VA Loans

VA Loan Center

Explore the essentials of the VA loan process, lenders, rates, and fees, along with key points and useful tools for a comprehensive guidance and understanding.

Pre-Approval Process

Step #1: Connect with me for expert guidance through every step of the process.

Step #2: Learn about the VA loan process with my informative pointers below.

Step #3: Get pre-approved with Local Lenders who specialize in VA loans. Take advantage of a 13-day window to shop around. Note: local lenders, familiar with our market, often outshine national lenders.

Compare Lenders for the Best deal

When shopping for a mortgage loan, lenders must provide a loan estimate (also known as a loan quote) after you get pre-approved. This document outlines all costs associated with the loan, enabling you to compare loans side by side.

Under the Truth-in-Lending Act (TILA), lenders must disclose total financing costs and the loan’s annual percentage rate (APR). The APR, an annualized rate that includes interest and lender fees, simplifies loan comparisons across different pricing structures.

loan estimate

The loan estimate on the right was prepared by Jeff Morelli from Caliber Home Loans when I was shopping for a home in 2023. I asked Jeff if getting a Conventional Loan would be better to avoid paying the VA Funding Fee. The loan estimate is a side-by-side comparison of a VA Loan vs a Conventional Loan. Based on Jeff’s calculations, the monthly payment for VA is $461 less expensive because the interest rate is better and there is no monthly PMI. My Estimated Cash Required at Settlement is high because I chose to put a downpayment. Did I use a VA loan to buy my home in 2023? Yes, I did.

Once you have selected your lender, you will be working with him or her to go over numbers and a cost analysis like I did with Jeff.

Out of Pocket Costs

Although a VA loan allows military buyers to purchase a home with zero down, you still have to pay for:

• Earnest Money Deposit: This is the first deposit you make to secure the home. Typically, it amounts to around 3% of the purchase price and must be paid within 3 days of the seller accepting your offer. Later on, this deposit is subtracted from your final closing costs. For instance, if your total closing costs is $20,000 and you've already put down a deposit of $15,000, you'll only need to pay the difference, which is $5,000 =($20,000 - $15,000).

• Home Inspection: This is used to find out everything that could possibly be wrong with the home. The cost can be based on square footage of the home, and it’s paid directly to the inspector.

• Termite Inspection: This inspection is required by the VA. Termite inspections range from $50 to $100. Sellers are no longer required to pay for the termite inspection after the VA changed its rules on June 15, 2022.

• Closing Costs: These are fees you need to pay when you finalize the purchase of a home. These costs include loan origination fees, appraisal fees, title insurance, escrow fees, recording fees, prepaid expenses. Closing costs can vary depending on the county and the amount will be calculated by your lender. In a buyer's market, sellers often cover closing costs. However, in today's super seller's market, buyers should be prepared to pay these costs themselves.

VA Loan benefits

• $0 Down Payment: VA loans offer the advantage of no down payment, making home buying more accessible.

• 0% Mortgage Insurance: Unlike conventional loans, VA loans do not require mortgage insurance (PMI), saving borrowers money.

• Reusable: VA loans can be used multiple times, allowing veterans to make future home purchases without exhausting their benefits.

• Flexible Debt-to-Income Ratios: While lenders may impose their own limits, VA loans have more lenient debt-to-income ratio requirements.

• Low Interest Rates and Fees: VA loans have lower interest rates and fees compared to other loan types.

• Versatile Use: VA loans can be used for multiple home purchases.

• No Maximum Loan Limits: While the VA limits its guaranty, there is no specific maximum loan amount for VA loans.

• VA Funding Fee: The first-time use of a VA loan incurs a funding fee of 2.15%, which can be reduced to 0% for individuals with disabilities.

• Quick Closing Process: VA loans close within 30 days, facilitating a smoother home buying process.

• Seller Assistance: Sellers can contribute towards closing costs and debt repayment, easing the financial burden on buyers.

• Renovation Options: VA renovation loans are available, allowing borrowers to finance home improvements.

• Lender Guaranty: The VA guaranties the loan, reducing the lender's risk and making it easier for veterans to qualify.

• Payment Assistance: The VA offers support to borrowers who struggle with payments, providing options to help them stay on track.

Selecting a VA Lender

You have a 13-day window to compare lenders, submit pre-approval applications and it only counts as a one (1) hard credit inquiry. This will ensure that you secure the best rates, service, and choose the best lender for you. I always recommend my clients to talk to at least three (3) lenders. As a first-time home buyer, I got pre-approved by three lenders and chose to one who communicated promptly.

Local Lenders

Understanding the distinction between local and national lenders is crucial. Despite the lender you choose, loans are often sold, so it's essential not to be swayed by brand loyalty. When comparing lenders, focus on fee structures, not just interest rates. National lenders typically charge loan origination points (% of the loan), usually around 1%. In contrast, local lenders charge a flat fee ranging from 0 to $1000… often thousands less than national lenders.

Incentives: National lenders often entice clients with incentives to use their preferred loan officer or preferred realtor. While national lenders may offer lower upfront interest rates, be wary of hidden buy-down rates or forced buy-down rates in the fine print. Most national and local lenders are willing to match each other's rates, but the key differences lie in the fees or points being charged. Requesting a loan estimate and comparing it with a local lender's can help clarify these differences. It's also important to note that these realtors are assigned to you; rather than chosen by you. These assigned agents are not always veterans or properly trained to handle and negotiate the complexities of VA deals.

30-Year Fixed Rate Veterans Affairs Mortgage Index

The chart below shows the interest rates for VA Loans from 2023 to the current date. Why is this important? Mortgage interest rates can change daily due to various factors, including economic indicators and market conditions. Once we have a purchase offer that is accepted and signed by the Seller, I will send a copy of the signed contract to your lender so your interest rate can be locked. This means that the lender will guarantee the agreed-upon rate until the closing of the sale, protecting you from potential rate increases during that time.

Local Pre-Approved Lenders

Here are the top local VA lenders based on experience, number of VA loans, lower fee structures, capability of closing on time, help with negotiations, understanding the market, and overall clients satisfaction. These lenders are experienced working with military buyers in Northern Virginia, Maryland and Washington DC. Please note that I do not receive any form of financial incentive for recommending these lenders. I have collaborated with them on numerous transactions, and they consistently demonstrate exceptional expertise in their field.

Schedule a Consultation

Please, complete the form below so we can start working together. You can also contact me by text at +1-571-230-9686 or email at Diana@BestHomesByDiana.com If you are stationed abroad, we can arrange a video appointment via Zoom.