Which Is The Best Bank To Take VA Home Loans in Michigan?

Last Updated on December 1, 2020

Need to know the best bank for VA home loans in Michigan? Here are some of the best banks and lenders that you can use to get the best VA home loans in Michigan. But before we go any further, let’s fully understand the concept of “VA loan” and how it works.

What Is a VA Loan?

A VA loan is a mortgage loan available under a program established by the United States Department of Veterans Affairs (formerly the Veterans Administration).

The VA home loan was created in 1944 by the United States government to help returning service members purchase homes without needing a down payment or excellent credit. This historic benefit program has guaranteed more than 24 million VA loans, helping veterans, active duty military members and their families purchase or refinance a home.

The VA sets the eligibility standards, dictates the terms of the mortgages offered and guarantees a portion of the loan, but does not actually offer the financing. VA home loans are provided by private lenders, such as banks and mortgage companies.

Today, a VA mortgage is more important than ever. In recent years, lenders across the country have tightened their lending requirements in the wake of the housing market crash, making the VA loan a lifeline for veterans and active military home buyers, many of whom find difficult when faced with strict credit standards and down payment requirements.

Like all home loans, VA mortgages can be daunting. We recommend that you use this VA Loan Guide to learn about the features of this exclusive home loan benefit.

How VA Loans Work?

VA loans help active service members, veterans, and surviving spouses become homeowners. The individual submits a VA Certificate of Eligibility to the Lender in the context of the loan application. Although some of the lender’s underwriting requirements still have to be met, in most cases it is easier to qualify for VA loans than to qualify for conventional loans.

The Veterans Administration offers a home loan guaranty benefit and other housing-related programs to help qualified veterans or their eligible family members buy, build, repair, retain or adapt a home for personal occupancy. VA loans offer up to 100% financing on the value of a home. VA loan recipients do not have to be first-time home buyers. Also, they may reuse the benefits and assign the loan to another qualifying person. 

The terms of VA loans are quite generous, compared to other mortgages and even federal loan programs. Among the advantages:

  1. No down payment is mandated unless required by the lender, or if the residence’s purchase price is above the established property value.
  2. There is no private mortgage insurance premium requirement.
  3. Closing costs are limited and may be paid by the seller.
  4. The lender may not charge a prepayment penalty if the borrower pays off the loan early.
  5. Assistance is available from the VA to help borrowers avoid default.

LEARN: How to Access FHA Loans (Eligibility, Requirements and Application Process)

Types of VA Loans?

The VA offers several types of mortgage loans to help veterans and their families.  Here’s a rundown of some popular VA loan programs.

1. VA Home Purchase

VA home purchase loans help veterans to buy a home at a competitive interest rate. Often these purchase loans do not require a down payment or private mortgage insurance.

2. Cash-Out Refinance Loans

Cash-out refinance loans allow mortgage holders who are veterans to borrow against home equity to pay off debt, fund school or make home improvements. This refinancing option offers a new mortgage for a larger amount than the existing note and converts home equity into cash.

3. Interest Rate Reduction Refinance Loans (IRRRLs)

Interest rate reduction refinance loans (IRRRLs), also known as streamline refinance loans, help borrowers obtain a lower interest rate by refinancing an existing VA loan. This is a VA-loan-to-VA-loan process that allows homeowners to refinance a fixed loan at a lower interest rate or convert an adjustable-rate mortgage (ARM) into a fixed-rate mortgage.

4. Native American Direct Loan

The Native American Direct Loan Program helps eligible Native American veterans finance the purchase, construction or improvement of homes on federal trust land. Reductions in interest rates also come with these loans.

5. Adapted Housing Grants

Adapted housing grants help veterans with a permanent and total service-connected disability to purchase or build an adapted home or modify an existing home for their disability.

Eligible Requirements to Access the Best VA Loans in Michigan

To be eligible for a VA loan, you or your spouse must meet the basic service requirements set by the Department of Veterans Affairs (VA), have a valid Certificate of Eligibility (COE) and satisfy the lender’s credit and income requirements.

Generally, you’re eligible if you fall into one of these three categories:

  1. You’re an active duty service member or an honorably discharged veteran who has 90 consecutive days of active service during wartime or 181 days of active service during peacetime.
  2. You have served more than six years in the National Guard or the Selected Reserve.
  3. You’re the spouse of a service member who died in the line of duty.

If you were to go through the application process, you would need a Certificate of Eligibility (COE) to show mortgage lenders that you qualify for a VA loan. You can apply for a COE through the VA website, by mail, or through your lender.

VA Loan Credit and Income Requirements

The VA does not set a minimum credit score requirement for VA loan eligibility, but lenders typically do. Because of this, VA loan credit score requirements vary by lender, with most lenders typically requiring a minimum 660 mortgage credit score.

In addition to credit score, the VA requires borrowers to maintain a certain amount of income left over each month after all major expenses are paid. The excess is meant to cover typical family needs, such as food, transportation and medical care, and is known as residual income.

By enforcing residual income requirements, the VA increases the chances of its borrowers earning sufficient income to meet all financial obligations, and also ensures borrowers have a cushion in the event of an emergency.

What Are VA Loan Benefits?

The VA Loan Program is the most powerful mortgage program on the market for many veterans, service members, and military families. These government-backed flexible loans come with high interest rates that open the doors of home ownership to veterans who may be struggling to obtain financing.

Here are some of the key features and benefits of a VA loan:

1. You can buy a home with no down payment.

VA loans are one of the last zero-down home loans available today. In 2018, around 50% of homes bought using a VA loan were bought with zero down payment.

2. No limit to the amount you can borrow on a VA loan

There is no limit to the amount you can borrow on a VA loan, but there is a limit to the amount of liability the VA takes on. For 2019, the VA will guarantee a maximum of 25% (up to $121,087) of a home loan amount, which corresponds to a maximum loan of $484,350. Anything beyond that won’t be guaranteed by the VA. Sound dangerous? It can be!

3. No Need to Pay for Private Mortgage Insurance

You won’t have to pay Private Mortgage Insurance (PMI). Since the loans are backed by the government, you can kiss PMI goodbye! PMI can range from 0.5% to 2.25% of your loan. So for a $200,000 loan, if your PMI rate was 1% that would mean an additional $166 to your mortgage payment each month!

4. No minimum credit score requirement

There’s no minimum credit score requirement. But lenders typically still look for borrowers with a credit score of 620 or higher. Although we believe your ideal credit score would be zero—because that means you have no debt!­—be aware that no credit score might put lenders on edge when it comes to giving you a loan.

5. Assistance for struggling borrowers facing a potential foreclosure

The VA offers assistance for struggling borrowers facing a potential foreclosure. The agency’s loan technicians can negotiate with lenders on behalf of borrowers who are having trouble making mortgage payments.

6. No prepayment penalty

There is no prepayment penalty. This means you won’t be fined if you pay off your loan early.

7. Not limited to first-time home buyers

You don’t need to be a first-time home buyer in order to get a VA loan. As long as you pay it off each time, you can use the benefit again and again.

8. Bankruptcy and foreclosure won’t permanently affect your chances.

If you’ve filed for bankruptcy or gone through a foreclosure, you can still qualify for a VA loan after two years have passed from the date of the bankruptcy or foreclosure.

VA Loan Limits

Qualified veterans with their full VA loan entitlement can borrow as much as a lender is willing to extend, all without a down payment. The VA loan limits only come into play for buyers with less than their full entitlement, either because they have one or more active VA loans or because they’ve lost a previous one to foreclosure.

What Are The Best VA Home Loans in Michigan?

The best VA home loans in Michigan vary depending on your needs, but many offer competitive deals for a variety of potential borrowers. The best will offer a low annual percentage rate, long repayment terms, and little to no fees. And of course, your personal needs and financial profile will also affect the type of lender you find ideal. If you live in Michigan, USA and need a VA loan, these are some of the best lenders you can use.

We select them based on the length of loans, current rates, minimum credit scores accepted by lenders, the application process, autopay features, and industry reputation for customer service.

1. Veterans United: Best Overall

Veterans United won best overall for VA loan rates because this lender specializes in VA loans, veterans are their primary clients, and they have many loan program options.

2. PenFed Credit Union: Best 30-Year Fixed

PenFed Credit Union earned the top spot for best 30-year fixed because its current rate is 2.375% with no points, carries no lender fees, provides 24/7 account access online, has discounts for members, and serves members in global locations.

3. Navy Federal Credit Union: Best 15-Year Fixed

Navy Federal Credit Union (NFCU) has our best 15-year fixed VA loan rate program because the current rate is only 2.375%, among the lowest of any lender.

4. USAA: Best Jumbo Loan

We have awarded the USAA the title of Best for VA Jumbo Loans because it allows you to borrow up to $ 3 million, does not have private mortgage insurance, and allows you to finance the VA funding fee.

5. LendingTree: Best ARM Loan

LendingTree is the best for VA adjustable-rate mortgage (ARM) loans because it will provide you with more options to compare rates and terms across several lenders.

6. Quicken Loans: Best Customer Service

Quicken Loans is not only the largest mortgage lender in the country, it’s also the second largest originator of VA loans by volume. Known for its customer service, Quicken offers an easy application process that can be initiated online through its Rocket Mortgage online platform or by phone.

You can apply for a 15, 25, or 30 year fixed rate VA loan to either purchase a home or refinance an existing VA mortgage. Quicken can help get verifying eligibility, accessing employment records, and obtaining your COE. Quicken will also approve VA loans with one of the highest DTI’s a lender can require (60%).

VA Home Loan Application Process

Veterans and service members don’t need to know if they’re eligible for a VA loan to try and start the process. You’ll get a good handle on your ability to land a VA loan during the first step – loan preapproval.

The VA loan process typically takes 30 to 45 days once you’re under contract on a home, although every buyer’s situation is different. Applying for a VA loan doesn’t obligate you in any way to a particular lender or to moving forward with the homebuying process.

Here’s a look at the four basic steps to applying for a VA Home Loan:

  1. Familiarize yourself with the broad VA loan eligibility requirements above
  2. Contact a VA-approved lender like Veterans United Home Loans and start your VA Loan application
  3. Obtain your Certificate of Eligibility through your lender or on your own
  4. Finalize your loan application and provide all necessary paperwork to your lender, including W-2s, tax returns and additional financial information.

LEARN ALSO: How to Access SBA Loans (Eligibility, Requirements and Application Process)

How to Choose the Best VA Home Loans In Michigan?

When you are ready to take the first formal steps toward using your VA home loan benefits, assess your eligibility and obtain pre-qualification, you will need the help of a VA approved lender.

It’s easiest to get a large amount of a mortgage when you come to the table with great credit and space in your budget to pay for a new home. Your credit score not only affects your ability to qualify, but also your ability to take advantage of the best interest rates available.

If you are not sure of your position in terms of credit scores or debt-to-income ratio, getting pre-qualified with at least a lender will help you determine the best way to make improvements. Some lenders may offer credit education, allowing you to continue the work toward home ownership while improving credit or paying off debt.

Remember to make a list of your priorities, which includes rate, fee, VA experience, and customer satisfaction in terms of what you consider most important when buying a home. When you are comparing lenders, your list will help you choose the one that suits your specific needs.

We hope this information helps you to find the best VA home loans in Michigan.


Leave a Comment