VA Loans for Uses Other than Buying a Home
When discussing VA loans, people tend to think that they can only be used to finance the purchase of a new home. However, that is just one of the dozens of a VA loan’s purposes. The Department of Veteran Affairs (VA) offers these loans to provide different kinds of benefits to veterans.
A VA loan can be taken to improve your existing home, increase energy efficiency or buy/repair many other applications. Do not shy away from asking for a VA loan if you need to spend big on property. The most common VA loan uses other than for the purchase or refinancing of a home is for home improvements. In fact, if you are buying a pre-existing home, it makes sense to apply for a loan to make the needed improvements before moving in.
The department is willing to finance home improvements for energy efficiency too. However, money for these improvements should be for one of the following:
●Storm or thermal doors and windows
●Purchase of energy efficient furnace
●Modifications to old furnace
●Solar heating and cooling systems
●Insulation for water heaters
●Insulation of the home and that of the attic, walls, floors and doors
●Any home improvement that, if your lender is convinced, lowers your utility costs in the long run
The VA offers this option to veterans because energy-efficient home improvement can help veterans save a lot on their utility bills. You can borrow up to $6,000 without a new appraisal. You should keep in mind some important facts when applying for a VA loan for home improvement:
●For borrowings up to $3,000, you only need to show documentation of receipts from improvements. This would not include the cost of your own labor.
●If you need to borrow more than $3,000, the documentation should prove that the additional dollars you will add to the monthly payment will be offset by the money that you will save due to the improvements.
●You will need to contact your local utility companies to get a hang of the amount you are likely to save by proposed improvements. These companies will also provide you with certification of the same that will work as proof for your lender.
●Your lender will open an escrow account so that you spend money only on the specific improvements that you intend to make.
You will need to learn a bit more about a VA loan funding fee, as that will be different in the case of home improvements.