VA Loan Hacks for Veterans: Hidden Benefits Beyond Zero Down Payment
The American dream of homeownership often seems out of reach for many veterans, especially with the rising cost of living and ever-increasing housing prices. However, for those who have served in the US military, there is a resource available that can make this dream a reality – the VA loan. While most people are familiar with the no-down-payment feature of VA loans, there are hidden benefits that can be extremely advantageous for veterans. In this article, we will explore some VA loan hacks that go beyond just the zero down payment and can help you save money and time on your path to homeownership.
The VA Loan Basics
First, let’s quickly review the fundamentals of VA loans. These mortgage loans are guaranteed by the US Department of Veterans Affairs, making them accessible to veterans, service members, and eligible surviving spouses. The VA loan program aims to assist eligible individuals in obtaining and maintaining homeownership by offering competitive interest rates, no down payment requirement, and no private mortgage insurance (PMI) requirement.
Many veterans are aware of the zero down payment feature of VA loans, but not everyone knows about the other perks that come with these loans. Let’s dive into some VA loan hacks that can help you make the most out of your VA home loan benefit.
Buying a Home with No-Down-Payment
Utilizing the VA Funding Fee
Most mortgage loans require a down payment of at least 3.5% of the purchase price, but with VA loans, you can purchase a home without putting any money down. However, some veterans may choose to put down a small amount to lower their monthly payments or to maintain some equity in the home. The good news is that the VA loan program allows borrowers to finance the VA funding fee, which is a one-time fee paid to the VA to cover the cost of the loan guarantee. This can significantly reduce the upfront costs associated with buying a home with a VA loan.
Negotiating Closing Costs
Another VA loan hack for buying a home with no down payment is to negotiate with the seller to cover the closing costs. Closing costs can add up to 2-5% of the home’s purchase price, and for a veteran purchasing a home with no down payment, this can be a significant expense. However, the VA loan program allows sellers to contribute up to 4% of the home’s purchase price towards the buyer’s closing costs. This can help you save a substantial amount of money upfront, making it easier to purchase a home with no down payment.
Refinancing Options for Veterans
Reducing Interest Rates with VA Streamline Refinance
If you already have a VA loan, you may have heard of VA’s Interest Rate Reduction Refinance Loan (IRRRL), also known as the VA streamline refinance. This program allows eligible borrowers to refinance their current VA loan into a new VA loan with a lower interest rate. The best part about this hack is that it does not require an appraisal, credit check, or income verification, making it a hassle-free way to save on your monthly mortgage payments.
Cash-Out Refinance for Home Improvements and Debt Consolidation
Veterans who own a home and have equity in it can also utilize the VA’s cash-out refinance option. With a cash-out refinance, you can refinance your current VA loan for a higher amount than what you owe and receive the difference in cash. This can be used for various purposes, such as home improvements, debt consolidation, or other expenses. The interest rates on VA cash-out refinance loans are typically lower than other loan options, making it a smart choice for veterans looking to borrow against their home’s equity.
Additional Benefits for Disabled Veterans
Waiving the VA Funding Fee
Veterans who have a service-related disability may be eligible for a VA loan with a reduced or waived VA funding fee. Disabled veterans rated at 10% or more are exempt from the VA funding fee, while those rated at 20% or more may be eligible for a full waiver. This can save you thousands of dollars on your VA loan.
Specially Adapted Housing Grant
The VA also offers grants to qualifying permanently and severely disabled veterans to help them adapt their home to their service-related disability. This assistance can be used towards building, buying, or modifying a home to meet their specific needs. The Specially Adapted Housing (SAH) grant and the Special Housing Adaptation (SHA) grant can provide up to $90,364 for home modifications and construction, respectively. These grants can significantly improve the quality of life for veterans with disabilities.
As you can see, there is more to VA loans than just the no-down-payment feature. These VA loan hacks can help you save money, time, and hassle when buying or refinancing a home. If you are a veteran or know someone who is, be sure to explore these options and make the most out of your VA home loan benefit.
