What You Need to Know About VA Mortgages

If you are either an active member of or are retired from the armed forces, we thank and salute you, and would like to inform you that if you are considering purchasing a property, a VA mortgage is worth looking into.

Zero Percent Down

While zero percent down is unheard of today in mortgage lending, it still happens with VA mortgages. While it is zero percent down, there are still other expenses, such as closing costs and potential tax escrows, that need to be considered.

In order to qualify, you will need to be able to provide a VA Certificate of Eligibility, which you can either obtain from the VA or with the help of your mortgage professional.

Credit score profiles are similar to those required in order to obtain an FHA loan. This means you would need a score of around 640, and would be ineligible if you have any recent foreclosures, short sales or bankruptcies. Income ratios also need to be equivalent to those required in other types of mortgage programs, and VA qualifications are somewhat more detailed in the calculation of your monthly expenses than for other types of mortgages.

With a VA mortgage, you are able to purchase only a home you intend to occupy, and would be unable to purchase an investment property. If you are married, you will be able to add your spouse to the mortgage; otherwise, you will be the sole borrower.

Please contact your mortgage professional for more details.

Considerations When Buying a Townhome or Condo

With the large number of properties that are still available at reduced prices these days, townhomes and condominiums represent excellent purchasing options: they often offer low-maintenance living and community facilities that would usually be unavailable in single-family homes.

When considering purchasing a townhome, keep in mind that there can be substantial differences in how the communities are structured and run from day to day.

First, with a townhome, you own your unit and the land underneath it, whereas with a condo, you own the unit, but the land on which it sits is part of a master parcel. With the former, you provide your own property insurance, and in the latter case, you will contribute to a blanket insurance policy.

Association dues for townhomes are typically lower than for condos, as few services such as painting and roof replacement are provided in townhome communities.

Whichever type you choose, always make sure that both you and your attorney review the financials and the bylaws of any development for which you intend to place an offer. This will give you an insight into how the property is being managed, the financial stability of the association, and what you might expect in terms of future association rate increases.

From a financing perspective, townhomes may be slightly easier to obtain. Here’s why.

The Federal Housing Administration (FHA) offers so-called approved condo developments, which have gone through a review process in which FHA assesses financials, bylaws, etc. Even after a development is approved, FHA will only lend on a certain percentage of units, and only so many of the units can be let as rentals. All of this helps to minimize the Association’s risk should a development take a downturn…

Contact your mortgage professional for more details.