

The VA guarantees the lender that the money will be paid. The lender services the loan, which gives the lender more flexibility to approve and provide these loans. In other words, the VA provides a guarantee to the private lenders that the loan will be repaid in the event that the borrower fails to repay it themselves.

Can I use a VA loan to refinance my home?

Yes! There are great benefits to getting a VA loan including lower costs and lower interest rates. You can take out equity to pay loans, credit cards and you can even refinance with cash out to pay other debts. This also increases your tax benefits because the interest is tax deductible. With Interest Rate Reduction Refinance Loans (IRRRS), you can actually refinance with no application required, making investing in real estate easier. Buying real estate is a good way to build wealth that is more insulated from market trends, even in a recession.

Can you have more than one VA loan at a time?

You can absolutely have more than one VA loan at a time. With this in mind, you can rent your current property and buy another home with no cash down in order to start building wealth through property ownership. Real estate is a great investment.

 

The information contained herein (including but not limited to any description of TowneBank Mortgage, its affiliates and its lending programs and products, eligibility criteria, interest rates, fees and all other loan terms) is subject to change without notice. This is not a commitment to lend. NMLS #512138

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