Hawaii VA Loans: An Effective Way to Secure a Mortgage in a Rising Interest Rate Market
If you’re a veteran or active-duty military member looking to buy a home in Hawaii, now is the time to act. The current interest rate market is shifting, and it’s becoming more challenging to qualify for a mortgage as interest rates rise. For this reason, it is more important than ever to understand the ins and outs of getting a mortgage through the VA Loan Program if you qualify. In this blog post, we’ll discuss how to get a VA loan in Hawaii and what to expect in today’s market.
100% Financing is Achievable
As a homebuyer in Hawaii, it’s important that you understand the facts about these government-backed mortgages. For example, did you know that a VA loan is not necessarily a monetary loan? Rather, the federal government guarantees a portion of your loan (usually around 25% of the total loan), making it easier for lenders to provide financing for up to 100% of the home’s value. In addition, VA loans come with some of the lowest interest rates available, which means that you can save a significant amount of money over the life of your loan. VA loans do come with fees and closing costs, but these can often be incorporated into the loan and financed as well.
Your Top VA Loan Questions, Answered.
Despite their many benefits, VA loans are one of the most misunderstood mortgage products on the market. This is partly because there are so many different types of VA loans available. For example, there are VA purchase loans, which can be used to finance the purchase of a home. There are also VA refinance loans, which can be used to lower your monthly payments or get cash out of your home equity. And finally, there are VA rehab loans, which can be used to finance the repair or renovation of a home.
We’ve put together a list of the top 5 myths about Hawaii VA loans so that you can be well-equipped with the knowledge you need to make the most informed decision when you’re ready to purchase a home in Hawaii.
Myth #01: You need perfect credit to qualify
While it’s true that your credit score plays an important role in the loan approval process, you don’t need perfect credit to qualify for a VA loan. In fact, even if you have bad credit, you may still be able to qualify for a VA loan if you have a strong enough income and a good history of making on-time payments. Your lender will then make the final decision on whether or not to approve your loan. If you’re looking at borrowing from a conventional lender, you’ll need a reasonably good credit score but a VA lender may be more lenient. Some lenders approve VA loans for veterans with credit scores as low as 550.
Myth #02: You need a huge down payment
While it’s true that most conventional loans require a down payment of at least 5 to 20%, this isn’t the case with VA loans. In fact, you can obtain a VA loan with no money down if you have an unencumbered VA entitlement ie you don’t have a current VA loan out, and/or haven’t had a VA mortgage foreclosed in the past. If you don’t have enough entitlement, you may still be able to qualify for a VA home loan with a small down payment. A qualified VA mortgage broker or loan specialist will be able to help you calculate your VA loan limit, and determine how much of a down payment you’ll need if any. A VA funding fee, however, is required on all VA home mortgages where the veteran/member does not have greater than a 10% disability rating. This fee ensures that the program remains self-sustaining but there are tiered fee structures and the fee can also be included in your loan amount.
Myth #03: VA loans are only for first-time homebuyers
While VA loans are an excellent option for first-time homebuyers, they’re also an excellent choice for anyone who is looking to buy a new home at any stage of life. If you’re a veteran or active-duty military member, you may be eligible for a VA loan regardless of whether you’ve bought a home before. Even if you’ve already used your VA loan entitlement, you may still be eligible to use it again if you meet certain requirements including having sold your previous home or having paid off your loan in full.
Myth #04: You can only use a VA loan to buy a single-family home
VA loans can actually be used to finance the purchase of a wide variety of properties, including single-family homes, townhouses, and even some condominiums. However, there are a few restrictions. For example, you may not be able to use a VA loan to purchase an investment property or a vacation home. But as long as the property you’re looking to purchase is going to be your primary residence, you should be eligible. Consulting with a mortgage broker is the best way to determine whether or not a particular property is eligible for VA financing.
Myth #05: The interest rate on a VA loan is always higher than a conventional mortgage
We touched on this briefly but it’s worth repeating: the interest rate on a VA loan is not always higher than a conventional mortgage. In fact, VA loans often come with some of the lowest interest rates available, especially when you compare them to other types of loans like FHA or subprime mortgages. This is because VA loans are backed by the government, which gives lenders the confidence to offer lower interest rates. In the current climate, low-interest rates are making VA loans a desirable option for home buyers.
Our Final Thoughts
If you’re thinking about using a VA loan to purchase a home in Hawaii, now is the time to start working with a Hawaii VA mortgage broker who can help you navigate the process. With interest rates on the rise, it’s more important than ever to get pre-approved for a loan and lock in a low rate. A veteran loan officer can help you compare rates from different lenders and find the best loan for your needs.
The first step in getting a VA loan is to obtain your Certificate of Eligibility (COE). The COE verifies to the lender that you are eligible for a VA-backed loan. You can either obtain your COE through an online service offered by the Department of Veterans Affairs, through your lender or by mail through the Veterans Benefits Administration. A mortgage broker, however, will be able to help you obtain your COE with little to no hassle and will also be able to negotiate the best interest rate on your behalf.
Get in touch with me to learn more about VA loans and how I can help you finance the purchase of your new home in Hawaii.
Elias Halvorson has over a decade of experience in the financial industry and is one of the top brokers in this specialist field.