VA loan is a mortgage loan available to veterans and their spouses through the Department of Veterans Affairs in the United States. It is provided by the government and offers the flexibility of payment, with lower interest rates than normal bank loans.
Who is eligible for VA loans?
In California, a few factors are considered to determine the eligibility of a VA mortgage loan. The VA home loan requirements are:
- You have served at least 181 active service days during peacetime.
- At least 90 consecutive days of active service during a time of war.
- More than six years of service in Reserves or the National Guard.
- If you are the spouse to a deceased service member who died in the line of duty or from a disability-related to their service time.
If you pass the eligibility test, you need to have a Certificate of Eligibility which you present as verification to your mortgage lender. Some lenders have an Automated Certificate of Eligibility (ACE) system, which determines your eligibility using an internet-based application and provides you a certificate in a few seconds.
How to apply for a VA loan
Find a VA-approved lender
Get a COE (certificate of eligibility)
Pre-qualify for your loan amount
Look for a house and sign a purchase agreement
The lender processes your application and orders a VA appraisal
Close on your loan and move into your new home
VA cash-out home loan refinance
A VA-backed cash-out refinance loan allows you to replace your current loan with a new one but on different terms. You can use your home mortgage to get cash higher than the amount you owe. To be eligible, you have to qualify for a VA-backed home loan COE, meet the VA’s and your lenders income and credit standards, and must live in the home you want to refinance with the loan.
You could use a cash-out refinance loan if you need cash off your home equity to pay off debt, make home improvements, pay school fees, or for other needs. You can also refinance a non-VA loan into a VA-backed loan.
How to apply for a loan refinance
1.Find a VA-approved lender
Research on lenders approved by the Department of Veteran Affairs to finance home loans. These are the only lenders who can finance VA mortgages. Double-check that your potential lender has extensive knowledge of the VA loan lending process. Using a VA loan specialist will make the process much easier and more hastier for you. The lender could be a mortgage company, private bank, or credit union.
2.Get a COE (certificate of eligibility)
The COE is proof that you meet the minimum eligibility requirements for a VA home loan. It also provides the lender with information on how much entitlement you should receive. To get a COE, you need to provide your veteran service details. An experienced lender should be able to get the certificate online for you. If you are a surviving spouse to a veteran, you must get it by mail.
3.Provide your lender with your financial information
To complete your loan eligibility proof, you need to provide your lender with the following documents:
- Copies of your most recent paycheck stubs from the last 30 days.
- A copy of your federal income tax returns for the past 2 years.
- Wage and tax statement forms for the past 2 years.
- Any other requirement that your lender may ask for.
4.Follow your lender’s loan-closing process, and pay your closing cost
Once you have passed the first three steps, you will start the process of closing the loan. Sometimes you may require to pay a VA funding fee during the closing process. This fee will help lower the cost of the loan since the VA home loan does not need you to pay down payments or have mortgage insurance. In addition to closing fees, your lender will charge you a fixed loan interest.
If you are a veteran or a veteran’s surviving spouse in the US, it is easy to get financing from the Department of Veterans Affairs. You could be a new homeowner or use your mortgage to get a new loan through proper research and following the right procedure. Find details of how to apply for a VA loan here: https://www.va.gov/housing-assistance/home-loans/loan-types/cash-out-loan/
