5 Things You Didn’t Know About VA Loans
A recent VA survey showed that half of all American veterans do not understand the government guaranteed home loan program. There are several nuances to the program, and even more misconceptions. VA loans are the most misunderstood mortgage program in America. Consumers often receive incorrect information when inquiring about them.
We want to help you debunk a few common myths about the VA loan program.
1 – MYTH: VA Home Loan benefits expire if they are not used.
FACT: If you’re an eligible recipient, the VA mortgage benefits will NEVER expire. Often, people confuse this program with the veteran education benefits. The Montgomery GI Bill benefits expire 10 years after discharge.
2 – MYTH: The VA Loan Benefit has a one-time-use.
FACT: Both veterans and active duty military can use this benefit several times. However, there IS a limit on the entitlement. Entitlement is the amount of loan the VA will guarantee. If the borrower exceeds their entitlement, they may have to make a down payment. But no matter what, there isn’t a limitation on how many times a Veteran or Active Duty Service Member can get a VA loan.
3 – MYTH: A borrower can only have one VA loan at a time.
FACT: You can have multiple VA loans out at the same time, as long as you do not surpass your entitlement. In order to have more than one VA loan, the borrower must be able to afford all payments and meet entitlement guidelines.
4 – MYTH: If you have a VA loan, you may not rent out your home.
FACT: Homeowners with a VA loan MAY rent out their home. When an individual applies for a VA loan, they certify that they will make the home their primary residence. Borrowers cannot use their VA benefits to buy property for rental purposes except if they are using their benefits to buy a duplex, triplex or fourplex. Under these circumstances, the borrower must certify that they will occupy one of the units. The others can be rented out.
5 – MYTH: If the borrower’s home is foreclosed on, and there is a VA loan on that property, they cannot have another VA loan.
FACT: If a borrower has a claim on their entitlement, they will still be able to get another VA loan. However, the maximum amount they would qualify for may be less. For example, Mr. X had a home with a $100,000 VA loan which foreclosed in 2012. When Mr. X buys his next home, he will have enough remaining eligibility for a $317,000 purchase with $0 money down. If he didn’t have the foreclosure, he would have been able to obtain another VA loan up to $417,000 with no money down payment.
Do you have a question about buying a home in Albany, NY region with a VA loan? If so, feel free to contact us!
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