Veterans Borrowing VA Loans at Record Rate, Study Shows: Is This Mortgage Option Right For You?
1.2 million veterans took advantage of their VA home loan benefits in 2020, and even more are expected to do so this year. Find out where retired military service members take out VA loans at the highest rate and learn more about eligibility requirements (iStock)
Military veterans have access to low interest home loans through the United States Department of Veterans Affairs (VA). The VA said it backed a record 1.2 million loans in 2020, and a new study suggests it is already set to break that record again in 2021.
Average consumers and military veterans have been able to benefit from home buying and mortgage refinancing when rates are low. VA refinance loans increased 76% in the first half of 2021 compared to the same period last year, and the demand for VA purchase loans increased by 10% during this same period, according to a new study of Veterans United Home Loans. The study also analyzed the top cities for VA home buyers to find out where veterans are moving.
Read on to learn more about housing market trends among veteran homebuyers, and learn how to take out a VA loan to refinance or buy a home. And if you are unsure of your loan eligibility, you can visit Credible to connect with experienced loan officers and get your mortgage questions answered.
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Veterans Reap the Benefits of VA Home Loan Across the Country
Military veterans are entitled to a number of benefits including VA home loans. These loans do not require a down payment or private mortgage insurance (PMI), which is usually required if you are not paying down. VA loans are also lenient when it comes to debt-to-income ratio (DTI) and minimum credit score requirements, so they can be an option whether you have fair credit or bad credit.
After their military service, many veterans take advantage of these VA home loan benefits by relocating to sunny climates, according to the study. The # 1 metropolitan area for VA loan growth is Honolulu, Hawaii, where lending activity has nearly doubled year over year. Retired military personnel are also seeking warmth from the South, flocking to states like Texas and Alabama.
Additionally, the study found that veterans are taking more VA loans in our nation’s capital and surrounding areas. Here is a list of the top 10 cities for VA loan growth:
- Honolulu
- Washington DC
- Baltimore, Maryland.
- Fayetteville, North Carolina
- El Paso, Texas
- Virginia Beach, Virginia
- Montgomery, Ala.
- Petit Rocher, Arche.
- Huntsville, Alabama.
- San Antonio, Texas
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Veterans don’t just take root in new places; many are using their entitlement to refinance their existing loans at a lower interest rate with a VA loan, according to the study.
Mortgage rates are currently low overall for VA loans as well as conventional mortgages, making this a good time to finance a home regardless of your military status. And with home values rising at a breakneck rate, now may be a good time for borrowers to take advantage of their home equity with a cash refinance.
If you are considering buying a home or refinancing your current mortgage, you should explore your options by visiting the online loan market, Credible.
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Eligibility Requirements for VA Refinancing and Home Buyers Loans
Taking out a VA loan is similar to taking out a conventional mortgage, as long as you meet the terms of service. Here are the VA loan eligibility requirements for military service and reserve members:
- You have served at least 90 consecutive days of active service in wartime or 181 days in peacetime, or less if you have been discharged due to a service-related disability.
- You completed 24 months of non-active service in the 1980s or 1990s, or less if you were fired due to a service-related disability.
- You are the surviving spouse of a veteran who was killed in the line of duty, disappeared in action, or is a prisoner of war.
- You served in the National Reserve or National Guard with 90 days of continuous active service or 6 years of service.
When you apply for a VA loan, you will need to provide a Certificate of Eligibility (COE) so the lender will know that you are eligible for this program. Your COE can be a copy of your release papers or a signed declaration of service, depending on your military status.
Like a traditional mortgage, a VA loan requires you to purchase a habitable home that meets minimum ownership requirements. You will need a VA certified home appraisal to confirm the home’s value.
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It may be wise to take out a conventional mortgage
While the advantages of the VA home loan are important, it is important to consider the disadvantages. VA loans can only be used to purchase a primary residence, so you cannot use one to purchase a second home, vacation home, or investment property. Plus, VA financing fees can add thousands of dollars to the cost of your mortgage.
If you decide to borrow a conventional home loan instead, you may be able to put as little as 3% down. And since mortgage rates are near their historic lows, you’re likely to get a low interest rate even without taking out a VA loan.
Military veterans should exhaust all of their financing options when buying a home, so it is important to check mortgage offers from several private lenders and loan types. You can be prequalified for a conventional mortgage on Credible in minutes to see offers tailored to you without affecting your credit score.
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