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There were more than 18 million veterans in the U.S. in 2023, according to the Department of Veterans Affairs (VA). If you’re one, there could be a variety of helpful options available as you buy and own a home. Here are three facts about VA loans — loans that benefit eligible veterans, surviving spouses, servicemembers, and members of the National Guard and Reserve.
Mr. Cooper Has Loan Options for Veterans
1. VA home loans can potentially make it easier to buy a home
One of the top facts about VA loans is that they can make buying a home easier and more affordable. In addition to the VA providing a portion of a VA loan’s Guaranty through mortgage lenders, benefits can include:
- Down payments as low as $0
- Comparatively low rates
- No requirements for monthly mortgage insurance
A rarer benefit some lenders offer is a temporary discount on a VA loan’s mortgage rate. This is done through what’s called a lender-funded mortgage buydown, and includes Mr. Cooper’s 1% MortgageMarkdown program. We’ll reduce your rate by 1% for the first year on your new home purchase.1
Finally, once you’ve purchased your home, many states offer special VA programs and benefits like property tax reductions. For more information, check with your state VA office and tax authority about options to reduce your costs even more.
All that said, VA loans usually include an upfront cost — a funding fee2 —whether you buy or refinance a home. Its cost varies based on factors like your down payment, so be sure to ask your lender for more details.
2. Veterans can potentially cash out 90% of a home’s equity without paying for PMI
VA loans can also help you put more money in your pocket if you’re interested in a cash-out refinance.3, 4 As the name suggests, these refinances enable homeowners to turn home equity into cash. They can be used for anything — from home improvements, to debt consolidation, and investments.
Most cash-out loans allow homeowners to turn up to 75–80% of their equity into cash. But in contrast, VA-backed options can allow up to 90%, depending on the lender’s requirements and your state.
VA-backed cash-out refinances also don’t require private mortgage insurance (PMI). PMI is typically associated with refinances when borrowers do not have 20% of the equity left in their home after refinancing. And that would be the case if you took the full VA benefit.
3. Veterans have special refinancing options available to them
A final tip in the top facts about VA loans is that they can make refinancing more affordable. If you already have a VA loan, you could be eligible for a VA Interest Rate Reduction Refinancing Loan (VA IRRRL). These loans are available if refinancing can lower your mortgage rate, or you want to change an adjustable-rate VA loan to a fixed-rate mortgage.
VA IRRRL’s are also known as “streamline loans” because of their simpler, streamlined application process. They typically don’t require income verification, a minimum credit score, or an appraisal.5
Get started on a VA loan
Ready to explore your VA loan options? Talk to one of our mortgage experts about this well-deserved benefit at 833-685-2565 or get started online!
Disclaimers
1. Mr. Cooper’s Mortgage Markdown is a temporary buydown program that reduces the borrower’s effective interest rate and effective monthly payment for a one year period of time by establishing a custodial escrow account, which will be funded partially by the lender and partially by the borrower (in the case of a VA loan the account will be funded entirely by the lender), and funds will be dispersed from the escrow account to cover the difference in interest during the one year buydown period which subsidizes the monthly payment amount. Mortgage Markdown is available for purchase loans that are locked by 09/30/2024. Mortgage Markdown is only available on purchase loans for primary residences. Not available on jumbo loans, second mortgages, or refinance transactions. Offer may not be redeemed for cash or credit and is nontransferable. Offer cannot be retroactively applied to any loans. This offer is subject to changes or cancellation at any time at the sole discretion of Mr. Cooper. Not available on all purchase transactions. Additional restrictions/conditions may apply. Offer is contingent on qualification per full underwriting guidelines.
2. VA loans require a funding fee unless eligible for funding fee exception. Call for details.
3. A cash-out refinance increases your mortgage debt and reduces equity. It may increase the total number and amount of monthly payments, total finance charges, and/or the total amount paid on the mortgage.
4. Available cash or cash-out amount is an estimate of the equity you may be able to withdraw. It is based on an estimated current value of your property minus the estimated current amount owed. The amount of cash-out that may be available to you varies and depends on numerous factors including the value of your property and the maximum allowable LTV, which can vary significantly based on factors such as the loan program, your capacity to afford the new loan, your credit history, and the property type.
5. In some cases, an FHA streamline refinance or VA Interest Rate Reduction Refinance Loan (IRRRL) may require an appraisal and/or full income and asset documentation and full credit qualification. This requirement will increase fees and required paperwork. A licensed Mortgage Professional can inform you of all options available to you as well as the program requirements.
