The Differences You’ll Find Lender to Lender For Your VA Loan

There is often a lot of confusion surrounding the nature of VA loans. Many mistakenly believe that simply being eligible for a VA-guaranteed loan means that they will be able to get one. The VA forces no lender to offer or approve any VA loans, so it may be hard to find a good lender that will approve your application for a VA loan. There are a lot of differences between lenders, and it’s important to find a lender that will treat you the best, has the lowest fees, and that you can get along with. It’s important to know what differences you can expect lender to lender so you can discern which lender is best for your loan. The most important differences you’ll find lender to lender are what types of VA loans they’re willing to approve, the fees they charge for their loans, and of course their personality and the culture surrounding their office.

First, the difference between what types of loans they are willing to offer. The VA offers plenty of different options for VA loans. Everything from purchasing an existing home, building anew with a construction loan, buying a manufactured home, buying a condo, buying a multi-unit home, to combining the VA loan benefits of two eligible veterans, having a non-veteran co-sign with a veteran on a loan, and even more options. However, for all these options offered by the VA, lenders are not required to offer them, even if they are a VA-approved lender. Many times, lenders or banks will choose to temporarily suspend one or more types of loans because of what the housing market is like. Currently, a VA-eligible borrower will find it very difficult if not impossible to find a VA-approved lender that will approve a new VA construction loan because of the higher risk involved and the current market.

It may also be difficult now to find a VA-approved lender to do a VA loan for a manufactured or mobile home. Reasons for this vary, and it may be worth asking a lender why they choose to not offer some types of VA loans. Often, their answer will be very enlightening. While these options may be difficult to utilize now, it doesn’t mean that they’ve gone away and will never come back; there may come a time when construction loans are the cat’s meow. For a prospective home-buyer, it’s best to approach the market with an open mind even if they have a preference of the type of loan they’d like to get. For types of loans that most lenders won’t offer, chances are that the lender you find that will is going to offer very unfavorable terms on the loan.

The next big difference between VA lenders is the terms they’ll offer you for your loan. Not everyone will offer you the same interest rate, and it’s best to shop around to different lenders to find the one that will offer the lowest interest rates. It’s usually best to do this with a direct question – e.g. “What is the rate for a VA loan today that’s good for 30 days on a $300,000 30 year ARM with no points?”. Getting rates from multiple lenders is often done via a loan officer and is much more convenient that way, allowing you to compare multiple quotes side by side. But the interest rate is not the only thing that separates lenders; they will also have different fees they charge. The one constant fee that won’t change across lenders is the VA funding fee, because it’s charged by the VA, not the lender. Finding out the closing costs of each lender and adding that to your consideration is a very important part of choosing one.

The last is the personality of the lender and the culture of their office. You’ll want to pick a lender that is going to be willing to work with you if something happens and you face defaulting on your loan. Can you imagine working with a lender that you just couldn’t stand or trust in a situation where you might lose your home? You’ll want to choose a lender whose office carries the type of culture that you might enjoy working in. While this may seem like a frivolous thing to look for in a lender, it becomes quite important in all the arranging of your loan, both before and after closing.

What is the Vow to Hire Heroes Act? Does it affect VA Loans?

The Vow to Hire Heroes Act was signed into law in November 2011. Its primary focus (as the name would imply), is to end or significantly reduce veteran unemployment. There are millions of job openings in the United States right now, but one of the biggest reasons that those jobs aren’t being filled is because of the specialized training they require. Many open jobs require training or certification in a certain field of technology, and many unemployed veterans do not have the education and training in those fields to take those jobs. As of November 2013, two years after the Vow to Hire Heroes Act was signed, veteran unemployment has dropped a full percentage point to 6.7%, now just .3% above unemployment among the civilian population.

The first thing that the Vow to Hire Heroes Act does is expand education and training assistance to unemployed and disabled veterans. For unemployed veterans, it can provide up to a full year of additional Montgomery GI Bill benefits to assist veterans in getting into high-demand sectors like trucking and technology. For disabled veterans, it provides an additional year of VA Vocational Rehabilitation and Employment benefits if their unemployment benefits have been exhausted. With funding and assistance targeted directly at enabling veterans to find better work, the Vow to Hire Heroes Act seems to have done very well.

The next thing the Vow to Hire Heroes Act does is improve on the Transition Assistance Program (TAP). TAP is a program that helps educate servicemembers as they leave the military about civilian life. It explains many of the basics of job searching and working in the private sector. TAP helps a servicemember know how to translate their job and work experience in the military into civilian terms to help a potential employer know how valuable they are. The Vow makes TAP mandatory for nearly every servicemember leaving the military. The Vow also refreshes the program to make it applicable and relevant in the current job market.

For those veterans who would seek a civil service job as they leave the military, the Vow also allows them to acquire their veterans preference status prior to separation. Since getting a civil service job can sometimes take months, allowing the veteran to begin the process before separating reduces the likelihood that the veteran will need to use unemployment benefits after leaving the military. The Vow also brings the Department of Labor into the mix by requiring them to analyze the training that military members receive and compare them to licenses and certifications in the civilian world.

In regards to VA loans, the Vow to Hire Heroes Act merely changes the structure of the VA Loan funding fee. In actuality, the Vow to Hire Heroes Act just reverses some of the previous changes to the funding fee structure, so it changes it back to what it was before. The change to the funding fee structure is found in Section 265 of the Vow. The Vow, in effect as of November 22, 2011, brings the funding fee amounts back up to the levels that changed on November 18, 2011, just four days earlier. So for loans closed in between the 18th and 22nd of November 2011, the lower funding fees apply. But for loans closed on or after 11/22/2011, the higher funding fees apply.

Here are the funding fee rates for first-time use of a VA loan after 11/22/2011: If the down payment is less than 5%, active duty pays a 2.15% funding fee, and Guard/Reserve pays 2.4%. If the down payment is between 5% and 10% the funding fee is 1.5% for active duty, and 1.75% for Guard/Reserve. If the down payment is higher than 10%, the funding fee for active duty is 1.25% and for Guard/Reserve is 1.5%.

Here are the funding fee rates for subsequent uses of VA loans closes on or after 11/22/2011: If the down payment is less than 5%, active duty pays a 3.3% funding fee, and Guard/Reserve also pays a 3.3% funding fee. If the down payment is between 5% and 10%, the funding fee is 1.5% for active duty, and 1.75% for Guard/Reserve. For down payments over 10%, the funding fee is 1.25% for active duty and 1.5% for Guard/Reserve. As you can see, for down payments over 5%, the funding fees for subsequent uses are the same as they are for first-time use.

Mil-to-Mil Couples and VA Loans

A mil-to-mil couple is a couple where both spouses are members of the armed forces. Most anybody who’s served in the armed forces is familiar with this phrase, but what is often less familiar are some of the mortgage advantages that a mil-to-mil couple has.

You can figure out some of the advantages by considering all of the benefits a veteran is entitled to and then multiplying them by two, but there are some benefits that go beyond that.

VA Home Loan Benefits for Military Couples

There are multiple advantages available to mil-to-mil couples on VA loans. The option that will work best for you depends on your personal situation and goals.

Using One Spouse’s VA Loan Benefit

Mil-to-mil couples can elect to have one spouse use all of his or her VA loan entitlement on the mortgage, while the other doesn’t use any of it.

This can be helpful in a few scenarios. For example, if the couple ends up defaulting on the mortgage, they still have the other spouse’s VA loan entitlement to use on another home. Additionally, in the event of a divorce, one spouse has the option to find a new home and finance it with a VA mortgage.

The spouse not using their entitlement can still be financially obligated on the loan if they co-sign on the mortgage. While this is a common and very advantageous way to utilize the dual VA loan benefits a mil-to-mil couple has, it is certainly not the only option available to them.

Combining VA Loan Benefits

Another option that the couple has is to combine their two entitlement amounts onto a single loan.

In this way, the couple can double the guarantee to get a more expensive home – or perhaps even negotiate a better interest rate. When a couple does this, the financial obligation for the mortgage is divided in half between the two spouses, and each of the spouse’s entitlement amounts are equally drawn from in order to cover the amount of the loan.

This is most advantageous when the couple is not expecting to move or purchase another home again in the foreseeable future. In this way, they can purchase a home that their family can grow in and that they can eventually retire in.

If the couple is expecting to move again, even if it’s ten years from the date of closing the first loan, they may want to consider the first option and compare how much they’ll save in the long run with each option. When doing this, it’s best to consult with a VA-approved lender who is familiar with amortization schedules (like Low VA Rates) and will be able to help you understand your options.

Combining Partial and Full Benefits

A possibility for many mil-to-mil couples is to use the remaining entitlement for one spouse and all of the entitlement for the other spouse. This option can present itself after one spouse’s entitlement has been used and something happened that required the VA to pay money on his or her behalf.

In the case that that spouse’s entitlement was only partially used up, the couple could combine what is entitlement is left with all of the other spouse’s entitlement and still have a more advantageous loan than either would have on their own.

Another situation where a couple may want to use part of one spouse’s benefits is if one of the spouses had a loan that used up some of their entitlement before they got married.

It’s important to remember that anyone who purchases a home using a VA-guaranteed loan must be intending to occupy the home as their primary residence.

In Conclusion

There are all kinds of benefits available to mil-to-mil couples when it comes to VA loans. If you have any questions about your VA loan benefits, don’t hesitate to contact Low VA Rates. Our experts can help.

What Happens to My VA Loan If My House Is Destroyed?

Hopefully you never need to know the answer to this question. But if it comes up, it’s something you’ll be glad you knew in advance because it gets pretty complicated. If a tornado, earthquake, hurricane, freak ice storm, or some other natural disaster comes your way, you’ll have plenty of things to worry about even if you know exactly what to expect and what needs to be done in regards to your home.

We’ll cover the basics here, but we encourage you to do more research on any areas you would like more information on so that you can be prepared if a natural disaster were to strike.

The topics we’ll cover first fall under the category of loan origination issues. The first, which most people will probably qualify under, is a loan that was closed prior to the disaster. If your home was purchased with a VA loan and then was damaged by a natural disaster, the loan is still eligible for the VA guaranty. In all disaster areas, the VA strongly encourages lenders to extend every possible option to forbear a foreclosure for borrowers in distress.

One thing many do not realize is that prepayments or extra principal payments above and beyond the minimum monthly mortgage payment can actually be brought up and count as your mortgage payment in the event of a natural disaster. It’s also possible to have the loan terms modified without prior approval from the VA if certain circumstances permit (one of which happens to be a natural disaster). The VA also requests that late fees be waived and credit reporting be postponed for loans affected by the disaster, it is up to the lender to decide whether to honor this request.

For a VA loan, it is the loan holder’s responsibility to evaluate damage to a property from a natural disaster and advise the borrower on possible actions they can take. The loan holder then presents a report to the VA Regional Loan Center. Thankfully, the VA requires that a home be sufficiently insured against hazards, and the proceeds from the insurance can be the line that connects the dots in a disaster situation.

There will always be a few people caught in that awkward position of having had the home they’d like to buy appraised, and then damaged in a natural disaster before they closed on the loan. For those in this situation, all hope is not lost; that loan can still be eligible for a VA guaranty. However, in order for it to be eligible, there are some things that are needed.

First, you’ll need two certifications: a lender’s certification and a veteran’s certification. The purpose of the two certifications is for the two parties to both affirm that they have looked at the property and found that is was either not damaged in the disaster or it was returned to its pre-disaster condition. Before the home can be purchased with a VA loan, it needs to reach VA appraisal minimum property requirements.

In addition to the certifications, a VA loan summary sheet (VA Form 26-0286)  must be submitted. If there is any indication that the value of the property will be lower than it was before the disaster, even after repairs, then the VA appraiser must update the fair value estimate.

Finally, there needs to be a certification that the lender has confirmed that the borrower’s income and employment situation has not changed since the loan application was submitted.

So if you’re a VA loan holder, remember to contact your mortgage company as soon as possible regarding any losses that might have occurred during the disaster.

One important thing to remember is that you are not excused from making your monthly mortgage payments under any circumstances, even if your home is a pile of rubble.

Contact your insurance company as soon as possible (especially if your home is a pile of rubble), but do not be hasty in making a settlement. Get quotes for repairs of structural damage and anything else, and make sure that any checks from your insurance company are made payable to you and only you, or possibly to your mortgage company if the check is for damage to the home.

You’ll also want to contact FEMA (Federal Emergency Management Agency). They can help you find resources to help cover loans and obligations that might be very difficult for you to cover after a disaster.

A natural disaster can definitely throw kinks in the loan closing process, but many of these obstacles can be overcome.




The Privacy Act and Your VA Loan

Anytime you are applying for a VA loan there are always concerns about disclosing your personal data, especially today when there is so much of a threat of identity theft. But some personal information is essential in the application process for a VA loan (or any loan, for that matter). While you shouldn’t be suspicious of some requests for information, there are some things that should not need to be provided. It’s always best to be aware of what is appropriate information to provide and what information should not be provided. You should also be aware of how that information is provided, whether on a form, over the phone, or unofficially.

Ironically, the reason this information is needed for a VA loan applicant is the same reason that causes most people to be skittish about giving it out. A VA loan lender needs to verify not only your identity but also your financial situation and history. If you know why a lender needs personal information, it becomes much easier to be confident in providing it to them. The first thing that your lender will need to process a VA loan application is your social security number. This is a unique identification number as a citizen of the United States and is one of the best ways to verify your identity. Regardless of the type of loan you’re applying for, you will most certainly be expected to provide your social security number very early in the process. Do not be affronted by this request.

Your social security number is required by the lender to prevent both identity theft and mistaken identity (there could easily be two John Smith’s). Requiring a social security number, and often a copy of your social security card, is a barrier to those who might try to open a loan in your name – they would have to have your social security number already in order to do so. In addition, when pulling a credit report on you, it probably would not be great if they accidentally pulled someone else’s with the same name. Having you provide a social security number is a way they ensure that they are pulling the correct person’s report. Specifically for VA loans, the social security number is also the main identifier in the records of the Department of Defense. The DoD uses the social security number to make sure the person’s information is used appropriately.

It is the lender’s responsibility to handle all credit information and obtain any necessary documentation and verification for the VA loan application. Part of that process is getting the social security number from the borrower. This is a non-negotiable part of the process and is essential in both identifying you as the borrower and protecting your identity. There is no need to be afraid of giving your social security number to a legitimate lender, and no reason to be suspicious of them asking for it. In addition to your social security number, you’ll also be asked for other personal and sensitive financial information.

It is not abnormal for a lender to ask for your bank information, such as your bank account number and routing number. However, there should always be a reason for doing so. Feel free to ask the lender why that information is required, and they should be able to provide a clear and compelling reason. If extra funds for energy efficient upgrades are being added into the loan, it may very well be that the lender needs your account information to deposit the funds into.

Also, be prepared to provide a fair amount of financial and tax documents. As part of employment and income verification, expect to provide w2 forms from at least the past year, and recent pay-stubs. You may be required to provide bank statements with some transaction information for the past year or several years. This is all normal. Be aware that some illegitimate lenders will pretend to offer outrageously good deals but actually be merely trying to get enough information to steal your identity. While this isn’t nearly as big of a problem with VA loans, since every lender who offers VA loans needs to be approved by the VA, it can still happen, and it’s best to always do your homework before applying for a VA loan with a lender.




The What, Why, When, and How Much of VA Loan Funding Fee

The Department of Veteran’s Affairs (VA) offers eligible veterans and servicemembers a special loan guaranty called the VA loan. The VA loan guaranty allows the eligible veteran to go to any VA-approved lender and apply for a loan that the VA will guarantee, either the whole thing or at least a significant portion. A VA guarantee means that the VA promises the lender that if the borrowing veteran defaults on the loan, the VA will make good on the remaining balance. As part of this program, borrowing veterans are charged a VA funding fee when they close a loan with a VA approved lender. But what is this funding fee? Why does it exist? When is it charged? and How much will it cost?

The VA funding fee is a certain amount the VA charges the veteran in exchange for guaranteeing a significantly larger amount on behalf of the veteran. The amount that a borrowing veteran saves on the favorable terms of a VA-guaranteed mortgage far exceeds the amount that is asked for in the VA funding fee. The VA funding fee is different from Mortgage Insurance Premiums (MIP) which are not charged on a VA loan, even if there is no down payment. Instead, the amount of the VA funding fee changes based on the amount of the down payment.

So why does the VA Loan funding fee exist? The funding fee exists because the money the VA pays anytime a veteran defaults on a mortgage has to come from somewhere. The VA loan program is supported in part by taxpayer dollars, but anyway there is to help make the program more self-sustainable, the VA is interested in. Why? Because it’s less likely to get cut in times of budgeting. If the VA can show that their Loan Guaranty program covers a significant chunk of its own expense and only relies a little on taxpayer dollars, the VA Loan program is more likely to survive and continue to be able to help veterans get homes when they otherwise might not be able to afford it. So the funding fee you pay for your VA loan is contributing to the program’s existence.

So when does the VA funding fee need to be paid? Typically, the VA funding fee is due at the time of closing of the loan. The fee can be paid in one lump sum or financed, but it must be paid (or the first payment made) at the closing of the loan. It takes place at this time because the VA needs the funding fee before they can guarantee the loan. By having the funding fee due right at the time of closing the loan, the VA can make sure they are covered in case of a default by the borrower, no matter when that default occurs.

So how much is the VA funding fee? That depends…. It depends on a variety of factors, including the amount of the down payment (as mentioned above), as well as the status of the borrower. Some borrowers are actually exempt from the funding fee completely. We’ll talk about those in a second. For those who are not exempt from the funding fee, the amount of the funding fee depends on whether you are/were a full-time service member or a guard/reservist, and how large the down payment on the loan is. The lowest amount of a funding fee charge that a veteran can get is 1.25% of the total amount of the mortgage. He or she can get that amount if they make at least a 10% down payment. For a guard/reservist, the lowest amount is 1.5%. If there is less than a 5% down payment made, the funding fee is 2.15%, and for guard/reservists, it is 2.4%.

You may be exempted from the VA funding fee under a variety of circumstances. If you are currently receiving disability checks from the VA, you are exempt. Also, if you would be receiving disability if you weren’t receiving retirement pay or active duty pay, or if you are a surviving spouse of a veteran who died of a service-connected disability. These exemptions have to be evidenced to the VA through a VA form 26-8937. It’s always good to check with a VA-approved lender to find out what your specific options are.




Seller Concessions and VA Loans

If you’re purchasing a home using your VA loan benefits, it will be advantageous to know and understand what seller concessions are and how they relate to your VA loan. Understanding what a seller concession is is actually pretty simple. A seller concession is a way that a seller can “sweeten the deal” when selling a home. Seller concessions on a VA loan can potentially save you thousands of dollars.

Seller concessions are classified based on how much value they have, and under what circumstances they were provided. The VA defines a seller contribution as, “anything of value added to the transaction by the builder or seller for which the buyer pays nothing additional and which the seller is not customarily expected or required to pay or provide.” Seller concessions on a VA loan are not allowed to exceed 4 percent of the home’s selling price. But to count as a seller concession it must to be something that the seller is “customarily expected or required to pay or provide”, so only things that could be considered out of the ordinary count towards that 4%.

Compared to conventional loans and FHA loans, the 4 percent limit is a good place to be. On a conventional loan, the limit is 3% while on an FHA loan the limit is 6%. The reason that a 4% concession limit is a good place to be is because it allows there to be significant help from the seller, but it also protects the buyer from finding themselves bribed into a mortgage that they can’t really afford. The percent limit on FHA loans is expected to be reduced soon for that very reason. But all this begs the question, why on earth would a seller want to throw in potentially thousands of dollars in concessions to the buyer?

It certainly isn’t done lightly. A seller might give concessions to speed up a sale when they’re in a hurry to get the property sold. Concessions speed up the sale by lowering the effective price of the property. Concessions can be an effective weapon for a seller when they’re in a tough market that’s got a lot of sellers and not many buyers. Thus, you can expect, that in areas and times when there are a lot of buyers and not many sellers, seller concessions are pretty hard to get. As mentioned before, seller concessions only include things that can be considered out of the norm for sellers to provide in the closing of a sale. So what things can be considered seller concessions? Let’s go over a few.

A semi-common one is a seller paying for the buyer’s VA funding fee. This amount can be anywhere from 2.5% to 3.3% and is certainly not chump change. If you find a seller willing to make this concession, it’s best to consult with a lender to find out if it really is a great deal or if the home is outside of your safe price range. The seller can also offer to cover or prepay the buyer’s property taxes and insurance payments on the home. This can be a nice incentive and is an effective concession for sellers when utilized. Often seller concessions come in the form of leaving furniture or appliances such as a nice television set or a refrigerator. These concessions are usually done because the seller would like to get rid of them anyway, and if they can throw it in and close a sale faster, it’s often worth it.

A seller can also pay extra points towards providing a permanent interest rate buydown, or providing escrowed funds to provide a temporary interest rate buydown. These types of concessions can be very valuable because their dollar value (under 4% of the price of the home) can lead to a much higher amount by the time the loan has gone a few years with a lower interest rate. A seller will also sometimes offer to pay off something else that the buyer is making monthly payments on to make the mortgage more reasonable. Something like a $200 car payment could make or break a sale on a home, and might be worth the seller dropping $8000 to cover the remaining balance on an auto loan for the buyer.

A last note of caution, if you have a seller that is trying to offer you excessive concessions, it could be a red flag that the house you are purchasing is being sold at an above-market value and they’re still getting the better end of the deal even after all of the concessions. When contemplating seller concessions, make sure to stay in close consultation with your lender.




VA Foreclosure Prevention Tips


If you’re in danger of foreclosure, this blog post on foreclosure prevention is for you. This can be a stressful, scary time. You might have lost your job. You might have emergency medical bills or other new financial challenges. Your house might not be worth as much as you originally paid for it. Maybe you don’t know how you’ll pay your next mortgage bill.

Whatever the problem is, you definitely want to avoid foreclosure, especially if it’s a VA foreclosure. Foreclosure can really hurt your credit options in the future. Let’s talk about ways to work with your lender and other parties to make sure that doesn’t happen.

There are more than 11 tips below, so you’ll be sure to find one or more to fit your situation.

Working with Your Lender

First, as soon as you’re in a situation in which you might start missing mortgage payments, go talk to your lender about it. You need to find out as soon as possible if your lender is willing to help. If not, you can move on to other options right away.

Your lender actually doesn’t want you to go into foreclosure because it’ll cost them. It’s easier for them to work out an alternative plan with you than to worry about a foreclosure. So ask them for help!

The first option your lender might explore is giving you a repayment plan if you have to miss a payment or several payments. Under this plan, instead of going into foreclosure you’ll make regular mortgage payments and pay a little extra each month in order to gradually pay off the payments you missed by a certain date. Your lender will decide the terms and length of the plan.

A different form of that type of plan is called a “special forbearance”. Your lender can give you a due date by which they need you to pay back all your missed payments. The difference is they won’t make you stick to a structured plan, and that’ll give you more flexibility. You might pay nothing one month and a lot another month.

One of the best deals your lender might offer is a modification of the loan, which is similar to a refinance. You almost get a clean start, because the lender adds your missed payments to the total of the loan and gives you a new payment schedule. You can resume monthly payments like normal. This can be a huge relief when you otherwise don’t see a way to catch up on back payments.

There are a few other ways your lender can help. First, they might give you time so that you can put together a private sale of the house. They won’t start a foreclosure while you’re finding the buyer and processing the sale. Second, they might agree to a short sale in which the house is sold and the lender accepts less than what you owe but still settles the debt. Third, your lender might accept the deed to your house instead of the payment of the mortgage. In that process, you’ll lose ownership but avoid a foreclosure.

 

Help from the VA and the SCRA

If you have a VA loan and your lender doesn’t want to help you or can’t think of a way to help, you can turn to the VA. Contact a Regional Loan Center of the VA. Your Loan Technician will talk you through all the different possible solutions to help you avoid VA foreclosure. He or she can also talk to your lender on your behalf and may be able to find a solution with them.

The Servicemembers Civil Relief Act (SCRA) is a US law that can help you if you’re a current military servicemember on active duty or a National Guard or Reserve member on active duty. Coverage begins when your active duty starts. Under the current law, you’re still covered for up to a year after your discharge from the military.

SCRA prevents your lender from foreclosing on your home while you’re away on active duty (except through a special court order). It can also prevent your mortgage interest rate from rising above a certain level. Also, it won’t hurt your credit score if you miss payments while you’re protected.

Five More Tips to Avoid Foreclosure

If the tips above don’t fit your situation, or you just want to try other options, here are five more that can help you with foreclosure prevention.

Get Financial Advice

You can make a plan with a professional financial advisor. An advisor might see options that you haven’t thought of. They can help you use extra money in your budget or untapped resources to make your monthly mortgage payments. You may even have a family member or friend with this level of expertise who’d be willing to help you.

Borrow Money from Private Sources

You might be able to borrow the money you need to make your mortgage payments on time from a friend, family member, or someone else you know well. It’s best if you’ve already built a high level of mutual trust with that person. He or she may be more willing if you explain your concrete, realistic plan to earn the money to pay him or her back, such as a quick path to a new job.

Refinance Your Home

It might be easier to refinance your home than to go through other options, such as trying to get your lender to restructure your mortgage. You may even end up with a lower interest rate and lower payments, especially if you switch to a VA loan from a conventional mortgage. You can talk to Low VA Rates about getting a VA refinance loan.

Sell Extra Possessions

If there’s no more room in your budget and you still can’t make your mortgage payments, you might sell some of your possessions that you can bear to part with. That might give you enough to cover a payment or a few payments. It might be easier to live without those things than to go through a conventional or VA foreclosure.

Consider Selling Your Home

If you haven’t already thought about it, at least keep this option in mind. You might think there’s no other choice than to keep struggling with your mortgage payments. Maybe you can’t imagine selling or moving right now.

It wouldn’t hurt to at least find out how much you might be able to sell your home for. There’s a possibility that you might end up with more money than you think. Maybe you could use the money to buy a less expensive house with easier payments.

We hope that at least one of these tips can help you with foreclosure prevention. If you’re stressed out, know that you’re not alone. Many people would like to help—maybe even your lender! If you want more information on how a VA loan can help you, please contact Low VA Rates.




How Zoning Affects VA Loan Eligibility

It is often asked whether the zoning for a property affects its eligibility to be purchased with a VA loan. As a VA loan is intended to be used to help a veteran obtain a residence, and there are safeguards in place to make sure that the VA loan benefit is not abused, the short answer is: yes, zoning for a property affects its eligibility to be purchased with a VA loan. But the long answer explains just how zoning affects eligibility, and what types of zoning will prevent a property from being eligible. A VA loan can be used for a variety of properties, such as a home in the suburbs or an apartment.

The VA has regulations that cover everything from mixed-use buildings to single-family homes. But what about using the VA loan benefit to purchase a multi-use property, such as a duplex or quadruplex? Those types of properties are eligible, but there is a stipulation: the veteran applying for the loan has to also be planning to use the property as their primary residence. So in the case of a multi-plex, one of the units has to be occupied by the veteran. While this still opens up some options for the veteran, it certainly makes starting a real estate business with your VA loan a little more difficult. But that’s because that isn’t the purpose behind the VA loan.

 

There are many properties that are zoned as both residential and commercial. Examples include condos that are located above a store on the first level. The VA has a way of determining whether those properties are eligible. The VA uses the principle of “remaining economic life” to classify those types of properties as eligible or not. Remaining economic life is a measurement of how much longer the residential aspect of the property will be open to be lived in. To qualify for a VA loan, the property must be determined to have a remaining economic life of at least 30 years (coincidentally the same amount of time that a typical mortgage will last).

 

Only an official appraiser can determine the remaining economic life of a property. There is actually a lot of work that has to be done before it can be determined. This is because a VA appraisal of the property doesn’t take place until you’re already approved for the loan, have chosen the property, and are working on finalizing the the loan. It’s smart to do your homework and find out if the property is going to have sufficient remaining economic life, but it cannot be officially determined until the VA appraiser examines the property. However, there is an option for houses that have a remaining economic life of less than 30 years. If the property does have a remaining life lower than 30 years, an adequate explanation of why the property is desired and why it is considered to not have the needed amount of remaining life is required. The actual remaining life must be specific and not arbitrarily established. The primary reason for this stipulation is to protect the veteran from being in a situation where their home is condemned or no longer sellable while they still have more to pay on their mortgage for the property. A financial vice like that could put a veteran’s family underwater.

 

Somewhat surprisingly, there is another factor closely related to the above that is not considered by the VA. On a property with mixed zoning (commercial and residential), the VA only considers the estimated remaining life of the residential portion of the property. But there are circumstances where the residential portion meets the 30 year requirement but the commercial portion does not. In this case, it is completely up to the veteran to make a wise purchasing decision. The commercial property might become less valuable or even unsalable. If that happens, you can expect to have a great amount of difficulty selling your home if you try to move. Being able to use your VA loan benefits to pay for both a home and store-front or other business is certainly appealing, but it is important to realize that the real estate markets, both commercial and residential, can be volatile, and 30 years is a long ways out.




VA Home Loans: Common Questions and Answers

Buying a Home is a big deal, one of most important events and decisions in a person’s financial life. There are probably a hundred questions to be answered about securing a loan for that new home. For military veterans and current service members wanting to exercise their VA home loan entitlement, several questions come to the front as they ramp up for this big event.

You might be surprised at how easy it can be to get your veterans mortgage financing. VA mortgage interest rates are still at historic lows.

Q. What can I use the VA-guaranteed loan for?
A. To buy a home, either existing or pre-construction, as a primary residence, or to refinance an existing loan.

Q. What are the benefits of a VA-guaranteed loan?
A. This is going to require a list!

  • No down payment (unless required by the lender or the purchase price is more than the reasonable value of the property)
  • No mortgage insurance
  • Equal opportunity for all qualified Veterans to obtain a VA loan
  • Reusable
  • One time VA funding fee that can be included in the loan
  • Veterans receiving VA disability compensation are exempt from the VA funding fee
  • VA limits certain closing costs a veteran can pay
  • Can be assumed by qualified persons
  • Minimum property requirements to ensure the property is safe, sanitary, and sound
  • VA staff dedicated to assisting veterans who become delinquent on their loan

Q. Who is eligible for a VA home loan?
A. Generally, the following people are eligible:

  • Veterans who meet length of service requirements
  • Service members on active duty who have served a minimum period
  • Certain Reservists and National Guard members
  • Certain surviving spouses of deceased veterans

Other people are also eligible. Check eBenefits  or contact the VA Eligibility Center at 1-888-768-2132.

Q. What are the underwriting requirements?
A. Here are some of the principal requirements:

  • No maximum debt ratio; lender must provide compensating factors if debt ratio is over 41%.
  • No maximum loan amount; however, VA limits its guaranty to $417,000 without a down payment in most of the country.
  • Published residual income guidelines to ensure Veterans have the capacity to repay their obligations while accounting for all living expenses.
  • No minimum credit score requirement; instead VA requires a lender to review the entire loan profile to make a lending decision.
  • Complete VA credit guidelines are published at www.benefits.va.gov/warms/pam26_7.asp .

Q. How do I get the process started?
A. Start by downloading the required forms.

VA provides policy, guidelines and oversight of the program. Lenders provide financing for eligible Veterans. The guaranty allows Veterans to obtain a competitive loan without a downpayment. Lenders need a Certificate of Eligibility (COE) to prove your entitlement. Most Veterans can obtain the COE online through eBenefits (www.ebenefits.va.gov). Lenders also have the ability to request the COE on your behalf.
The VA appraisal is not intended to be an “inspection” of the property. Get expert advice from a qualified residential inspection service before legally committing to a purchase agreement. Veterans are also encouraged to have radon testing performed.

Q. Is there any possibility of getting a VA loan if I’m having trouble on my current mortgage?
A. VA loan technicians are trained to help Veteran borrowers retain their homes and avoid foreclosure. You can call toll-free 1-877-827-3702 to speak to a VA loan technician.

If you have questions concerning your military qualifications for a VA mortgage loan, you can contact the VA directly. For those living in the Intermountain West and Pacific Northwest, the VA Regional Loan Center is in Denver. Here’s how to contact them:

Department of Veterans Affairs
VA Regional Loan Center
155 Van Gordon Street
Lakewood, CO 80228
(Mail: Box 25126, Denver, CO 80225)
1-888-349-7541

 

Get Started With Your VA Loan Today




The Basic Allowance for Housing and VA Loans

For active servicemembers, the Basic Allowance for Housing (BAH) is a handy boon if they are stationed in an area where housing is not provided by the military. The BAH is a monthly stipend or “allowance” for active servicemembers to use to rent or pay for decent housing. The BAH can also be very useful in helping to establish an easily-measured proof of the ability to pay of the veteran. The BAH doesn’t have to be used for a mortgage payment – it is most commonly used to rent an apartment, but if coupled with the VA Loan Guaranty, the BAH can be a huge help in getting a servicemember and his or her family a home to live in much sooner.

 

The BAH rate is tied to the local zip code, and thus can vary widely across the country. In areas where housing is generally more expensive, the BAH rate will also be higher. Conversely, in areas where cost of living is lower, the BAH allowance will not be as much. With this variance also comes a degree of fluctuation; that is, as the cost of housing goes up or down within a zip code, the BAH rate will also go up or down. This inconsistency sometimes causes a lot of grief for servicemembers who rent an apartment based on how much they are getting from the BAH, then have the rate change on them while they’re in the middle of the lease. There is a certain amount of protection from this sort of thing, however.

 

BAH protection allows servicemembers to keep the old amount they are still eligible for in the event that the BAH rate goes down. There are several categories of persons, however, that are not covered by this protection. If you receive permanent change of station (PCS) orders, and move to a zip code with lower cost of housing, you’ll receive the BAH rate for that zip code without really any exceptions. While renters can to a degree shrug that off, it can create a headache for someone who has been using it to make a mortgage on a VA loan. If they were not able to sell their home before the move, they might be stuck with a monthly mortgage payment for their old place, a rent payment for their new place, and less allowance than they were previously getting. While this is only a concern for those who choose not to sell their homes, it can make it difficult for someone to maintain a home to live in after service is completed.

 

A change of marital status will affect your BAH rate no matter what. If you were originally single when you moved into a certain zip code, you began receiving the “without dependents” BAH rate. Upon getting married, you will receive the “with dependents” BAH rate, which is higher. While that is a great thing, it’s important to realize that the opposite happens in the event of a divorce. If you’re getting the “with dependents” BAH rate in a certain zip code and then get divorced, you will be dropped back down to the “without dependents” rate. This can be problematic if you decided to move into a larger apartment to accommodate the two of you, or perhaps even decided to buy a home with a VA loan. While it probably won’t be a factor when considering a divorce, it should definitely be a factor when considering getting married and while making decisions about where to live after you get married.

 

A contributing factor to the BAH rate you will receive is your rank. As such, a demotion or promotion will impact (perhaps substantially) your BAH rate eligibility. Regardless of the reason, a demotion will result in a lower BAH rate and a promotion will result in a higher BAH rate.

 

As far as leveraging the combined power of the BAH benefit and the VA loan benefit, there are a few things that are important to know. First, the BAH rate is based off of the local renting averages, not mortgage averages. So if you plan on using the BAH to help cover your mortgage, it would be wise to keep in mind that the amount you get from the BAH may not be independently sufficient. If you’re hoping to keep the home that you’re currently paying a mortgage on, it may be in your best interests to take advantage of the BAH benefit to make double payments on your mortgage. Obviously, you should evaluate your budget and determine if this is a wise (or even possible) course of action, but if the BAH single-handedly knocks out your mortgage payment, adding on top of that will significantly reduce the amount of interest that you pay over time and help you pay off the home faster. For example, if you make double payments on a 30-year mortgage, you will actually slice about 20 years off of it; you’ll be paid off in 10 years. Often, it’s not possible to make a double mortgage payment, but if  you can, and you hope to keep your home for a long time, it is probably worth it.




Think You Can’t Qualify for a VA Loan? Think Again

It’s time to bust a few myths about qualifying for a VA loan. There are plenty of misconceptions about qualifying for a VA home mortgage loan, but we’ve included three of the most common reasons people think they won’t qualify for a VA loan—along with the reasons they may be wrong!

Myth 1: I can’t afford it.

Current VA interest rates are still among the lowest in half a century. In terms of value and affordability, these days are hard to beat! And VA mortgage loans are among the very best values in the home loan marketplace.

Next of all, a veterans mortgage loan does not require a down payment and, because the government guarantees the loan, you are not required to have home mortgage insurance either.  No insurance required and no down payment represent significant reductions to you as you factor in the amount of money you need to get into a home.

The last part of affordability is to plan. You won’t get far without a plan. You will find that setting up a strategy to pay off debt, and putting into motion another strategy to save a little bit of money each paycheck—no matter how modest—will pay huge dividends when it comes to improving your financial situation. Having a plan, and sticking to it, will give you the ability to make progress toward your goal of home ownership.

Myth 2: My FICO score isn’t high enough to qualify.

First of all, let’s get this right: the VA has NO min FICO score requirement, so don’t abandon hope if you have a low FICO score.  Each lender has their own overlays or underwriting restrictions that they place over the VA rules. One of the country’s most accomplished veterans mortgage loan companies works with  approved lenders that have NO minimum on VA streamlines and others  that go down to 580 score.

Here’s more good news. If you get a VA automated underwriting approval from FANNIE (DU or desktop underwriter) or FREDDIE (LP or loan prospector) some lenders will be OK regardless of your FICO since you have a guaranteeable loan.

If your FICO score is under 580, don’t despair.  Stay tuned because I’m about to show you some practical things you can do to improve that score immediately.

Myth 3: My financial past has doomed me.

Bad credit serves as a deterrent for lenders. That much is true. Whether it’s an old debt in collection or a bunch of maxed-out cards, mortgage brokers don’t look kindly on low FICO scores. After a rash of loose lending requirements, the mortgage lending industry now expects borrowers to show up with the best credit score possible.

With discipline, patience, and strategic fixes to your finances, most people can quickly bring their FICO score up to an acceptable level. Here’s how:

  1. Obtain your credit report and make corrections. If there are errors in dates, payment amounts or other information, file a dispute to correct the problem. Also make sure to dispute any old negative collections. Weston writes, “The older and smaller a collection account, the more likely the collection agency won’t bother to verify it when the credit bureau investigates your dispute.”
  2. Pay off credit card debt. Banks like to see a borrower with no more than 30 percent of her possible credit in use. Any more than that takes a toll on the FICO score. Increase your payments and work to pay off each card. MSN Money says, “While most debt gurus recommend paying off the highest-rate card first, a better strategy here is to pay down the cards that are closest to their limits.”
  3. Resist consolidating debt onto a single card. It’s usually best to leave older accounts open and have several accounts rather than one larger one. Plus, applying for a clean card to make a balance transfer can ding your FICO score.
  4. Be very cautious of debt consolidation or debt-relief plans that offer a quick fix. Even though many of these businesses promise to remove bankruptcies, foreclosures and judgments, they often do little to earn the hefty up-front fee they charge.  A slow, sure, steady approach is the responsible way to repair past financial mistakes.
  5. Verify that any default judgments are appropriate and legal. If there’s a judgment from a case that you don’t remember, it’s possible that the summons was purposefully served to an old address to elicit a default judgment against you. Go to the presiding court and file a motion to vacate. This takes a small payment and may require a new court date, but it could potentially knock a credit score-killing judgment from your record.

Don’t allow the past to ruin the future. Take advantage of the present to improve your financial health and open the door to that new VA financed home.

Get Started With Your VA Loan Today




Start with the Certificate of Eligibility

You know, there will come a day when we look back on the present and realize, probably with a degree of astonishment, how favorable the present truly [was] for buying a home. There will be those delighted with a new home and the satisfaction that they did everything they could to get their VA home mortgage loan. And there will be those without a home, sporting instead a healthy dose of regret.

The professionals at lowvarates.com have made it simple for you to apply for your veteran’s home loan. Not only do they strive to provide some of the lowest rates in the business, they have a team of working professionals who can answer all of your questions and handle all the paperwork.

Start with your COE

Your VA mortgage loan begins with your Certificate of Eligibility (VA Form 26-1880).  You can download the form right from the lowvarates.com website in the links section.  Obtaining your COE is the starting point, because even if you are already approved for a VA loan, without your COE form you cannot get a VA loan.  That’s because your COE is the VA’s way of proving to the lender that you have served sufficient time in the military and are eligible for a VA loan.

If you are the spouse of a veteran, you will apply using a different form (VA Form 26-1817). If your Veteran spouse died after service, VA must determine that the death was due to a service-connected disability. Allow 2-3 months for this process unless you know that the decision on service-connected death has already been made.

Your completed COE form goes to this address:

VA Loan Eligibility Center
Attn: COE (262)
PO Box 100034
Decatur, GA 30031

Online Resources Worth Knowing About

If you have not visited the eBenefits site the Department of Veteran’s Affairs has put together, it would be well worth your time. Not only will you find great information about obtaining your COE, you will also find additional information that you may not have thought to look into yet.

The VA has made it easy to get your COE online; simply go to the eBenefits portal at this link. If you already have login credentials, click the Login box. If you need login credentials, click the Register box and follow the directions on the screen. The eBenefits Help Desk toll-free number is 1-800-983-0937. They are open week days from 8am to 8pm EST.

The VA website has a lot of new content, much of it developed or updated in the last year. Here is a sampling of the information available:

  • Find out how the Affordable Care Act (ACA), also known as the health care law, affects your VA Health Care.
  • Explore thousands of programs and services at the national, state, and local levels.
  • Get Common Access Card (CAC) access to your VA and DOD benefits.
  • Get personal education advice and guidance with one-on-one guidance and support from the VA.

The time is right for you to apply for your veterans home loan. Take advantage of the time, the place, and the opportunity. It can all be handled quickly and easily from within this website.

 




The History of VA Loans

During World War II, politicians wanted to avoid the postwar confusion about veterans’ benefits that became a topic of much debate in the 1920s and 1930s. President Franklin D. Roosevelt wanted a postwar assistance program to help veterans transition from wartime to normal life. So many politicians from many parties, such as Harry W. Comery, Ernest McFarland, and Edith Nourse Rogers, helped write and sponsor the legislation. The Servicemen’s readjustment Act of 1944, known informally as the G.I. Bill, was the legislation that provided a range of benefits for returning World War II veterans (commonly referred to as G.I.s). An important provision of the G.I. Bill was low interest, zero down payment home loans for servicemen, later known as VA Loans. This enabled millions of American families to move out of urban apartments and into suburban homes. The VA loan guarantee program was especially important to veterans.  Under the law, as amended, the VA is authorized to guarantee or insure home, farm, and business loans made to veterans by lending institutions. Despite a great deal of confusion and misunderstanding, the federal government generally does not make direct loans under the act. The government simply guarantees loans made by ordinary mortgage lenders after veterans make their own arrangements for the loans through normal financial circles.  The Veterans Administration than appraises the property in question and, if satisfied with the risk involved, guarantees the lender against loss of principal if the buyer defaults. In association with the VA’s program, the Service members’ Civil Relief Act was passed in 1940 to protect the millions of active soldiers, sailors, airmen, marines, coast guardsmen, and other service members during World War II from financial woes on their home loan that may occur as a result of active duty commitments. It continues today to protect active service members from bankruptcy, being sued, and even freezes their interest rates at 6%, so those in service don’t have to worry about their home and family while away on duty. The Veterans Housing Act of 1970 removed all termination dates for applying for VA-guaranteed housing loans, a waiver on funding fees for post Korean War Veterans, and provision for direct loans to Veterans eligible for Specially Adapted Housing Grant, which is a grant given to Veterans who are entitled to compensation for permanent and total service-connected disability.  This 1970 amendment also provided for VA-guaranteed loans on mobile homes. More recently, the Veterans Housing Benefits Improvement Act of 1978 expanded and increased the benefits for millions of American veterans by increasing the maximum loan guaranty entitlement to $25,000 for home and condominium loans, and reduced the minimum service requirement for eligibility purposes for Vietnam Era veterans from 181 days to 90 days in order to equate Vietnam service that performed in prior wartime periods. Until 1992, the VA loan guarantee program was available only to veterans who served on active duty during specified periods. However, with the enactment of the Veterans Home Loan Program Amendments of 1992, program eligibility was expanded to include Reservists and National Guard personnel who served honorably for at least six years without otherwise qualifying under the previous active duty provisions. Such personnel are required to pay a slightly higher funding fee when obtaining a VA home loan. Qualifying for VA Loans has been fairly painless for many Veterans. The VA Loan program is designed for Veteran’s who meet the minimum number of days of completed service. The program does allow for benefits to Surviving Spouses. The VA does not have a minimum credit score used for pre-qualifying for a mortgage loan. However, most lenders require a minimum credit score of at least 620, so research the different venders available to you that will meet your credit score.  After you have found a lender, you will need to fill out the appropriate application with the appropriate documents needed. On October 26, 2012, the Department of Veterans Affairs announced it has guaranteed 20 million home loans since its home loan program was established in 1944. With guaranteed home loans that have no down payments, no private mortgage insurance (PMI), and even an option for a refinance of up to 100% of the loan amount, VA Loans are one of the biggest benefits and blessings to those who have served our country.




When Is It Wise to Lock in My VA Loan Rate?

By now, the low interest rates in the loan market are old news, but chances are they won’t stay that way forever. We’ve already said goodbye to the historic lows that were being seen not long ago, and interest rates can fluctuate dramatically over short periods of time. Now could be a very good time to look into refinancing or opening a VA loan, because of the generally very low interest rates. But something that often confuses borrowers and can even stop them from qualifying from a loan is the concept of locking in an interest rate during processing.

 

Borrowers are often frustrated when they agree to apply for a loan at a given interest rate one day, but by the time they are trying to close with the lender, the interest rate is a quarter of a percent more than it was the day they opened the application. In more extreme cases, borrowers get frustrated because the rates have risen so much that they no longer qualify for the loan that they applied for. There is a method to getting around this, called “locking” in an interest rate at the time of application. This is always an opt-in choice, and is subject to individual lenders’ policies regarding locking rates.

 

Since VA loans are financed by third party VA-approved lenders, and not the VA itself, all VA loans are subject to the lender’s policies and procedures, which cover rate locking as well. Locking is done at the request of the borrower, and prevents the interest rate from fluctuating higher – or lower. Locking will never be done without the permission of the borrower, and may not even be available depending on the rules of the VA lender you are working with.

 

All lenders require that you have applied for a specific loan for a specific property (no locking an interest rate while price checking over the phone) before allowing a lockout. Generally, lenders will not keep you posted on interest rates from day to day, and it is not their responsibility to do so. Choosing when to lock an interest rate is as important as choosing whether to do so at all. Loan periods can vary in length, but are generally long enough to get the loan completely processed and closed. It’s important to note that rate locks aren’t “free”. A thirty day rate lock could make a 4.00% loan with no points a 4.00% loan with one point.

 

Once locked, you can’t unlock the rate until the specified lock period has ended. So, if rates go down after you’ve locked, there’s generally not much you can do. However, in some cases, and with some VA lenders, the option of “floating down” exists. A Float Down is generally a one-time option where a borrower can opt to bring their locked rate down to the current market rate if it dropped after they locked. Most lenders that offer this option have specific requirements for a situation in order to allow a borrower to do so. A common requirement is that the interest rate must have dropped at least a quarter of a percent. When you get the paperwork for your loan when you apply, your lender should provide you with a copy of their lock policy. Read the policy carefully and understand exactly what your options are so you can make the best choice for your loan. There can sometimes be additional fees associated with locking an interest rate, which can catch you by surprise if you’re not prepared for them.

 

With the above information, the only remaining variable to deciding when to lock your VA loan rate is market situation. Often, in this case it is wise to rely on the advice and perspective of your VA loan specialist, who can tell you if it seems that rates are on the rise and it would be smart to lock, or if rates seem to be declining and you may want to hold off. Whether the market seems likely to rise or fall is the largest factor in considering locking. If you’re not sure about market trends and don’t have someone you can ask, you can always ask the lender you are working with. While they can’t provide specifics about what is going to happen, they should have a sense of the market direction, and a good VA lender is going to be on your side and give you the best information they have available to you




Why Veterans Should Consider Refinancing into a VA Loan

There are a lot of potential advantages to refinancing your mortgage. Often you can get a lower interest rate, resulting in lower monthly payments. Sometimes you can take cash out for improvements or repairs to the property, and you can even adjust the length of the mortgage between 15 and 30 years.

So refinancing can be a good idea in and of itself, but those advantages are augmented when you refinance into a VA loan.

Why a VA Loan?

A VA loan is a loan that is backed (guaranteed) by the Department of Veterans Affairs. It is a benefit created exclusively for veterans and eligible dependents and spouses.

Refinancing into a VA loan can bring a number of benefits to your mortgage. For example, VA loans do not require the usual mortgage insurance premiums for over 80% Loan-to-Value (an extra charge each month when you still have more than 80% of the principal to pay back, as “insurance” for the lender against the possibility of you defaulting). VA loans also do not penalize you for prepayment, which means that the sooner you can pay the money back, the better off you are.

Additionally, having your mortgage through a VA loan makes selling your home easier; if you sell to another VA-eligible person, the VA loan can transfer directly to them.

You can refinance a non-VA loan into a VA loan so long as you are eligible for a VA loan.

Where Do VA Loans Come From and Who Is Eligible?

The VA loan program was originally implemented in 1944 as part of the original GI Bill. VA loans were implemented to address  servicemembers returning home from combat and needing to be able to buy homes.

Over time, eligibility requirements for VA loans have broadened to include many more categories of people. Today, most who have completed a term of active service are eligible, though the length of the term of service depends on when the service took place. Generally, for post Vietnam-era veterans, the requirement is 24 months of continuous service or between 90 and 181 days of active duty. Veterans of the Vietnam era and earlier must have completed at least 90 days of active duty.

Veterans who were honorably discharged for reasons beyond their control, such as a service-related disability, a reduction in force, or something similar, may be able to have the term-of-service requirement waived.

Some non-veterans are also eligible for VA loans. Current servicemembers can be eligible if they’ve met the 90 days of active duty requirement. Spouses of servicemembers can be eligible if their spouse is MIA or POW, or if their spouse was killed in action.

Reservists and National guard members can be eligible after 6 years of service in their respective branches.

For those eligible, the VA loan is insured by the Department of Veterans Affairs, which can mean that the VA will insure up to 1/4 of the loaned amount in the event the borrower falls behind on payments.

How to Refinance into a VA Loan

In recent years, approximately half of all VA-backed loans have been linked to a refinance. If you’re looking to join the many veterans benefiting from refinancing into VA loans, here are some steps to follow:

  1. Make sure you’re eligible for a VA loan. Most servicemembers or veterans who have served for a continuous 24 month period will be eligible for a VA loan.
  2. Obtain a Certificate of Eligibility (COE). A COE is a document that proves you are eligible for a VA loan, and can be obtained through any VA approved lender. If you are refinancing from an existing VA loan to a new VA loan, you need not obtain another COE; your previous COE will carry over to the new loan.
  3. Make sure the property you are wanting to refinance is eligible for a VA loan. There is an occupancy requirement for VA loans, which means that rental properties and vacation homes are generally not eligible. Some exceptions apply where the borrower is living in one of the plots of a multiplex and renting out the other plots, or when refinancing a mortgage for a home that was once lived in by the borrower but is no longer.
  4. Calculate the closing costs. All of the “administration fees” associated with refinancing a mortgage need to be factored in. In the case of a VA loan, often the closing costs can be added to the loan amount, making it part of what is paid off each month. VA loans also tend to have fewer associated closing costs than traditional loans.
  5. Finally, pick which VA loan you feel is appropriate for you. It is advantageous to shop around between VA approved lenders to make sure you’re getting the most appropriate loan for the most affordable price. Don’t sign up for anything you don’t fully understand.




There Is No Time Like the Present

I had a great neighbor, an older gentleman, who always seemed to get things done in record time. While I was still trying to decide what to do, he was already doing. We often talked over the fence and one of his favorite sayings was, “there is no time like the present.

In the spirit of taking wise action now, here are five good reasons why you should take advantage of your VA home mortgage loan entitlement:

  • Reason #1: Veterans, active duty and certain surviving spouses are eligible for VA home loan benefits. Qualified surviving spouses may borrow up to $417,000 (more in high-cost counties) with no money down.  Surviving spouses are exempt from paying the VA funding fee.
  • Reason # 2: VA home loans can be used to purchase foreclosed and short-sale properties, often with little or no money down. VA-eligible borrowers possess an advantage over those who need up to 20% cash down to qualify for conventional loans. Work through a VA appraiser who is trained to certify value and safety. He will be able to steer you away from problem properties that are not a good investment.
  • Reason # 3: If you are currently deployed overseas, you can sign a power of attorney or (POA) designating your spouse or someone else to act in your behalf for a VA home loan. The POA grants permission for the attorney in fact to sign on behalf of the VA-eligible borrower.  The service member must give intent to obtain a VA loan through an email, letter, or other written notification. Only a spouse can satisfy the occupancy rule (move in within 60 days of closing) in a deployed serviceperson’s stead. Otherwise, the borrower serving away from home is granted an extension of up to 12 months to occupy the home.
  • Reason # 4: There are knowledgeable specialists who can help you get the facts. You should not trust a real estate as a reliable source for VA loan information.  A VA specialty lender, one whose majority product is VA-backed loans, can provide reliable VA mortgage lending facts.
  • Reason # 5: If a lender is specialized in VA home loans, then closing can often happen within 30 days. The VA-approved lender is given flexibility to decide on its own whether a borrower is a satisfactory credit risk.  Oftentimes a borrower with extenuating circumstances can close quickly.

Where do I Start?

Your quest for a VA home loan starts with a Certificate of Eligibility (COE). You are required to obtain a COE to pursue a VA mortgage loan. If you do not have this certificate, you will need to apply using VA Form 26-1880 (which requires a copy of DD-214—your Certificate of Release or Discharge from Active Duty showing character of service). Along with the COE, you will need to document your credit, savings, and employment information to apply for a VA home loan.

Why get a Military Home Loan?

Simply put, there are distinct financial advantages to do so. A  VA Home Loan allows qualified buyers the opportunity to purchase a home with no down payment. There are also no monthly mortgage insurance premiums to pay, limitations on buyer’s closing costs, and an appraisal that informs the buyer of the property value. For most loans on new houses, construction is inspected at appropriate stages and a 1-year warranty is required from the builder. VA also performs personal loan servicing and offers financial counseling to help veterans having temporary financial difficulties.

I’ve Already Used My VA Loan Eligibility

You can have previously-used entitlement “restored” one time only to purchase another home with a VA loan if the borrower has paid off the prior loan but still owns the property, and wants to use his entitlement. This often occurs with active duty borrowers who transfer to a new station but want to keep their existing home for retirement. However if the prior loan has been paid off, AND the property is no longer owned, they can have their entitlement restored as many times as they want.  They can re-use their VA eligibility for every home purchase from the first to the last.

A veteran’s maximum entitlement is $89,912, and lenders will generally loan up to four times your available entitlement without a down payment, provided your income and credit qualifications are fine, and the property appraises for the asking price.

Remember, there is no time like the present!

Get Started With Your VA Loan Today




Good Timing for a VA ARM Loan?

Are you 40 or older and reasonably well off? You might be surprised at how well an adjustable rate mortgage (ARM) could work out for you at this stage of life. ARMs are only a small part of the market, but most people are surprised to find out that most of them don’t adjust for five or seven years, meaning this option can make a lot of sense if you don’t plan on being in your home long or for older refinancing homeowners with lots of equity.

Why Consider a VA ARM?

You might be asking “why should I even consider an ARM?” or “Is an ARM safe?” The biggest savings come if you pay off the loan within the five to seven years before the ARM adjusts–effectively turning it into a very short, very low-rate fixed mortgage. That’s attractive if, for example, you plan to move in the next several years or if you want to pay off a big mortgage before you retire.

A surprising number of veterans never really look into their Veterans Affairs (VA) loan guarantee. The VA home mortgage was established  for the purchase of homes, condominiums, co-ops, and manufactured homes. The VA guarantees a percentage of the loan, which helps you obtain a no-down payment mortgage at a competitive interest rate.

Some Advantages of Adjustable-rate Mortgages

  • Feature lower rates and payments early on in the loan term.
  • Allow borrowers to take advantage of falling rates without refinancing.
  • Help borrowers save and invest more money.
  • Offer a cheap way for borrowers who don’t plan on living in one place for very long to buy a house.
  • Because lenders can use the lower payment when qualifying borrowers, people can buy larger homes than they otherwise could buy.
  • Instead of having to pay a whole new set of closing costs and fees, ARM borrowers just sit back and watch the rates -and their monthly payments fall.
  • Someone who has a payment that’s $100 less with an ARM can save that money and earn more off it in a higher-yielding investment.

Are You Eligible for a VA Home Loan?

You may qualify for a guaranteed VA loan if you are:

  • A veteran (including Reserve and National Guard members who were called to active duty)
  • An active duty service member
  • A current Reserve and Guard member (usually after six years of reserve service)
  • Certain surviving spouses
  • A commissioned Officer of the Public Health Service or National Oceanic and Atmospheric Administration, once discharged.

Generally, in order to receive VA benefits and services the Veteran/service member’s character of discharge or service must be under honorable conditions. However, individuals receiving undesirable, bad conduct, and other types of dishonorable discharges may qualify for VA benefits depending on a determination made by VA.

Your Next Steps

To apply for a VA home mortgage loan, you will need a valid Certificate of Eligibility (COE). There are several ways to obtain your COE:

  • You may be able to obtain a COE online through eBenefits at http://www.ebenefits.va.gov.
  • If you are unable to obtain your COE through eBenefits, check with your lender. In most cases, your lender will be able to obtain a COE for you using the Automated Certificate of Eligibility (ACE) program.
  • You can download VA Form 26-1880, “Request for A Certificate of Eligibility” at http://www.va.gov/vaforms/. Complete it and mail it with proof of military service to the VA Eligibility Center.

For more information on this program, visit http://www.benefits.va.gov/homeloans/.




The VA Loan and Its Benefits

What is a VA Loan?

The VA Loan was implemented by President Franklin D. Roosevelt in 1944 through the original Servicemenʼs Readjustment Act also known as the GI Bill of Rights. The purpose of the bill was to provide housing and assistance for veterans and their families through a federally guaranteed program that allowed veterans to purchase a home with
no, down payment. As a result of this program, home ownership has become a reality for millions of veterans and their families.
VA guaranteed loans are made by private lenders, such as mortgage companies or banks, to eligible veterans for the purchase of a residence they must occupy. This guarantee protects the lender from loss and replaces the protection the lender generally receives by requiring a down payment. This guarantee protects the lender and allows
for more favorable financing terms for the veteran!

Who qualifies for a VA Loan?

In general, a service member may be eligible for a VA home loan if any one of the
following are true:
• Served 181 days during peacetime (Active Duty)
• Served 90 days during war time (Active Duty)
• Served 6 years in the National Guard or Reserves
• You are the spouse of a service member who died while in service or from a service-connected disability

Veterans who served on active duty must have a discharge other than dishonorable to
be eligible for a VA Loan.

Who should use a VA Loan?

First-time homebuyers are finding greater difficulty in qualifying for traditional loans because more and more banks are requiring that buyers come to the table with large down payments. A Conventional loan requires a minimum of 5% of your purchase price down to purchase a home, and in some instances as much as 10-20% down!

A VA loan is a great alternative to a traditional loan because it helps qualified veterans purchase a home with little or even no money out of pocket. This benefit opens the doors to homeownership sooner for many veterans who may have put off purchasing a home because they struggled to obtain financing or come up with the large down payments required.

What is the amount I qualify for?

As a rule, the purchase price of the property, or the fair value of the property, whichever is less, plus the funding fee may be borrowed. The VA will guarantee a maximum of 25 percent of a home loan amount up to $104,250. This means the maximum loan amount for a VA home loan is $417,000.

What are the benefits of a VA Loan?

No Down Payment
A VA loan allows you to finance 100% of your homeʼs value. This means you can purchase your home with $0 down. This is possible because your loan is backed by the federal government. The VA Loan is one of the few loans that allows this, which puts home ownership in reach of many veterans today!
The chart below shows you how much you would be required to put down at closing with a traditional loan and what you can save with the no-money-down benefit of the VA Loan at closing:

Lower Monthly Payment
Private Mortgage Insurance, or PMI, is not required on a VA loan since your loan is guaranteed by the federal government. PMI is required on a Conventional loan when the borrower finances more than 80% of the homeʼs value to protect lenders in case the borrower defaults. Again, since your VA loan is backed by the federal government, you will not find this added monthly expense in a VA loan, potentially saving you thousands of dollars each year and allowing you to buy more house for your dollar!

Better Interest Rates
Interest rates are determined by the amount of risk the bank must assume to finance a loan. Since a VA Loan is guaranteed by the federal government, banks assume less risk and, as a result, VA borrowers often benefit from a lower interest rate!

Easier to Qualify
Most first-time homebuyers havenʼt established a strong credit history, making it more difficult for them to qualify for a traditional loan and receive a competitive interest rate. Since VA loans are guaranteed by the federal government and the bank assumes less risk, it is easier for a veteran to qualify for the loan at a competitive interest rate.

No Pre-Payment Penalty
When you pay off some traditional loans before they mature, you are often hit with a pre-payment penalty by your lender to recoup some of the interest it missed out on over the life of your loan. This penalty can be thousands of dollars. With a VA loan, there is NO pre-payment penalty when you pay your loan off early or refinance your loan for a
better interest rate.

Apply Basic Allowance for Housing
Lenders will include an active military memberʼs Basic Allowance for Housing (BAH) as effective income, which means you can use your BAH to pay your monthly mortgage!

Loan is Assumable
In the military, families are always on the move. When a loan is assumable, this means when you sell your house, the buyer can assume your loan. Basically, the loan stays with the house! With rates at all-time lows, this is a very attractive selling point if you need to move and sell your house down the road.

Are there any Fees associated with a VA Loan?
The Veterans Administration collects a funding fee on your VA loan. This amount is added to your loan. The first time you take out a VA loan, the funding fee is 2.15% of your loan. Each time thereafter, the fee is 3.3% of your loan, unless you put 5% down, in which case it is only 1.5%. If you have a service-related disability of 10% or greater, the funding fee is completely waived.

Can I use a VA Loan to purchase a vacation home or land?
A VA Loan can only be used for the purchase of your primary residence.
How do I get started?

Get Pre-Qualified
Complete an online application or give us a call so we can get you pre-qualified and lock in a historically low-interest rate for you today!

Certificate of Eligibility
If you do not have a copy of your Certificate of Eligibility (COE), we can help acquire it for you during the loan process. This is the document you need that certifies you as the veteran and proves your eligibility for a VA guaranteed home loan.




For Veterans, Home Loans Couldn’t Be Easier

As a veteran, you have sacrificed your time, abilities and life in defense of this nation. You have put this country first and fulfilled your duty to protect the lives of others. Your sacrifice has helped keep this nation safe and your sacrifice does not go unappreciated.

 

You want to protect your family, and for them to be safe and financially sound. You want a place to call home and where your family can live happily.

 

It has always been the American Dream to own a home. It is a safe environment for your family and children. It is a place where you can build equity for the future. It is a property you can call your own.

 

You have had to postpone your dreams to serve this country. Your aspirations were put on hold as you served valiantly. You do not need to wait any longer. Now is the time for you to fulfill the most important of all American Dreams: to own a home.

 

At LowVARates, we know purchasing a home can be stressful. We want to make this process easy and fast for you. You have served this country greatly, now it is time for us to serve you.

 

In order to make your dream of owning a house a reality, we at LowVARates help you obtain a Veteran Affairs Loan. With a VA Loan, veterans and their families can become homeowners.

 

Since 1944, VA Loans have guaranteed more than 20 million home loans to veterans like you. These loans have helped families build, repair, purchase and retain their property.

 

VA Loans were created to protect veterans from risky investments. At LowVARates, we stand by the principles of openness, integrity and trust. You can be assured there are no hidden fees, failure to disclose or dishonesty. You can trust us to secure your loan and get you the home you deserve.

 

VA Loans are hassle-free. The conventional loan process can be overwhelming and time-consuming. VA Loans, however, are specifically designed for veterans and are easy and fast. Soon, a house could be yours.

 

You can buy your home now. With no money down and record low prices, there is no better time to acquire a VA Loan. These loans offer rates up to 0.5% lower than a typical loan, which would save you a great deal of money.

 

These VA Loans are only available to veterans. At LowVARates, we appreciate your sacrifice for this country. We are experts in helping veterans achieve the dream of owning a home. We want you to succeed and we want you to achieve this American Dream.

There is no easier way to attain a home than with a VA Loan and there is no easier way to make it happen than with LowVARates.com.




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*Annual savings calculator based on 2015 monthly average savings extrapolated year-to-date.