VA Loans Serve Those Who Have Served
Government-backed Loans Make Home Purchase Attainable for Veterans
U.S. Service Members and Veterans may be able to purchase a home with lower monthly payments, $0 down and interest rates comparable to those of conventional loans. Backed by the U.S. Department of Veteran Affairs (VA), VA loans allow lenders to provide loans with more favorable terms to eligible veterans. The loans may be used to purchase a new home or to refinance an existing loan.
Unlike conventional loans which require a down payment of anywhere between 5% and 20%, no down payment is required for a VA loan as long as the sales price doesn't exceed the appraised value. And, because the VA guarantees these loans, no monthly private mortgage insurance (PMI) premium is required, helping to lower the monthly payment. Other advantages include a limit on the amount charged for closing costs and no penalty fee if the loan is paid off early. The VA may also be able to provide assistance if the borrower runs into difficulty making payments.
To be eligible, applicants for a VA-guaranteed loan must have suitable credit, sufficient income and provide a DD Form 214 (Discharge Papers) showing an honorable discharge from service. A Certificate of Eligibility (COE), which verifies to the lender that the applicant qualifies for a VA-backed loan, will also be required. In some situations, surviving spouses of service members or veterans may also be eligible.
These loans may be used to purchase a home, condominium unit in a VA-approved project or manufactured home and/or lot. They may also be used to build a home or to improve a home by installing energy-related features or making energy efficient improvements. The home must be for personal occupancy.
Applying for a VA loan is similar to applying for a conventional mortgage. In most cases, the following steps should be followed:
- Get Pre-qualified: In other words, find out how much loan you can afford. First Community Bank and Trust encourages all applicants to begin the application process by visiting our online mortgage site, First eMortgage. It only takes about 20 minutes to complete the application and applicants will find out within minutes if they've been pre-approved.
- Get a Certificate of Eligibility: Once eligibility has been determined, evidence will need to be submitted in order to obtain a COE. This verifies to the lender that the applicant qualifies for a VA-backed loan. First Community Bank and Trust Vice President Tim Goldrick has over 25 years of experience with the VA loan process will be happy to answer any questions or assist with obtaining the required documentation.
- Find a Home and Sign a Purchase Agreement: Make sure the purchase and sales agreement contains a "VA Option Clause." This essentially protects the purchaser from financial loss in the event the purchase price or cost exceeds the "reasonable value of the property established by the Department of Veterans Affairs." The clause should also contain wording that allows the buyer to "escape" from the contract without penalty if a VA loan is denied.
- Apply for a VA Loan: We will work with the buyer to complete the loan application and gather the necessary documentation, such as pay stubs and bank statements.
- Loan Processing: We will order a VA appraisal and begin to process all of the gathered information. The review process includes the appraisal and all of the documentation of credit, income, and assets.
- Closing: Upon approval of the loan, we will make all of the arrangements for the closing.
VA loans are a viable financing alternative for veterans looking to secure an attractive fixed-rate loan with little or no money down. We encourage all interested applicants to contact us for more information on how a VA loan can help to achieve homeownership dreams.
Call Tim Goldrick, Vice President at First Community Bank and Trust at (708) 946-2246.
U.S. Department of Veteran Affairs
About First Community Bank and Trust
First Community Bank and Trust is a privately owned bank. Established in 1916 First Community Bank and Trust has been serving Beecher, IL, Peotone, IL and the surrounding communities for over 95 years. Our commitment to providing the best banking products and services is matched only by our outstanding customer service. We offer traditional community banking services, including mortgage, consumer, and commercial lending, as well as state of the art electronic banking services.
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Steven D. Koehn, VP
First Community Bank and Trust