Tuesday, June 19, 2012

Can You Use a VA Home Loan More Than Once

By David Rouse

Current active duty military members and eligible veterans may receive multiple VA guaranteed home mortgages throughout their lives. VA does not limit the number of mortgages any veteran may obtain but usually will allow only one at a time. If the veteran already has a VA mortgage and wants to purchase a new home, the veteran must have sufficient entitlement remaining for the new loan. The veteran's basic entitlements $36,000 but for loans exceeding $144,000, VA guarantees up to 25 percent of the county loan limit, currently $417,000 nationwide. In most cases, the veteran may have to sell the existing home or refinance existing mortgage before obtaining a new VA mortgage.

VA charges a funding fee anytime a VA loan is closed. The funding fee is a percentage of the loan amount. The veteran may finance the funding fee, pay for the funding fee in cash or request the seller pay the funding fee for her. The funding fee for a first time use is less than the funding fee for subsequent uses of the VA loan program. In addition, if the veteran served in the reserves or National Guard the funding fee is higher than it is for active duty veterans.

VA does not provide loans directly to veterans. It guarantees loans to veterans made by approved banks and mortgage lenders. While VA creates the minimum requirement guidelines, lenders are empowered to create guidelines that exceed VA's lending requirements. The veteran must meet both the VA requirements and the individual lender's requirements. The veteran still qualifies based upon credit history, employment and income. The VA home loan program does not require lenders automatically approve a home mortgage to every veteran regardless of credit history or ability to repay the mortgage. The veteran must still meet all of the lender's guidelines.

Some veterans use their VA loan benefit to refinance their current mortgages. Veterans may obtain a rate and term refinance mortgage which changes the interest rate, loan term or loan type of their mortgage. Veterans may also obtain a cash-out refinance mortgage using the VA home loan program. Cash out refinances allow the veteran to access the equity in his home, which he may use for home improvements, paying off other bills or for any other purpose he chooses.

One special refinance program only available to veterans who currently have a VA loan is the Interest Rate Reduction Refinance Loan (IRRRL). This loan program does not require an appraisal or require the veteran prove her ability to repay the mortgage as long as the new mortgage balance does not exceed the initial mortgage balance of the current loan.


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