DISCOUNT POINTS- DO VA LOANS INCLUDE THEM?

When deciding to buy a home you want to get the best mortgage possible for your circumstances.

Veterans and service men and women have an advantage in the financing step because they are exclusively eligible for a VA Home Loan.

The loans are offered by mortgage companies and banks, but the VA guarantees a part of the loan, enabling you to get a loan with better terms than a typical mortgage.

ELIGIBILITY

VA loans require you to have adequate income, suitable credit, and a completed valid Certificate of Eligibility to establish that you qualify for the benefits of a VA home loan.

Lenders ideally prefer that you have a credit score of at least 620, but exceptions can be made with additional stipulations in certain circumstances.

You must also intend to live in the home as your primary residence. The funds can be used to buy a home, buy and improve a home, purchase a manufactured home or to build a house.

You do NOT qualify if you have received a dishonorable discharge.

The service requirements vary based on dates of service and minimum days of active duty required. Specific information regarding eligibility can be found here.

BENEFITS OF A VA HOME LOAN

■NO DOWN PAYMENT

Conventional mortgage companies require buyers to put down at least 20% of the purchase price to avoid having to obtain private mortgage insurance or PMI.

For example, if you are looking at a home for $100,000, you would be required to have $20,000 up front on top of other fees.

■NO PRIVATE MORTGAGE INSURANCE

PMI ranges from .3 to 1.15% of the total amount of the loan which can add thousands of dollars to the overall cost of the loan.It is paid for the duration of the mortgage.

Its purpose is to protect the lender from loss, but since the VA guarantees a portion of the loan, borrowers are exempt from the requirement. You’ll build equity in your home much faster without this fee.

■COMPETITIVE INTEREST RATES

Interest rates are primarily focused on the risk the lender takes by loaning you the money.

A lower interest rate is always favorable because it requires a lower monthly payment, while an interest rate that has a reduction of as little as .5 or 1% saves thousands of dollars over the life of the loan.

VA home loans also have discount points, which reduce the interest rate of the loan by making an upfront payment equal to a percentage of the loan’s value.

This is typically a .25% interest reduction for each point, costing 1% of the overall loan. Points are beneficial if you intend to remain in the home for a while, otherwise, they can be a waste of money and not worth the investment.

■NO EARLY PAYMENT PENALTIES

A VA home loan ensures that you cannot be penalized if you decide to pay off the loan earlier than the term of the mortgage.

■CLOSING COSTS ARE REGULATED

They include things such as appraisals, credit report checks, application fees, property taxes, homeowner’s insurance and a VA funding fee…

…which varies based on your initial down payment, type of service and whether this is your first time getting a VA loan. These also can be paid by the seller if decided during negotiations.

PROCESS TO GET A VA LOAN

■Contact a VA-approved lender to begin the paperwork and eligibility screening

■Bring your preapproval letter with you as you look for homes or use a real estate agent who specializes in VA loans

■Make an offer on the home

■Complete the closing process with appraisals and inspections. The final process involves signing the paperwork, paying the fees and getting your new keys

Mortgage Originator Jimmy Vercellino, specializing in VA loans, helps veterans use their VA loan benefit to their greatest advantage.

Be a proud homeowner today. For more details call 619-350-1951 or visit the site http://sandiego.valoansforvets.com/

First Choice Loan Services Inc., DBA FCLS in CA 959 South Coast Drive, #490Costa Mesa, CA 92626Phone: 619-350-1951