Will a VA Mortgage Work for You?

VA mortgages are partially guaranteed by the Veterans Administration, require low down payments, require no mortgage insurance and have negotiable mortgage rates.

I’m a veteran having served with the Air Force as a radar technician. I was one of the few women in my career field. I remember cold winter nights repairing air traffic control radar in a remote part of Osan Air Base in Korea. When my husband left the Air Force in 1986, we used a VA loan for our first home.

A VA loan can be a great way to finance you primary residence, particularly if you don’t have the 20% down payment that most conventional mortgages require. Down payments can be as low as nothing, if the home appraises above the mortgage amount. If not, the bank will want down payment money to make up the difference.

Some banks are happy to work with you on a VA loan. The advantage to them is that the Veterans Administration partially guarantees the loan for them. However, there’s going to be more paperwork, but that’s the price you pay for dealing with both a bank and the government.

I would advise going to the VA website and downloading VA Form-1880 Request for Certificate of Eligibility so that you have the certificate before you approach a participating bank. The bank can request the certificate for you, but I would bet there would be a significant delay if they do it for you.

When you approach the bank, ask them if they are currently making VA loans. The VA does not guarantee the full amount of the loan, so the banks are going set their own standards for making the loan. You will need decent credit and sufficient income to qualify.

The major advantage of the VA loans is the low down payment and no mortgage premium insurance (PMI). You may also have reduced closing costs with this loan. The loan limit for Daytona Beach homes and condos is $417,000 for 2010. That should cover about 90% of available homes in the area.

Now for the caveat – if you are going to use a low or no down payment loan, plan to stay in that home for awhile. By awhile, I mean more than 5 years and probably closer to 7 years. You cannot get back your closing costs and pay sales costs in the short term. If you had to sell in two years, it would take money out of your pocket to make the sale.

If you are eligible for a VA loan, I believe you should explore the possibilities. You could get a better rate and save some money.