In our efforts to serve our military clients we search and stay up to date with ways to help! We were thrilled to hear about this product and how it can help you achieve your dream of owning a home.
How the VA renovation loan process works
The most important thing to understand about the VA renovation loan is that it is a second loan, but it works differently from a normal supplemental loan. Instead of having two separate loans, the VA rehab loan will be rolled together with the original loan, meaning you’ll only have one mortgage rate and monthly payment.
Because the goal of the program is to make the home VA eligible, you’ll have to prove that the repairs you’re planning will meet VA standards.
Before getting approved for the program, you’ll need to submit plans for the specific renovations being made, as well as information on the contractor you’ll be using. This all happens during the underwriting process.
So, before you get approved, you’ll need to have a very specific idea of what improvements you’ll want to make, as well as how much those improvements are going to cost. This takes time, and it can slow down the home buying process.
After the repairs are made, a VA Inspector will come to make sure the home meets the standards.
How you can use the loan
There’s a maximum of $35,000 allowable through this loan program, but there’s no minimum amount to be spent in order to qualify. So, if qualify and only want to make $5,000 in renovations, that’s completely acceptable.
One thing to note is that you can’t use the renovation loan to change every part of the home. Only repairs, renovations and replacements approved by the VA are allowed. Again, the point of this loan is to make the home livable while meeting VA standards.
Common improvements allowed by VA rehab loans include:
It’s worth noting that all VA loan programs allow the home buyer to make energy-efficient upgrades – a win-win for the buyer since this increases the value of the home and decreases monthly energy payments.
Who can get a VA renovation loan?
Anyone who is VA eligible is able to get approved for a VA renovation loan. Also, current VA eligible homeowners are eligible to get this loan. The VA renovation loan can be used for refinancing to fund upgrades to your home. This is a good way to avoid using a cash-out refinance or getting a second mortgage.
To use this loan program as a refinance, homeowners must still follow the same improvement restrictions as home buyers.
Finding a lender
As good as the VA renovation loan is, the biggest drawback is that it can be difficult to find a lender that offers the program.
Want to know more? Call Mark Halvorsen at Movement Mortgage.