Eligible veterans planning to buy a home next year may take advantage of an expanded Veterans Affairs program that may allow them to fulfill their ultimate dream home. This could be a great chance for deserving veterans and their spouses to secure a comfortable lifestyle after serving the country. However, what they may not realize are the fees associated if they wish to avail of the VA Home Loan Guaranty benefit.
VA lifts home loan limits under expanded disability law
The Department of Veterans Affairs will lift the home loan limits after President Donald Trump recently signed the Blue Water Navy Vietnam Veterans Act of 2019. Veterans who are honorably discharged and their spouses may buy a home without a down payment even it exceeds VAs $484,350 price limit.
Although veterans may apply for higher home loans without paying for a down payment, they need to keep in mind that mortgage lenders may still decide on how much loan they can afford. Generally, the VA vouches for qualified veterans to apply for a mortgage without having to pay lenders the 20% down payment that is usually required to ordinary homebuyers.
The home loan cap removal that’s expected to begin on January 1, 2020, was decided as VA expands their disability benefits to veterans who might have been exposed to harmful herbicide including those who have served in ships off the Vietnam coast during the war. The funds coming from the lifted home loan is expected to cover the disability benefits needed by affected Vietnam War veterans and their children.
Fees veterans may need to pay when buying a home
Veterans planning to buy a home are normally not required to pay for a down payment and monthly mortgage insurance under VA’s Home Loan Guaranty benefit. However, they should be aware of the loan fees associated with applying for a home mortgage.
Veterans applying for a mortgage may need to pay a funding fee or a percentage of the loan depending on the applicant’s military category and loan type. The VA requires veterans to settle such fees to reduce the loan’s cost. The funding fee is scheduled to increase on January 1, 2021, from 2.15% to 2.35% purchase price.
Moreover, veterans should also know that they need to pay for other fees and interests associated with their loans. As a homebuyer, veterans may need to settle VA appraisal, state and local taxes, recording fees, credit report, and other costs related to closing.
There are some circumstances when prospective veteran homebuyers might be exempted from paying such fees. For example, disabled veterans and their spouses receiving benefits are not required to pay for funding fees. Similarly, veterans are not required to pay commissions, “buyer broker” fees, and brokerage fees.
Veterans may consider getting help from a professional loan advisor
Depending on your health condition as a veteran, you may find home buying a stressful and complicated process that may lead to costly errors. If you plan to avail of the no cap home loan limit next year to get your dream home, get in touch with a professional loan advisor today. A loan advisor can give you smart advice to help you make sound decisions as you plan one of the biggest investments in your life.