Hedy’s Hints: VA construction loans assist veterans looking to build or rehab …
Thanks to a loan program from the Veterans Affairs Administration (VA), qualifying military veterans now have several borrowing options available when looking to build or refurbish a home.
With current interest rates and available inventory, there has never been a better time for returning service men and women to invest in a new home (or to make renovations to an old one!)
Types of available loans
- A VA Home Loan can assist qualifying veterans in several areas:
- Purchase owner-occupied residential property
- Refinance an existing home
- Make energy efficient upgrades and improvements
- Build a new home
Depending on the circumstances, some borrowers may be able to purchase a home with no money down. The requirements for applying for any VA loan are pretty similar across the board.
Construction Loans
If borrowers are looking for financing for new construction, they will be required to submit blueprints and construction plans for the proposed property and enlist the services of a licensed contractor. The lot for the proposed construction may either be bought separately or included in the estimate for the construction loan. Soft fees like taxes and fees may also be included in the loan amount in some cases.
As part of the building and construction plan the lender will require in order to approve the construction loan, the borrower must design and manage a building schedule with the contractors for payment, as the financing is provided according to this timeline and funds are released for payment as each phase is completed.
Private to VA loans
In some situations, specifically where the borrower has been pre-approved for a VA loan, a veteran may borrow from a private lender for construction costs to begin building on the property. Once the construction is completed, the VA loan, also known as a permanent mortgage can replace the construction loan from the private lender.
Rehabilitation oans
Rehab loans are similar to construction loans in that the VA provides loan guarantees, in this case for the purpose of making repairs to a property, such as:
- Roofing
- Floors
- Kitchen and bathroom remodels
- HVAC systems
Energy efficiency upgrades
In some cases, lenders can increase a VA loan amount by as much as $6,000 for energy efficiency upgrades such as:
- Solar heating
- Storm windows
- Insulation
Finding the right loan and financing options can be challenging and overwhelming, and prospective buyers should always consult with a knowledgeable real estate professional for guidance and advice about the process.
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Hedy Goldman has lots of knowledgeable information to share. She has been practicing real estate since 1996 and is a 2010 gold award winner at Windermere Real Estate SoCal. Hedy sells all over San Diego, but specializes in North County Coastal. She can be reached at (858) 504-2334 or San Diego Realtor.
