Asia Rapier (on the right) is a student at De Paul University who has a student loan. On the left is fellow student, Edward Ward. She talked about the new proposed changes to federal student loan issues proposed by President Obama. | Al Podgorski~Chicago Sun-Times
Updated: May 3, 2013 12:15PM
Veteran’s day is upon us — and if this story seems familiar, it’s because I have written several times about the great deal that the Veterans Administration mortgage loan program offers to those who have served our country: 3.875 percent, 30-year, fixed-rate mortgages.
So instead of starting today’s column with the traditional question, let me start with some answers. Here are two true stories about people who read my column and contacted VA mortgage expert Daniel Chookaszian about buying or refinancing using the VA loan program. A VA loan not only gives you lower rates, and no PMI (private mortgage insurance) payment, but lets you borrow 100 percent of the value of your home, and may allow you to withdraw cash, as well.
California residents Paul and Jennifer were deep in debt and struggling to pay their traditional 6 percent mortgage. A VA refinance allowed them to take out cash to pay off their credit cards, and it reduced their mortgage payment by $400.
Diana, a 35-year-old disabled veteran of the Iraq war, receives monthly VA disability income as well as Social Security Disability for life. She has just closed on her first home using her VA eligibility with no money down and a 15-year fixed-rate at 3.75 percent. Her disability income was used to qualify Diana for the loan.
If you or your spouse is a veteran, the VA loan program may be the answer to your questions about finding an affordable loan. So here are the qualifications you must have to secure a VA loan:
† You must have been honorably discharged from the U.S. military.
† You must have a Certificate of Eligibility (available from the VA Eligibility Center at 888-244-6711).
† Your credit score must be above 640.
† You must be able to demonstrate steady income, or a two-year history of self-employment, or a stream of retirement benefits.
† Spousal income can help you qualify.
† Your total debt payments cannot be more than 41 percent of your total income.
† You cannot have any unpaid liens or judgments.
† You must wait until two years after a bankruptcy to apply and cannot have any subsequent late payments.
You can qualify for VA home loan benefits no matter how long ago you were honorably discharged. And even if you took out a VA loan many years ago, you remain eligible for another VA loan if the first loan was paid off.
The maximum amount of the full VA no-down payment mortgage loan is $417,000. However, if you purchase a more expensive home and need to borrow money above that amount, you must put down 25 percent of the amount above the $417,000 limit, and pay a slightly higher rate to get the larger mortgage.
The VA loan program is not intended for speculators or investors. The property must be owner-occupied, although the loan can be used for single-family homes, condos, or one- to four-unit properties. And a VA loan can also cover a “jumbo” mortgage, making it an attractive alternative for higher priced homes.
There is no age restriction on qualifying for a VA mortgage loan, and you can get a new loan even if you had one many years ago. The surviving spouses of veterans with benefits also qualify if they have not remarried.
To learn more about VA loans, contact Daniel Chookaszian at (312) 376-2215. He’s a volunteer chaplain for disabled vets. Or, you can contact the VA Regional Loan Center in St. Paul, Minn., at (800) 827-0611 to speak with a VA loan specialist.
The VA loan is not a solution for those who have bad credit or who owe much more than the home is worth. But for those who have served our country, and are now looking to buy a home or refinance an existing loan, this is one small reward for their service. And that’s The Savage Truth.