Although the loan programs offered by the U.S. Department of Veterans Affairs are often touted for their numerous advantages, many aspiring homebuyers who are eligible for them don’t realize that there are actually several different types of VA loans. Which one is right for you?
Exploring the Types of VA Loans
The VA does not actually originate loans. Instead, it provides a financial guarantee that prompts participating lenders to offer attractive loans to eligible service members and veterans who are purchasing or refinancing appropriate properties. While there are rules regarding the properties that can be purchased with a VA loan, the many variations of this loan mean that there is also a surprising amount of flexibility. Which of the many types of VA loans should you choose? That depends on what you hope to accomplish.
If You Want to Buy, Build, or Improve
Perhaps the most familiar kind of VA loan, a VA Purchase Loan can be used to buy a property to serve as the borrower’s primary residence. While the VA does set requirements and insist on appraisals of any property that will be purchased with this type of financing, homebuyers utilizing these loans aren’t limited to houses. As long as the property meets the standards set by the VA, a VA Purchase Loan can be used to purchase a house, condo, townhouse, or a manufactured home on a permanent foundation. Does the challenge of renovating a fixer-upper appeal? A VA Purchase Loan can also provide the funds needed to buy and renovate an existing home or build a new one.
If You Want to Purchase a Farm
Agriculture is a business, and VA loans are not meant to finance commercial ventures. However, individuals who have always dreamed of calling a farm home may be able to use a VA Farm Loan to make this happen. That’s because a VA loan can be used to fund the purchase of a farm that includes a farm residence that the borrower intends to use as their primary residence. There is no set limit regarding the amount of acreage accompanying a farming property, and the valuation cannot include livestock, crops, or equipment. Any improvements that are not generally considered residential in nature will be assessed at their fair market value. In addition, if some or all of the funds needed to meet the loan payments will come from the proceeds of the farming operation, the borrower’s industry experience and ability will be part of the equation.
If You Want to Make Improvements for Energy Efficiency
If you want to reduce your energy usage and your energy costs by making improvements to your home, a VA Energy Efficient Mortgage can be an excellent choice. Offered in conjunction with either a purchase or refinance loan, these loans are used to finance renovations that will reduce a home’s monthly energy bills. These include installing insulation, a heat pump, a solar water heater, programmable thermostats, vapor barriers, and storm doors or windows. The costs of the improvements are added to the loan balance and repaid as part of the monthly payment. Ideally, the money saved in energy costs should offset the increase in the mortgage payment.
If You Want to Convert Equity to Cash
Do you want to start a business or pursue a degree? Are debts that you’ve accumulated through the years weighing you down? Would you like to complete some home improvements or buy a new vehicle? There are many reasons why homeowners decide to draw on some of the equity they’ve built up in their homes. For eligible service members or veterans who want to cash in on their equity, a VA Cash-Out Refinance Loan can be a good option. What if your mortgage isn’t a VA home loan? You still have a chance. This type of loan can also be used to refinance a different kind of home loan into a VA home loan.
If You Want to Refinance a VA Loan for a Better Interest Rate
Would you like to lower your monthly mortgage payment? Have mortgage rates dropped since you purchased your home? Do you want to change an adjustable-rate mortgage for a fixed-rate one? A VA Interest Rate Reduction Refinancing Loan may be the answer that you’ve been seeking. Available only when refinancing a property purchased with your VA loan eligibility, this type of loan is sometimes called a Streamline Loan. It can be used with no money out of pocket for the borrower; all costs are refinanced back into the new loan. However, this program does not allow borrowers to receive any cash from the loan’s proceeds.
With so many different types of VA loans available, there’s a good chance that one can help you achieve your goals. Whether you are hoping to purchase your dream home, build the perfect home to shelter your family, or refinance your existing home loan, it’s worth taking a closer look at VA loans.
Let us help you explore the possibilities. Contact PrimeLending: Manhattan, Kansas today to arrange a consultation. Every year, we help thousands of veterans and active-duty members of the military buy or refinance their homes through the VA home loan program. With our assistance, you can take advantage of the many benefits of a VA loan while saving money due to our lack of lender fees. We offer 100% financing with competitive interest rates – no down payment or PMI required! To learn more, please give us a call at 785-560-3011 or contact us online. We would be happy to help you explore the types of VA loans available. It’s our turn to serve you!