1. How do I find out if I am eligible for a VA loan? Or in other words, how do I get a certificate of eligibility?
You will have to apply for a certificate of eligibility. You can apply for your certificate of eligibility by going to this VA webpage. It is pretty straight forward. You will receive your certificate immediately online and you can forward it to your lender. Whether you are using your VA eligibility for the 1st time or have used it multiple times, you will need to receive a current certificate of eligibility.
2. What does it mean that a VA Loan is guaranteed?
This means that the Department of Veterans Affairs does not furnish the loan, but promises it, guarding the lender from financial loss if the buyer defaults, helping lenders to provide loans with good terms.
3. Does the type of military discharge a veteran has experienced affect qualification for a VA Loan?
Yes, a veteran who has been discharged under dishonorable conditions cannot apply for a VA Loan.
4. Why is there no need for Private Mortgage Insurance?
Since the VA Loan is federally backed, the Department of Veterans Affairs shelters lenders from losing money should the buyer not be able to pay back the loan, covering the need for private mortgage insurance and saving homeowners thousands of dollars over the life of the loan.
5. Why is there no pre-payment penalty?
Other types of mortgage loans have a pre-payment penalty, or a penalty paid to the lender if the borrower pays off the loan before it matures, in order to make up money that may have been lost in future interest payments. VA Loans do not come with a pre-payment penalty, allowing homeowners to pay off the loan at any time and be free to make plans for the future.