Why Sellers Shouldn’t Be Afraid of the VA Loan

Why Sellers Shouldn't Be Afraid of the VA Loan

Common VA Loan Misconceptions & Facts Every Seller Should Know

Some sellers have heard things about the VA loan that make them hesitant when VA borrowers come knocking at their door. They begin to wonder if VA loans are bad for sellers, and they may even end up turning away veterans who are looking to buy a home using their VA loan benefits.

Rumors that VA loan seller disadvantages outweigh the advantages are simply not true. And because these rumors may keep sellers and veterans from perfectly good transactions, they can actually be harmful.

To put it simply, sellers should be excited to work with veterans! Not only are you supporting those who have served our country by allowing them to use their hard-earned benefits, but you are also enjoying the benefits that come with working with US veterans.

Check out our video below for an overview of what a VA loan means for the seller.

Keep reading for more details on how VA loans affect sellers and why working with VA buyers isn’t much different than working with any buyer.

Sellers Can Choose Whether or Not to Pay Concessions

Because the VA prohibits veterans from paying certain fees on VA loans, some sellers mistakenly believe the myth that sellers are required to pay these costs on VA loans.

The truth is that both conventional and VA loan buyers can request that sellers pay some closing costs or fees on their loan, called concessions.

Like with any other loan type, a seller is not obligated to pay any costs a VA buyer asks them to. Buyers can ask for seller concessions on any kind of loan, but it’s up to sellers to choose whether or not they want to pay for some closing costs during negotiations.

Even the VA’s non-allowable fees don’t have to be paid by sellers. They can be paid by any other loan party, including the real estate agent or lender.

Before making the decision to pay or not pay concessions, it’s important for sellers to know that in some cases, paying for some of the closing costs can actually be beneficial.

For example, in a buyer’s market, making some concessions can give you a competitive edge over other sellers and help you sell your home faster.

Plus, home sellers who decide to pay concessions often make up for these costs by either:


            Increasing the Home Price                        Holding Firm on the Listing Price


You can increase the home price an amount that will cover what you agree to pay for the buyer on closing costs and fees. Or, you can hold firm on the listing price, since paying some closing costs may give you bargaining power if the buyer asks for a lower price in addition to concessions.

For more details on how seller concessions work with VA loans, check out our video below.

The Loan Process Is Simple for Both Buyers and Sellers

Automatic Authority Streamlines the Process

Some sellers are concerned that because the VA loan is backed by a government agency, selling their home to a buyer with this loan type will be a long or complicated process.

While buying with a VA loan used to take longer than other loans since the requests had to be processed by the VA, now lenders can be granted automatic authority, which has helped make the VA loan process quick and simple.

What Is Automatic Authority?
Automatic authority is when private lenders are authorized by the VA to process loans without going through the VA.

It’s also helpful to know that VA loans are government-backed, not offered through the government itself. Private lenders are the ones who actually offer VA loans. And most lenders who are serious about the VA loan seek the aforementioned automatic authority from the VA.

This VA authority allows the VA loan process to move smoothly and operate similarly to conventional loans, removing many of the complexities that made the loan process a bit sluggish in the past.

For the simplest process, ask the VA buyer you’re working with to use a lender with VA-granted automatic authority.

Appraisals for VA Loans Aren’t Much Different than Those for Other Loans

Keep in mind that the appraisal on a VA loan is more strict than one for a conventional loan because of the required Minimum Property Requirements (MPRs) that must be met. These MPRs ensure that those who have served our nation are not buying unsafe properties.

Minimum Property Requirements look for evidence that the home is safe, structurally sound, and sanitary

You can find out more details on what these three “S’s” mean by watching our video about the VA Minimum Property Requirements.

Basically, if your home is in good shape, the appraisal should pretty much be just like an appraisal for any other kind of loan. Even with a few extra requirements, the timeframe for VA loans is quite comparable to any other loan type, only taking 2-3 days longer, on average.

Another way to streamline the appraisal process is to make sure that your veteran buyer is working with an agent who is familiar with VA loans. Because VA-familiar agents know the ins and outs of the process, it’s less likely that there will be agent-caused delays.

Want more tips to make sure your appraisal goes as smoothly as possible? Watch our video below to learn why homes may fail the VA loan appraisal and what you can do to prepare.

Veterans Are Reliable

When it comes to mortgages, veterans of the US military are the most reliable group in the nation. Of all loan types, VA loans have the lowest foreclosure rate in the country.

Soldier saluting in front of a list of veteran values: duty, integrity, ethics, honor, courage, loyalty, excellence, respect, selfless service, commitment

Why is this? Well, veteran culture includes many honorable values that make them a great group to work with.

This is meaningful to sellers because with priorities like goal-setting, honesty, and loyalty, veterans tend to follow through on their agreements and have likely thought carefully through the decision of homebuying before looking at homes.

Despite this reality, some buyers may be concerned that a veteran putting $0 down could mean something about their reliability or assets, or that their higher offer on a home signals that something fishy is going on.

However, veterans commonly put nothing down because of the no down payment requirement of the VA loan, which may free up funds to make a higher initial offer. This doesn’t mean anything negative about the veteran; it simply means they’re using the benefits they’ve earned through their service.

In addition to the fact that veterans and servicemembers are some of the most grounded and dependable people to work with, working with someone who has helped secure your freedom is a great opportunity to say thanks and give back.

The Bottom Line

If you have the chance to work with a US military veteran or servicemember, don’t turn them away because of rumors you may have heard.

If you’ve heard anything else about VA loans that makes it sound questionable for the seller, please leave a comment below or contact us. We’ve been working with VA loans for over a decade, so we know the ins and outs and can help you navigate what VA loans mean for you as the seller.


5 Ways to Pay Less in Closing Costs on a VA Loan

If you’ve started the mortgage process, you probably know that closing costs can be expensive, equaling around 1–5% of the home price. That’s why many veterans looking to get a VA loan wonder if there’s an option with no closing costs.

The good news is that there are multiple ways for veterans to lessen or even eliminate VA loan closing costs on their home loan, some of which are listed below:

5 Ways to Reduce Out-of-Pocket Closing Costs. 1. Roll some closing costs into the loan. 2. Use closing cost assistance for veterans. 3. Negotiate with the seller for them to pay closing costs 4. Get lender credits to cover the costs. 5. Look at VA loans with no closing costs.

Keep reading to learn how to make each of these tips a reality for your home loan.

1. Roll Some VA Closing Costs into the Loan

One of the best ways to reduce VA loan closing costs is to roll the VA funding fee into the loan. This fee is typically equal to 1.25–3.3% of the loan amount, so including it in your mortgage can save you a substantial amount at closing.

Most veterans choose to roll the fee into the loan to save on upfront costs, though some do opt to pay it out of pocket.

It’s important to keep in mind that rolling any closing costs into the loan will require you to pay more in interest over the long run. This is because you’re increasing the loan amount, which in turn increases the amount of interest you’ll pay.

However, this option is helpful for those who may not have enough money saved to pay the funding fee upfront or who don’t want to spend their savings and would rather include the fee as part of the loan amount.

How Much Will My Interest Go Up If I Roll the VA Funding Fee into the Loan?

Here’s a simplified example to give you a sense for how costs could change if you included the VA funding fee in your loan.

Let’s say you’re getting a $200,000 mortgage. You put 5% down and are an active-duty veteran, so your VA funding fee amount is 1.25% of the loan, which equals $3,000.

If you pay the fee upfront, you won’t have to pay interest on the fee amount. You’d end up paying $6,500 in interest on the mortgage. In total, you’d pay $209,500 for the mortgage amount, interest, and funding fee over the life of the loan.

However, if you roll the fee into the loan, you’d pay $6,597.50 in interest, which means the total amount you’d pay for the loan would be $209,597.50.

As you can see, the interest added by the VA funding fee isn’t much. You’d only pay $97.50 in interest on the fee over the long run.

Essentially, in this example, you’d have to decide whether it’s worth paying an additional $97.50 over the life of the loan to avoid paying the $3,000 funding fee upfront.

For many veterans, paying slightly more in interest to avoid the significant upfront cost is worth it. However, the best option for you depends on your individual situation.

2. Use Closing Cost Assistance for Veterans

Depending on your area, there may be programs and grants available to help veterans reach their goal of homeownership.

According to VA loan expert Maurice Navarro, these programs usually vary locally, sometimes differing even between counties. You can visit your local VA office to learn more about what programs are available in your area and for your specific situation.

You can also ask your VA lender if they’re aware of any veteran homeownership assistance programs you might be able to apply for. Look for lenders that specialize in VA loans, like us at Low VA Rates, so you’re getting information from experts that are more familiar with opportunities available for veterans.

3. Negotiate with the Seller to Have Them Pay Closing Costs

Perhaps one of the best ways to reduce VA closing costs is to ask for the seller to pay for them. As part of the homebuying negotiations, it’s perfectly acceptable to ask for any/all costs to be paid by the seller.

The closing costs a seller agrees to pay are called concessions, and they can include the VA funding fee, property taxes and insurance, and other specified costs.

Did You Know?
According to the VA, seller concessions can equal up to 4% of the loan amount.

Whether the seller will agree to pay for these costs depends on multiple factors, like how long the home has been on the market or what kind of housing market you’re in. If you’re in a buyer’s market, you’ll likely find sellers who are more willing to pay some closing costs.

It’s important to know that no seller is required to pay closing costs, but it’s still in your best interest to make sure you ask.

Learn more details about seller concessions on VA loans in the video below.

 4. Get Lender Credits to Cover the Costs

What Are Lender Credits?
With lender credits, lenders lower your closing cost amount. In exchange, you accept a higher interest rate and potentially pay certain fees.

Another helpful way to reduce upfront costs on a VA loan is to ask your lender for lender credits.

Like with most lender-buyer agreements that lower closing costs, your interest will usually increase with this option. A higher interest rate helps cover the cost your lender is paying for you at closing. It spreads it out over a longer period of time, however, making it more manageable for many borrowers.

Also similar to other closing cost-saving options, you’ll want to consider whether the additional money paid in interest over the long run is worth the upfront savings.

5. Explore VA Loans with “No Closing Costs”

If you’re looking for a “no closing cost” VA loan, the VA IRRRL is a great option if you already have a VA loan and want to refinance. With the IRRRL, you’re able to roll all of the closing costs into the loan.

Similar to what happens when you roll the VA Funding Fee into a loan, this option increases the balance of your loan, but allows you to pay less upfront.

You’ll want to remember that there are no true “no closing cost” VA loans, since you’ll still need to pay for the costs (plus interest) over the life of the loan.

However, any costs you can roll into the loan will mean you pay less money out-of-pocket on your home purchase, which is especially useful for veterans who can’t afford a large upfront payment or would like to keep their money in savings or use it for investments.

Talk to a VA lender to learn about your options for rolling closing costs into your VA loan.

In the meantime, watch Eric Kandell, president of Low VA Rates and VA loan expert, discuss how this works in the video below.


9 Questions You Should Ask Before Choosing a VA Lender

"9 Questions You Should Ask Before Choosing a VA Lender" overlayed on an image with a man and woman meeting at a coffee table to discuss business

Did You Know?
While lenders do have to meet certain VA requirements to offer VA loans, they still have plenty of wiggle room in many areas of the loan—like rates, minimum credit scores, and down payment requirements.

Whether you’re using your VA loan benefit for the first time or you’ve bought a home before, it’s in your best interest to compare a few VA lenders rather than going with the first one you find.

This is because lenders—and the loans they offer—aren’t all the same.

Even with VA loans, which are guaranteed (but not directly offered) by the government, details can vary between loans.

That’s why it’s important for veterans to know how to choose the best VA home loan lender. Working with the right lender could save you thousands of dollars and a lot of stress.

Check out some of the questions our experts recommend to help you narrow down the lenders on your list and choose the one that works best for your situation.

What Questions Should I Ask a Lender before Getting a VA Loan?

We’ll go into more detail, but for your quick reference, we’ve listed the questions below:

9 Questions to Ask Before Choosing a VA Lender: 1) Are you a LAPP lender? 2) How many VA loans do you close per month? 3) What rate and APR can you offer me? 4) How do I lock my rate? 5) What are the closing costs involved in the loan? 6) How long is your average closing process? 7) How do you communicate with borrowers? 8) Do you have any overlays? 9) What are the discount points and origination fees?


Now, let’s dive a little deeper into the why and how of these questions.

1. Are You a LAPP Lender?

In the mortgage world, there are many lenders that can do VA loans. However, not all lenders are able to close the loans themselves. Lenders that are approved by the VA to close loans within their company are called VA LAPP lenders.

A Privilege
“LAPP authority is a privilege delegated to lenders at VA’s discretion. Lenders maintain this privilege by complying with all applicable LAPP-related requirements.” –VA Lenders Handbook, Chapter 15

So why does it matter to a borrower whether a lender has been through the VA Loan Appraisal Processing Program (LAPP)?

Well, since the lender won’t have to deal with the extra processing required of non-LAPP lenders, you’ll usually experience an expedited loan process, which means you’ll likely close sooner and get in your home faster.

On top of that, to be LAPP-approved, the lender has to meet additional qualifications set by the VA. A lender must have an effective quality control system to ensure the best work on appraisal reviews.

Also, the lender exercises its LAPP authority through a staff appraisal reviewer (SAR), which is required to have at least three years of qualifying experience and a specified understanding of appraisals.

You can have confidence that LAPP lenders are often a better choice than other lenders.

2. How Many VA Loans Do You Typically Close per Month, and How Many Did You Close Last Month?

The VA loan process is a little more complex than the normal mortgage process. There are specific steps and requirements that the lender must be familiar with to efficiently close a VA loan.

Some lenders offer VA loans but don’t do them very often, which is not in your best interest. You’ll want to look for lenders who are regularly doing this type of loan and can provide you with numbers to back it up.

Pro Tip
Another way to get a feel for a lender’s values and experience is to look at their website and social media profiles. Do they frequently talk about VA loans? Are there resources available for veteran homeowners?

When you speak with a loan officer, ask them about their personal loan experience. A good average monthly range to look for in an individual loan officer is somewhere between at least 5–15 loans, with more being even better. You can also ask them how their number has changed over the last year or so to get a broader picture of their experience.

Keep in mind that if you’re speaking to a newer loan officer or the mortgage market hasn’t been doing too well, a loan officer may not have a large number to give you. This doesn’t necessarily mean you shouldn’t go with that lender, however.

If this happens, you could ask the loan officer how many VA loans their company closes per month and what the numbers have been like over the last year to get a feel for how regularly the lender itself closes VA loans.

Overall, the goal of this question is to find out whether the loan officer and lender are regularly closing VA loans and know the loan type well.

3. What Rate and APR Can You Offer Me?


A common focus for VA lenders is mortgage rate, which is the percentage of the home loan cost the borrower is charged in interest. You’ll want to ask what this number is.

Additionally, if you’re considering an adjustable-rate mortgage, make sure to ask for further details. Ask how often rates will be adjusted, what the maximum rate is, and how much it can increase annually.


Rate is an important aspect of mortgages, but another aspect that is just as important (and sometimes overlooked) is annual percentage rate (APR).

APR is the percentage of the loan cost you pay overall for taking out a home loan, including charges like fees and closing costs. APR not only takes into account a number of fees that the rate doesn’t, but it also includes the rate itself as part of the percentage.

Remember This
Though it may seem like rates or other parts of the loan are set, everything in a mortgage offer is negotiable. Making lenders compete for your business can help you get better offers.

To put it simply, if you ask a few lenders for their rates and compare those, you can get an idea of which of them are offering good deals. However, if you compare multiple APRs, you’ll get the bigger picture of how much it will cost to take out a loan with each lender.

This way, you can compare compare apples to apples and see where some lenders may have lower rates but higher costs in other areas.

At Low VA Rates, we have a $250 Lowest APR Guarantee, where we offer $250 to anyone who closes with another lender at a lower APR than we can offer. We have written a few checks over the years, but we can usually beat other offers.

Check with lenders to see if they have similar guarantees or can beat other offers you find. Remember that you’re in the driver’s seat when it comes to your loan.

4. How Do I Lock My Rate?

It’s also wise to ask what the process is like for locking in your VA loan rate. Locking your interest rate now can protect you when rates change in the future.

Some lenders may lock your rate just a few weeks before closing. Others, like Low VA Rates, will lock loans after the initial disclosures have been submitted; we even make exceptions and can lock the rate shortly after receiving all the initial documentation.

As you learn when different lenders lock rates in on loans, you can narrow your options to those who make it easiest to lock your rate.

Additionally, ask whether they charge for locking your rate. If they do, ask if they’re willing to drop that charge.

5. What Are the Closing Costs Involved in the Loan?

Before choosing a lender, it’s a good idea to have a conversation with them about closing costs.

Comparing costs between lenders is much easier when you know what you’re looking at—plus, you can also compare how straightforward different lenders are in their descriptions of costs you can expect to pay at closing.

One thing that’ll help you in comparing costs is your Loan Estimate (LE), which you’ll receive after applying for the loan. Formerly called a Good Faith Estimate (GFE), an LE is the lender’s best estimate of what your loan rate, closing costs, and monthly payment will look like.

Don’t be afraid to ask lenders to explain the numbers to you. You can also challenge their costs by comparing them with quotes from other lenders.

6. How Long Is Your Average Closing Process?

How quickly VA loans close depends in part on what type of loan they are. Lenders should usually be able to close in around 2–3 weeks for a VA Streamline (or IRRRL); for VA cash-outs and VA purchase loans, you can expect a time frame closer to 30–45 days.

Knowing these time frames is important because some borrowers have a certain amount of time they need to work within.

Perhaps you got permanent change of station (PCS) orders and need to move in the next few months. Or maybe a seller wants to sell their home quickly, and you need a loan that can close within a month.

In either of these situations, knowing each lender’s expected time frame will help you gauge whether their timeline fits your needs.

7. How Do You Communicate with Borrowers?

Even though it can be an easy part of the loan process to overlook, your lender’s communication skills can make or break your loan experience.

Though most lenders will probably feel like they communicate well with their clients (and tell you that), asking them how they communicate can still be useful.

Ask and listen for specifics they can provide on the spot, such as:

  • How quickly they respond, on average, to clients
  • Whether their loan officers are available at any time
  • What kinds of relationships they have with borrowers
  • How often and how quickly they communicate updates about the loan
  • What communication methods they use (like phone calls, texting, emails, video calls, and Facebook chat)
Some Trustworthy Review Sites
  • Trustpilot
  • Better Business Bureau
  • Yelp
  • Zillow

You won’t want to take their answers at face value, however. One of the best ways to feel out which lenders are a good bet is to look at trustworthy reviews online. Though most lenders will probably feel like they communicate well, reviews can tell another story entirely.

Ask lenders where you can find their reviews, but also do some exploring on your own. Look for reviews hosted by third-party websites. As you look through reviews, you’ll pretty quickly learn how borrowers felt about the communication skills of their lenders.

8. Do You Have Any Overlays?

The VA has specific requirements that every VA loan must meet, but as previously mentioned, not every VA loan is the same. Lenders can add their own requirements, called overlays, that go beyond what the VA requires.

Ask what these overlays are for the specific type of VA loan you’re looking for (purchase, cash-out refinance, IRRRL, etc.). This can help you figure out whether you’ll qualify and give you a feel for just how veteran-friendly a lender is.

One specific question you may want to ask about overlays is this: Do You Have Minimum Credit Score Requirements?

While the VA does not require VA loans to have minimum credit scores, most VA lenders have credit score overlays. Asking about overlays can help sort out which lenders are most willing to work with you.

At Low VA Rates, we’re adamant about this one because we feel like lenders should not turn veterans away based solely on a number. That’s why we don’t have a minimum credit score requirement and, when determining eligibility, are open to considering the broader picture of a veteran’s financial life.

9. What Are the Discount Points and Origination Fees?

Many lenders charge discount points, which are payments you make to receive a lowered interest rate.

These points can be helpful, especially if you plan to stay in the home long-term. However, if you’ll be in the home for just a few years, using discount points will usually end up costing you more than if you simply went with the higher interest rate.

Find out what each lender charges for these points and how they’d negotiate if you’d like to pursue paying or not paying them.

Additionally, origination fees are costs you pay for the processing, underwriting, and origination of a loan. These fees are only permitted to add up to 1% or less of the loan amount, but this can still be a substantial amount of money.

Find out what kinds of fees you’ll be charged so you know upfront what to expect.

Additional Resources

Watch our video below to listen to one of our loan experts, Maurice Navarro, discuss what to look for in a VA lender:

And if you’re still wondering about what questions you should ask a VA lender or how to navigate finding a good lender, please explore our additional articles and videos below:



Feel free to contact us at Low VA Rates anytime. We’re happy to help you compare offers, understand the numbers, and even find the best lender.



Continue reading “9 Questions You Should Ask Before Choosing a VA Lender”

VA Loan Analysis Explained: Form 26-6393

VA Loan Analysis Form 26-6393

What is the VA loan analysis? How does it work and what does it mean? In this article, we’ll go over everything you need to know, including explaining the VA form 26-6393 so you can meet with your loan officer educated and more confident.

The VA Loan Analysis Form 26-6393

When you begin the VA loan process, your lender or loan officer will present you with a packet of information. This packet will contain lots of documents; one of them may be the 26-6393, entitled the Loan Analysis. We say “may be” because sometimes this form won’t be included in the packet; sometimes you’ll just receive a copy of it in the mail. If you want a copy of it to fill out, you can always request one from your loan officer. But if it is included in your packet, here’s an explanation of what it is and what it’s for.

What Is the Purpose of the VA Loan Analysis Form?

Eventually, the VA Loan Analysis form will be used by the underwriters of your VA loan, An underwriter is someone who checks all the documents included in the VA loan process and makes sure the information they contain is legitimate. The loan analysis form helps underwriters determine whether you, the applicant, are qualified to receive the loan by summarizing your most important and basic financial information. It consolidates lots of information found on different reports, putting them in one location for the underwriter’s convenience and providing them with a general idea right off the bat of your financial situation. This makes the loan process faster and more efficient. Underwriters may also consult additional documents when determining your eligibility for a loan. If there’s anything on the loan analysis form that they need elaborated on or changed, they can request more information, but assuming everything has been done correctly, the underwriter may only need to work from the 26-6393.

Loan analysis forms are also submitted directly to the VA when certain applications require prior approval. The 26-6963 is a helpful and often necessary tool for them in the process of determining your VA eligibility.

What Information Does the VA Loan Analysis Form Contain?

Much of the loan analysis form is self-explanatory; you shouldn’t have a lot of trouble filling it out to the lender’s satisfaction. Some of the required fields may already be filled out if you receive the form in the mail or in your starter packet. Click here to see the form.

Sections of the VA Form 26 6393

va loan analysis how to completeThe VA form 26 6393 itself is divided into sections A, B, C, D, and E. Sections A and B will ask you for general information about yourself and the loan, such as your address, the loan amount, and what it will be used for. Both the loan applicant and the applicant’s spouse have spots to fill out on the form, if the scenario applies. For the best experience filling out the form, take on each question in the order it’s given; this will provide the subsequent questions with clearer context. For example, section B field 9 asks you to check or not check the box “Utilities Included.” This may not make sense at first, but if you refer to field 8, you’ll see that the utilities refer to your “Current Monthly Housing Expense.” Since the loan analysis form covers so much in such a small space, there may not be thorough explanations at every turn. So if you have any questions, make sure to retrace your steps, read carefully, and ask your lender for help.

Sections C, D, and E deal with the details of the loan, the nitty-gritty information that might not just come off the top of your head. This section includes lots of math and working with numbers, and some people can get easily confused. If you’re not a math person, make sure you have a calculator and maybe even some scratch paper with you while tackling this section; you don’t want to make any mistakes. In section C field 21, you’ll total your estimated monthly housing or shelter expenses. This includes any maintenance or utilities costs, as well as HOA or condo fees, if you’re required to pay any. The information in field 21 isn’t to be confused with your monthly mortgage payment; rather, this section deals with anything you pay per month that has anything to do with the place in which you live, not just your rent or mortgage. Your actual monthly mortgage will be a smaller number than the one you list here.

Section D of the loan analysis form presents a good opportunity to check for accuracy. It includes a record of your debts, compiled by someone else, so make sure to cross reference it with your own records and take care of any mistakes or discrepancies in the description of the item, the monthly payment amount, or the remaining unpaid balance. You want these numbers to be accurate; they’ll make a difference in the loan approval process, for better or worse.

Section E of the loan analysis form is all about your income and any tax deductions for which you’re eligible. It should also accurately reflect the information provided by your lender and your own personal financial records, and none of it should come as a surprise to you. Again, take the time to look over these numbers and make any changes that need making. In theory, this section of the form will be close to perfectly accurate because it’s already undergone a series of verification processes. But there’s always the chance something fell through the cracks or was misreported. Any inaccuracies, no matter how small, should be addressed.

We Shoot for Fast, Easy, and Accurate Loan Processes

We at Low VA Rates recognize the sacrifices made by veterans and the stresses they’ve endured, both during and after their military service, so we want to make the VA home loan process as painless as possible. We hope every veteran and potential borrower is properly educated, either by online resources or in person with our loan officers, so nothing gets in the way of their becoming proud homeowners. To learn more about forms like the VA loan analysis and any step of the VA loan process, as well as the myriad of VA loans available.

If you have additional questions about the VA loan analysis give us a call at 866-569-8272. We would be more than happy to answer any VA loan related questions.


VA Home Loan Milestones

You have to wonder how many times in life we pass up tremendous opportunities to progress for timidity. Timidity is akin to fear—we tend to fear the unknown. How many times are we robbed of significant advancement because we lack understanding or because we hesitate for the unknown?


Using your Veterans or military service entitlement, you have the chance to get into your own home. To most people, the task of getting into a home seems complex, stressful, and distant. It will surprise you to know that the process of qualifying for a VA home loan is simple and direct.


The truth is, getting into your home is a huge event.  Your journey should be one of hope and happiness. The experts at LowVARates not only know how to keep focus on the joy of the journey, they have the experience to guide you through the process to its completion.


Keeping it simple, then, here are the steps to the VA Loan Process:

  1. Prequalify with LowVARates.

The security of any adventure is in knowing you have a trusted partner. Finding experienced VA loan specialists is half the battle. The collective experience of the loan specialists at LowVARates is a decided advantage on your journey to home ownership. Don’t allow your inexperience or doubt be a factor here. We specialize in helping you find a way.

Start by giving us a call. Our loan specialists know exactly the information needed to qualify for a home.  If the time is not presently right, we can tell you the steps to take so that you will qualify.

  1. Getting Pre-approved.

LowVARates will take your personal information, and with professional precision determine if you can qualify for a veterans mortgage loan.  We have a long history of helping homeowners qualify for their home loan. You can be confident that LowVARates will have your loan package filled out and representing you to your greatest advantage.

The VA has specific requirements for you to meet. So expect to do your work.  We can help tee it up for you, but the swing is still yours to take.

Here are some of the documents you will need to provide:

  • Current pay stubs.
  • Tax returns and W2s
  • Employment history
  • Bank/Investment statements
  • Evidence of real estate assets

(*Here is a slightly different list of documents for streamline refinance loans.)

  1. Find Your Home.

You might have your home already picked out. Or, you might not know where to even start. LowVARates can help here as well, helping you find a reputable realtor who will listen to you and help you locate the property and neighborhood you want to live in.

  1. Make an Offer.

When you find that perfect home, you will make an offer on the home and negotiate a contract with the seller. Because we understand the VA home loan market and process, we can help you arrange the contract so you do not need any money down, if that is how you want to proceed.

Because VA loans do not require mortgage insurance, you can qualify for more home on your budget. We will help you structure the details to your greatest possible advantage.

  1. Processing and Closing.

The VA requires homes to be ready for move in.  The burden to have the home move-in ready lies with the seller. The person that determines move-in ready is the appraiser.  The appraiser’s job is to make sure the home is to verify the value of the home and to make sure it is in good repair. The appraisal protects you and protects your lender.

Once you are under contract to purchase your home, the loan documentation goes to an underwriter for review.  The underwriter verifies financial information and all other required documentation; he also ensures the loan meets VA requirements.

When your loan is approved, a closing date is scheduled, where you will review all information and sign the required documents. This will finalize your VA home loan and you can then take ownership. What a banner day!

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.

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.

Your VA Mortgage Loan Awaits

Getting your finances in order and qualifying for a Veteran’s mortgage loan is worth the effort. There is no time like the present!

Granted, there has been plenty of trouble in financial markets over the last few years. Traditional loan originations for that period to now have been sharply down. Ironically,  VA guaranteed loan funding actually increased by 168% since 2007, with 14% increase in the last year alone.

VA Mortgage Loans are Popular

One of the big reasons for VA mortgage loan popularity is default and delinquency rates have been the lowest of all loan packages throughout the mortgage crisis. Delinquency rates for 90-day defaults are steady at just 2.2% for VA loans, which is less than half that of all other conventional and FHA loans. Loan specialists were initially perplexed at this seeming contradiction because on paper VA borrowers are statistically a greater default risk. Or are they?

In a recent column for the Washington Post, Kenneth Harney wrote, “Michael Frueh, the VA program’s acting director, says the key to the agency’s quiet success is its almost paternalistic emphasis on servicing its 1.5 million borrowers — moving early and quickly to intervene at the slightest hint of payment problems.”

The VA objective to keep borrowers in their homes contrasts starkly to the failure of other federally backed, but commercially serviced loan assistance programs. The VA is clearly working with an ideal of respect here; they are guiding homeowners with a paternal care. The discipline and hard work that characterizes the veteran’s military roots translates as responsible and conscientious in civilian terms.

Take a second to review a few reasons why VA home mortgage loans are so attractive:

                    No down payment is required. However, even a small down payment can significantly reduce the VA fee that is associated with the loan. The loan cannot be funded for more than the appraised value and in most states the limit for funding is $417,000.

                    Closing costs paid by the borrower are limited and oftentimes even these can be covered by the seller.  Approved closing costs of up to 4% of the total can be covered by the seller at closing. Certain costs, like termite inspection, cannot be paid by the buyer.

                    Private Mortgage Insurance (PMI) is not required with a VA guaranteed loan. PMI is the extra insurance that lenders require buyers to pay when they take out a loan that is usually greater than 80% the cost of their home. If you choose a VA loan, it is backed by the Federal government and lenders cannot require you to pay PMI.

                    Without having to put any money down you do not have to save 20% of the value on a home that conventional loans require. In addition, without any PMI payments you save on your monthly payment (usually between $100-$200 a month).

VA interest rates are trending lower than traditional fixed rates as VA home loans prove to have a markedly lower rate of default through the mortgage crisis. VA loan appraisals tend to be more conservative, which can limit negotiating space to add in additional costs or fees. However, in the current real estate climate, sellers are more conducive to negotiate small changes in purchase price to allow room for the fees with the loan package.

Debt-to-Income Ratio (DTI)

Guidelines for debt-to-income ratio (DTI)  recommend a DTI of 41% maximum. Calculate DTI by adding your total mortgage payment (principal and interest, escrow deposits for taxes, hazard insurance, homeowners’ dues, etc.) and all recurring monthly revolving and installment debt (car loans, personal loans, student loans, credit cards, etc.). Then, divide it by your gross monthly income.


With a little planning and some genuine hard work, you can prepare to take advantage of your veteran home loan entitlement. Qualification is not meant to be automatic. But you have already proven that you can be patient, disciplined, and strategic. Start now and you’ll be in that home before you know it!

VA loans are not only attractive to the veteran lender with no or little down payment, but they are increasingly a more secure investment for lenders.

Time to Buy a Home with a VA Loan

With mortgage rates near 65 year lows, it could be the best time in the past decade or so to buy a home.  There is plenty of “stock” available in nearly every market and in some markets, like FL, AZ, CA and a few others, prices have come down from near top of the market “values” compared to just a few years ago.

The “bad” news, well it has become somewhat more difficult to qualify for a home loan. The good news, however, is that there are fewer hoops to jump through than you might think on VA Loans still.  So for those that do qualify for a VA loan and there are MANY that do, it is still the best option for a purchase or a refinance.

Let’s talk about a few of the hoops, and see how easy they really are to get through.

1.  Income qualifying-  The VA has simplified the debt ratios and allows some of the highest DTI, Debt to Income, ratios in the industry.  I recently had an approval on a 54% DTI, that is 13% higher than current conventional guidelines.

2.  Appraisals- it has to be done by a VA certified appraiser.  This is a great benefit to the buyer.  The VA has more strict guidelines that protect the veteran/active duty buyer from getting into a home that isn’t safe, hasn’t been maintained well or doesn’t adhere to current “livable” standards.

3.  Seller Concessions- the VA offers up to 6% seller paid concessions on purchase transactions.  So if you were buying a $280,000 home, the seller could offer $16,800 in concessions to make the deal work.  That is obviously a HUGE amount of concessions and I haven’t seen the need for that much but hey it’s available and an option if it really came to that.   In addition, almost all purchases currently have some sort of seller concessions to help pay for closing costs.  It is just the way the market has moved with all the volatility in the real estate market.  Sellers are willing to give concessions away so they can sell the house at all, in this kind of market.

4.  100% financing- best of all no money down financing is still available.  Boy, that is when I wish I had access to the VA’s loan program.  We had to bring an arm and a leg to close so as to avoid paying mortgage insurance- which also the VA doesn’t have on any of their loans.  On VA loans, they charge a funding fee, which goes to guarantee the loan unless you collect disability from the VA and then they waive the funding fee altogether.

5.  VA Rates– among the lowest in the country, the VA “specialized” for government loans only offer rates as low as 3.25% today.  The best I could get on my own loan was 3.875%.

I hope I have helped to inform and bring up to date what the current market is to allow VA eligible home buyers to buy a house right now.

Eligibility and Benefits of VA Loans

The government tries to provide some benefits to members who serve the country. Among the other benefits that are available, is the Department of Veteran Affairs loan program for homebuyers. VA loans are mortgage loans that are designed to offer long-term financing to all eligible veterans or their surviving spouses. In case you want a loan from a private lender and things are such that you can’t pay your lender then VA stands behind and guarantees that the lender’s money will be paid.
Not all are eligible for the VA loan. You will be required to have a certificate of eligibility to get a VA loan. The people who are eligible for a VA loan are as follows.

  • Active duty personnel
  • Veterans of different fields
  • Some National Guard members
  • Surviving spouses of persons who have died while on duty
  • The spouses of personnel who are missing in action or taken captive

The VA loan has several advantages over the conventional loan.

Some of the benefits of VA loans are as follows:

1. No down payments:

Under this program, there has to be no money down. The eligible buyers can finance 100 percent of a home’s price without making any down payment. Conventional loans have very high down payment requirements. They at least require 20 percent of the value of the house as down payment. Thus, a lot of people can not afford to take out these conventional loans. The advantage in case of VA loans is that they do not require any down payments.

2. Processed faster:

If you are a potential buyer then you must submit your application and request for an appraisal of the property. This should be done before obtaining a VA loan. Some lenders, who have the VA approval for processing automatically, can finalize a loan. They do not need to wait for VA to review the application or the appraisal.

3. Protection of the lender:

The VA guarantees that it will provide repayment of the loan in case the borrower can’t. Thus, the lender is safe from any loss in the event of the borrower not being able to pay. This attracts the lenders and so they help veteran buyers in getting better loans.

4. Lowers cost of the buyer:

In case of the VA loan, the funding fee is approximately between half and 3.3 percent. This may be included in the loan or is supposed to be paid out–of–pocket. The loan is designed in such a way that it is meant to reduce the cost for the buyer.

5. Flexible loan:

These VA mortgage loans are not only for purchasing homes. They can also be used to build a new house or buy land. You may also take the loan out to make improvements to an already existing house. Thus, there is flexibility when it comes to VA loans.

VA Loan Types

Veteran Mortgage Loans vary in form and length. The type of VA mortgage loan an individual selects will vary according to an individual’s needs.

Here is a quick overview of some of the types of VA loans:

Fixed Rate- Fixed interest rate home mortgage loan offers a borrower to lock a certain interest rate for the life of their loan unless the borrower chooses to refinance. The interest rate for the loan never changes; no matter what is happening in the market. This gives a borrower a sense of comfort from a fluctuating market.

Advantages: Even if interest rates rise, you can keep your interest rate.

Disadvantage: If interest rates go down, your rate stays the same.

Term of Fixed Rate loans: Fixed VA mortgage rates are available for 40, 30, 25, 20, 15 and 10 years. Usually, the shorter the term of the loan the lower the interest rates. Longer term VA loans can be easier to get because a borrower does not need as much income. The most common fixed rate loan lengths are 30 and 15-year loans.

30 Year Loan: This is the most popular mortgage. Monthly payments are low since the life of the loan is long, but because of this there will be more interest over the life of the loan.

15 Year Loan: This loan life is shorter, resulting in a borrower owning their house quicker. A 15-year loan usually has a lower interest rate, but higher monthly payments.

Adjustable Rate (ARM) – Adjustable rate mortgages, VA Hybrid ARM, or Variable rate mortgages are loans where the interest rate adjusts based on indexes and or prime rates. With a variable rate, the interest is tied into the lending institution’s prime rate. Interest rates can vary from month to month. While the payment remains and only fluctuates slightly, the amount applied to the principal can change regularly. Typically lenders will set a cap for how high the interest can reach annually. Because of the flexibility, Adjustable Rate Mortgages often are less expensive than fixed-rate mortgages.

Advantages: If you are going to be only staying in your home a short time an ARM is great since a borrower is able to exploit lower interest rates. Variable rate mortgages are also great if a borrower believes that interest rates will lower soon.

Disadvantages: It can be frustrating having your rate change sometimes month to month. If the market is bad, a borrower’s rate will be bad.

Terms of Variable Rate Mortgage or ARM- The term for ARM is usually 1, 3, 5, 7-year terms.

Hybrid Adjustable Rate Loan or Hybrid ARM- A hybrid ARM features an interest rate that is fixed after an initial period but then acts like an ARM thereafter. It hybrids together both a fixed rate and an Adjustable rate mortgage.

Advantages: Hybrids are the best of both worlds, getting a fixed rate at first but then later having more flexibility with the Adjustable Rate. Hybrids are particularly great if a borrower will not be staying in their home long.

Disadvantages: They have the disadvantages of both a fixed and an adjustable rate.

Term of Hybrid ARMS: Hybrid ARMS term is referred to first by the fixed amount rate and then the adjustable amount rate periods. For example; ARM 3/1 is a fixed mortgage rate for 3 years and an adjustable rate for 1 year. The date the fixed rate switched to the adjustable rate is known as a reset date. A Hybrid ARM transfer some interest rate risk from the lender to the borrower allowing for lower interest rates.

VA Jumbo Mortgages– A jumbo mortgage is a mortgage that is higher than the typical loan amount. Jumbo loans may have a higher interest rate and different requirements for down payments than smaller home loans due to different underwriting requirements. Fannie Mae and Freddie Mac set the standard for the maximum amount of a loan before it is considered Jumbo. The current limit is 417,000. Any home that costs more than 417,000 would be considered a Jumbo loan. With Jumbo loans, Veterans will need to pay 25% on any amount over $417,000. Here is an example of how a jumbo loan works. A Veteran finds a home for 600,000. His maximum VA home amount is 417,000 with a $0 down payment. The Veteran pays 25% of 183,000 or 45,750. This amount acts in many ways similar to a down payment. Jumbo loans are required if you want to buy a more expensive home because lenders feel a greater risk.

Leave No Man Behind

These immortal words have become part of the American lexicon. Though the phrase has become synonymous with the US Armed forces, there is some debate as to the origin of its use. The film “Black Hawk Down” lays claim to these words as the motto of Delta Force, the legendary (and still officially unrecognized) special forces unit, a claim supported by Chuck Norris, starring as a Delta Force operative in the eponymous 80’s action flick. Despite this, a simple Google search of the phrase reveals that many contest this fact, including but not limited to Marine Reservists serving in Iraq, Army Rangers, and even armchair historians who claim that the earliest derivation of phrase was coined by none other than Alexander the Great. Whatever the source, the message seems to resonate most with those who have served in combat. With reverent stoicism, it is a pledge of allegiance to the fraternity of soldier hood. Their fears are less tied to notions of self-preservation than how they cherish the lives of their friends, for some the last family they will ever know, and thus the true reminder of home. They are not motivated by the protection the unit offers, as much as they are compelled by the nobility of their membership to it. Theirs is a nobility born amid chaos when the trappings of their normal lives erode, and their consciousness distils into a clear purpose. They serve our country, they serve our values, but most of all, they serve one another.

These tough economic times have made the line between soldier and civilian blurry at best, particularly when one thinks of “leaving no man behind”. Don’t our veterans deserve better than this? What about the veteran borrower returning home after his second tour in Afghanistan, only to find that the home he bought in Detroit for 80k is now worth less than $15k and the manufacturing job he was counting on died with the rest of the city’s work infrastructure? As he falls behind on his payments, how can he not feel even just a bit slighted by the system?

The intent of this post is to offer a hand out to government loan borrowers wishing for assistance on their VA loans. Though there are many options available, few are being utilized effectively. Even if you are only using this post as a means to expand and clarify your options, please, feel free to contact James at a time that works best for you and I’d be happy to answer them.


“An ounce of prevention is worth a pound of care.” Benjamin Franklin

Before exploring any foreclosure option, I would recommend checking out the free credit repair for veterans. This is an internal division that provides basic credit management education and assists borrowers with disputing and updating their reports to the greatest point of accuracy. It is said that 70% of all credit reports have errors on them and an astonishing 1 in 4 have errors on them serious enough to prevent someone from getting the credit they are rightfully entitled to.


If you wish to stay in your home but have fallen behind on your VA mortgage payments there may be a way to save you from foreclosure. Contrary to popular belief, most lenders don’t want to have to resort to a costly and time intensive foreclosure process, particularly in a housing market such as this one. The following alternatives have been recommended from the VA Borrower Delinquency Page

A. Repayment Plan – The borrower makes regular installment each month plus part of the missed installments.

B. Special Forbearance – The servicer agrees not to initiate foreclosure to allow time for borrowers to repay the missed installments. An example of when this would be likely is when a borrower is waiting for a tax refund.

C. Loan Modification – Provides the borrower a fresh start by adding the delinquency to the loan balance and establishing a new payment schedule.

D. Additional time to arrange a private sale – The servicer agrees to delay foreclosure to allow a sale to close if the loan will be paid off.

E. Short Sale – When the servicer agrees to allow a borrower to sell his/her home for a lesser amount than what is currently required to pay off the loan.

F. Deed-in-Lieu of Foreclosure – The borrower voluntarily agrees to deed the property to the servicer instead of going through a lengthy foreclosure process.


A. Service Members Civil Relief Act (SCRA) SCRA may provide a lower interest rate for up to one year, and provide forbearance, or prevent foreclosure or eviction up to nine months from the period of military service. In order to qualify for certain protections available under the Act, his or her obligation must have originated prior to the current period of active military service.

B. If VA is not able to help a veteran borrower retain his/her home (whether a VA-guaranteed loan or not), the HOPE NOW Alliance may be of assistance. HOPE NOW is a joint alliance consisting of servicers, counselors, and investors whose main goal is to assist distressed borrowers retain their homes and avoid foreclosure. They have expertise in financial counseling, as well as programs that take advantage of relief measures that VA cannot. HOPE Now provides outreach, counseling and assistance to homeowners who have the willingness and ability to keep their homes but are facing financial difficulty as a result of the crisis in the mortgage market. The HOPE NOW Alliance can be reached at (888) 995-HOPE (4673), or by visiting www.hopenow.com.

IV. DIRECT ASSISTANCE with non-VA Guaranteed Home Loan Veteran’s Affairs

A. For a veteran or service member who may have obtained a conventional or sub-prime loan, VA has a network of eight Regional Loan Centers and two special servicing centers that can offer advice and guidance. Borrowers may visit VA’s Loan Guaranty website at www.homeloans.va.gov or call toll free (877) 827-3702 to speak with a VA Loan Technician. However, unlike the case of a veteran or service member with a VA-guaranteed home loan, VA does not have the legal authority or standing to intervene on the borrower’s behalf. Therefore, it is imperative that a borrower contacts his/her servicer as quickly as possible.

B. VA Refinancing of a non-VA Guaranteed Home Loan

C. Veterans with conventional home loans now have new options for refinancing to a VA-guaranteed home loan. These new options are available as a result of the Veterans’ Benefits Improvement Act of 2008, which the President signed into law on October 10, 2008. Veterans who wish to refinance their subprime or conventional mortgage may now do so for up to 100 percent of the value of the property, which is up from the previous limit of 90 percent.

D. Additionally, Congress raised VA’s maximum loan amount for these types of refinancing loans to $729,750 depending on where the property is located (this limit is significantly higher in Guam, Alaska, and Hawaii). These changes will allow more qualified veterans to refinance through VA, allowing for savings on interest costs and avoiding foreclosure. A VA refinancing loan may help a veteran who is facing a big payment increase.

V. DIRECT ASSISTANCE on VA Guaranteed Home Loan Veteran’s Affairs

C. When a VA-guaranteed home loan becomes delinquent, VA provides supplemental servicing assistance to help cure the default. The servicer has the primary responsibility of servicing the loan to resolve the default. However, in cases where the servicer is unable to help the veteran borrower, Loan Guaranty has Loan Technicians in eight Regional Loan Centers and two special servicing centers who take an active role in interceding with the servicer to explore all options to avoid foreclosure. Veterans with VA-guaranteed home loans can call (877) 827-3702 to reach the nearest Loan Guaranty office where loan specialists are prepared to discuss potential ways to help save the loan.

Why Veterans Should Purchase a New Home

During the time I have worked in the VA loan industry, there have been many Veterans who ask the question, “Why should I purchase a home in 2010/9/etc.?” Some veterans are scared that they won’t get the best deal possible and are waiting for something better to come along.  However, the truth is that 2010 will be the best year historically to make the decision and purchase a home with a VA loan.   You still don’t believe me? Well, two of the big reasons are as follows:

Prices Are As Low as They Will Get

Prices on both new and existing homes have dropped 15-65% in many parts of the country, especially in Florida and California and there has been a slowing in the falling prices. In some parts of the country, people are beginning to see a slight increase in prices from which most experts think that the decline of the housing market has hit rock bottom and is on the rise.  So while shopping for a house in 2010 it will be much easier to find a better deal on something that will probably appreciate more rapidly than ever before.  Making it the best time to buy, but the longer the procrastination the more the market will rise and the harder it will be for Veterans to get the better deal.

Financing for Veterans is Not a Problem

While there have been many changes to getting approved to purchase a home and is nearly impossible on the conventional side of things the VA makes it a lot easier to get approved on a purchase.  As long as your credit is decent you are pretty much approved,  there is no down payment required, and in today’s market most sellers will even offer to pay the closing cost (which otherwise would have to be paid by the borrower).  Here at Low VA Rates we specialize in only VA loans, thus our name! We work fast and we know the easiest and fastest way to get an approval for you in just three weeks to a month. That’s much faster than typical loan approvals!

VA Loan and the Specially Adapted Housing Program

Aside from the well-known VA home loan program available to veterans, the VA also offers other home-related benefits to service men and women. One of these is the Specialty Adapted Housing Program, which was designed to provide grants to qualified service members with specific service-connected disabilities, for the purpose of constructing an adapted home or modifying an existing home to meet their adaptive needs. According to the VA, “the goal of the Specially Adapted Housing (SAH) Grant Program is to provide a barrier-free living environment that affords the veterans, or servicemembers, a level of independent living he or she may not normally enjoy.”

Specially Adapted Housing Grant

Which veterans or service members are basically eligible for the grant?

The Specially Adapted Housing Grant is available to veterans or service members who are entitled to compensation for permanent and total service-connected disability due to:

· The loss, or loss of use, of both lower extremities such as to preclude locomotion without the aid of braces, crutches, canes, or a wheelchair.

· Blindness in both eyes having only light perception, plus loss or loss of use of one lower extremity.

· The loss, or loss of use, of one lower extremity together with: (1) residuals of organic disease or injury, or (2) the loss or loss of use of one upper extremity.

· The loss, or loss of use, of both upper extremities, so as to preclude the use of the arms at or above the elbows.

· The permanent and total disability is due to a severe burn injury (as so determined).

How much specially adapted housing assistance can a veteran or service member receive?

· An eligible veteran or service member may receive a VA grant of not more than 50 percent of the cost of a specially adapted house, up to the aggregate maximum amount allowable by law. The current maximum grant amount allowable at the time of this publication is $63,780. This amount will be adjusted annually based on a cost-of-construction index. The first adjustment occurred October 1, 2009, and future adjustments will take place each October 1 thereafter. Any future adjustments will increase the grant amounts or leave them unchanged.

How may the grant be used?

An eligible veteran or service member has the option to use up to the full amount of the grant under any one of the following plans:

· Plan (1): The veteran or service member may elect to construct a home on land to be acquired for that purpose.

· Plan (2): The veteran or service member may build a home on land already owned if it is suitable for specially adapted housing.

· Plan (3): The veteran or service member may remodel an existing home if it can be made suitable for specially adapted housing.

· Plan (4): When the veteran or service member has already acquired a specially adapted home (without the assistance of a VA grant), the grant may be applied against the unpaid principal mortgage balance of the home.

Special Housing Adaptation Grant

Which veterans or service members are basically eligible for the Special Housing Adaptations Grant?

Veterans or service members who are entitled to compensation for permanent and total service-connected disability due to:

· Blindness in both eyes with 5/200 visual acuity or less, or

· The anatomical loss or loss of use of both hands.

· The permanent and total disability is due to a severe burn injury (as so determined).

How much special housing adaptation assistance can a veteran or service member receive?

An eligible veteran or service member may receive a VA grant for the actual cost to adapt a house or for the appraised market value of necessary adapted features already in a house when it was purchased, up to the maximum grant amount allowable by law. The current maximum grant amount allowable at the time of this publication is $12,756. This amount will be adjusted annually based on a cost-of-construction index. The first adjustment occurred October 1, 2009, and future adjustments will take place each October 1 thereafter. Any future adjustments will increase the grant amounts or leave them unchanged.

How may the grant be used?

An eligible veteran or service member has the option to use up to the full amount of the grant under any one of the following plans:

· Plan (1). The veteran or service member may elect to construct a home on land to be acquired for that purpose.

· Plan (2). The veteran or service member may build a home on land already owned if it is suitable for specially adapted housing.

· Plan (3). The veteran or service member may remodel an existing home if it can be made suitable for specially adapted housing.

· Plan (4). When the veteran or service member has already acquired a specially adapted home (without the assistance of a VA grant), the grant may be applied against the unpaid principal mortgage balance of the home.

*Note that if a veteran or service member qualifies for both benefits, the law limits him/her to the use of the larger grant.

If you feel you may be eligible for one of these grants, contact the Specially Adapted Housing Agent at your local VA Regional Loan Center for more information.

If you are in need of help with your home loan, need a VA streamline, or a VA loan in any state including a Texas VA Loan we can help.

Top 10 Factors Considered in Getting a VA Loan

Putting together a loan proposal for dozens of veterans every week can expose a loan officer to a wide array of borrowers with varying circumstances. Whether you’re a young couple hoping to upgrade in a few years, or you’ve finally retired and found the home of your dreams, I make it a point to know my borrowers before we start discussing specific loan features.

In the process of getting to know my clients’ situation, I try to understand their priorities and how those same priorities would influence my decision if I were in their shoes. The following is a list of the top ten factors (in descending order) I take into consideration when choosing the right VA refinance loan.

Borrowers face choices between fixed and variable rates, 30- and 15-year loans, lower rates, and lower closing costs. Hopefully these factors I present in detail will help you in finding the right loan for you.

#1: Breakeven Point

If I could boil my decision making process on a VA refinance down to one factor, the breakeven point would be all that remains. Borrowers get hung up on tons of different variables, whether it be the closing costs, the rate, the term, or the type of loan they’re getting.

If your hang-up is in the expenses, consider this simple equation: How much time is required before my monthly savings surpass my net expenses in this transaction?

Simple economics should rule this decision, but they don’t. So much of it has to do with priorities, perception, and emotions like the fear of making a bad decision. For me, the number one question that helps me determine the loan type (not just the rate) best suited for a borrower is, “How long do you see yourselves staying in this home?”

If you plan on staying in your home until it’s paid off, a breakeven point of 7 years should not deter you from moving forward, regardless of the expense. If you see yourself moving in 5 or so years, you may want to reconsider the expense if it doesn’t break even before that. Sometimes your current needs for monthly savings can trump this factor, but it is a factor worth considering nonetheless. Many clients have found the hybrid loans to be a great alternative when they’re uncertain of future plans for the home. The lower expenses and increased savings give it a superior breakeven period compared to their fixed counterparts.

Almost all VA refinances are identical in their relative closing costs, but as a borrower it’s up to you to choose between a lower rate or lower costs. You can always choose one, but unfortunately it’s almost always at the expense of the other. Lower rates generate higher expenses, and lower expenses require higher rates. Some borrowers I’ve worked with saw themselves staying in the home less than 10 years, but didn’t want a variable rate. After looking at the various fixed rates and their corresponding costs, we calculated the breakeven point at each rate and found the one they were most comfortable with. Bear in mind, discount points paid to reduce your rate are tax deductible over the life of the loan.

In any case, if you have to take one thing away from this post it’s this: A refinance will usually make sense if you recoup your costs soon enough to enjoy a net savings before you’ve made your last payment. Your monthly savings can determine exactly how soon you recoup those costs. Go into your refinance with a strategy on how to best apply the savings generated so you can maximize its potential.

#2: Broker & Lender Choice

If price were the number one factor driving economic decisions, retailers like Target and brands like Toyota would cease to exist.

Your broker and his selection of lenders are the connection between you and your VA loan, and the quality of that connection can determine a lot of your loan’s outcome.

Low VA Rates (a broker) specializes in doing only government loans, with more than 90% of the loans being VA IRRRL loans. This familiarity with VA guidelines proves to be extremely useful when it comes to getting a loan closed on time, with a great rate and price. The sheer volume of these refinances has given Low VA Rates a great relationship with wholesale lenders, allowing them to pass the savings of bulk, and preferential pricing on to veteran borrowers.

One benefit in dealing with a broker like Low VA Rates is the many lender options available to you, rather than having to deal with one lender’s rules and pricing. Lenders are much like insurers in that certain variables factor into the rate being offered. Depending on where you live, your loan size, your credit score, and whether it’s a townhome, a mobile home, or single family residence—all of these can affect the pricing. When your broker can see how 10 different lenders price a loan based on your circumstances, you increase your chances of obtaining a lower rate.

Your lender (the bank your broker decides to take your loan through) can also impact the decision. Although you’re dealing with a commodity when it comes to mortgage loans, some lenders are simply better than others when it comes to ease of closing a loan and the time it takes for the loan to get from application to closing. Any broker worth his salt will be able to tell you the pros and cons of the lender with whom he chooses to lock your loan.

No matter who you deal with, it is important to find a broker who understands your needs before suggesting a specific type of loan. Many brokers do not place the client’s interests above his or her own, which only further supports the case for better borrower education. Many clients have stated that a broker who is upfront with all of the costs, quick in responding to questions, and competent in delivering on their promises are among their top attributes they seek in a loan officer.

#3: Current Debt Situation

Many borrowers have felt the effects of our economy and are finding themselves overburdened with debt in increasing numbers. For those on high-rate loans, it’s always a no-brainer to refinance to a lower rate, especially if you are seeing hundreds in savings or a drop in excess of 1%. Even if you’re not in the market for, or qualified for the cash-out loan, the VA IRRRL loan still potentially provides up to two months of deferred payments and a possible escrow refund, which can provide thousands in short-term relief.

Many borrowers look beyond the benefits of a lower payment and realize the benefits of a reduced term. If they’ve got 27 years left on a high-rate mortgage, but could pay the home off in 18 years on the same payment they’re making now (but at a lower rate), this gets them all excited about living out their Golden Years debt-free, which is a great idea if you’ve got no other debt.

Strangely enough, I’ve talked quite a few borrowers out of this strategy after digging a little deeper into their situation. If you’ve got a lot of debt, take into consideration how much you spend in minimum payments to simply carry the debt. For one borrower with over $30,000 in credit card debt (most of it around 18% interest), it didn’t take long to convince him where to best apply the $200 a month potential savings his refinance would create. For some of my borrowers, the increased debt reduction possibilities offered by the hybrid rates made it easily the best decision for their needs in stabilizing their finances and, in some cases, keeping their home.

I’m an advocate for building equity, but when one has to choose between paying extra on a debt charging 18% and another debt charging only 5% that’s tax deductible, it only makes sense on which debt to pay sooner (hint: it’s the bigger, more expensive one). The sooner one eliminates interest expenses in consumer debt, the sooner one can reapply that monthly savings in paying down the mortgage.

#4: Equity Position

Everyone knows what its like to see the mortgage payment go out month after month, only to realize that a depressingly small percentage is being applied toward the principal.

For many, building up equity is the #1 reason for them to consider refinancing their loan. I’ve had many borrowers switch from a high-rate 30-year mortgage to a low-rate 15-year mortgage with similar payments, and although this can’t be done in every case, nearly every refinance presents an opportunity to shorten the term without increasing the payments.

For any refinance proposal I’ve personally done, I make it a point to show the borrower how soon they can pay off their mortgage with the same payments they are currently making. Every lender offers both 30-year and 15-year mortgages, and many lenders also offers terms of 25 and 20 years. In any case, it’s important to remember than any 30-year mortgage can be turned into a reduced term by increasing the monthly payments. Increased payments build equity faster.

Refinancing to a lower rate can help pay off the home sooner without increasing expenses. The security of a fixed rate helps get this job done over the long-term for most borrowers, but many have also taken advantage of the increased savings found in hybrid loans, which are perfect for building equity in a relatively short amount of time. Most folks refinancing to the hybrid are seeing their rate drop usually in excess of 2%, and with five years of an additional $100 in savings over the fixed rates, the hybrid loan is perfect for their situation. Either way, if your strategy is to build up equity in the home, your choices will vary depending on your priorities.

#5: Loan Type

For most of my lending career, I’ve been a fan primarily of the 30-year fixed mortgage. But for a lot of situations that I’ve come across in this recent economy, the VA hybrid loan has been a great, if not better, alternative in accomplishing borrower objectives. I find it important that all borrowers understand this loan before they dismiss it as an option; this is not the same ARM loan that was a principal culprit of our current economic crisis.

Take into consideration that this is a loan fully backed by the VA and FHA, and it has built-in adjustment caps to reduce movement over time. The average rate for the past 18 years on these has been below 5.5%. While not for everyone, these loans are best suited for borrowers with short-term expectations for the home. Many active-duty and empty-nesters love this loan as they would like to lower their expenses, but expect transition early enough to make the expenses of a fixed rate less attractive.

In any case, my general rule of thumb on deciding between fixed and hybrid is this: anyone with less than an eight-year plan in the home should seriously consider a hybrid, while anyone planning on staying longer than that should look more towards the fixed rates. Exceptions based on individual needs will apply, but when you’ve got the best loan, you can avoid unnecessary expenses and enjoy greater savings.

#6: Current Rate Trends

I never have, and never will, encourage timing the market when it comes to refinancing. If anything, I only bring up current rate trends (not the rates themselves) as something I would tell borrowers to not consider when they’re refinancing. In the seven years it’s been since I first started doing mortgages, I have only learned with my accumulated experience, insight, and inspiration that it is impossible to predict where the interest rates are headed.

If you’ve got a good opportunity to refinance now, take it. There were simply too many clients who gambled on waiting for a lower rate earlier in 2009. Waiting offered little to gain and much to lose; sadly, they didn’t realize this until it was too late.

It’s not a question of if, but more a question of when rates go back up, what will you do? Many potential borrowers change their tune in a rapidly rising interest rate market, and rates they decided to pass up are now something they’ll gladly take if it can still be done. Don’t get caught in this trap. If the opportunity isn’t good enough by the numbers, then wait. But if you’ve got a good opportunity in front of you now, carpe diem.

#7: VA Funding Fee

If you’re a veteran receiving disability income, the VA funding fee is waived altogether, making it no longer a factor in the refinance decision. For the rest of us, the type of loan you choose can change these costs dramatically. When most of you purchased using your first VA loan, you may have paid as much as 2.4% of the purchase price for your VA funding fee. On a $200,000 loan, that’s almost $5,000. For secondary purchases, cash-out, and debt-consolidation loans, this cost goes up to 3.3%.

This may be a necessary cost in order to pay off an expensive second mortgage or get the financing to finish some much-needed repairs. However, when I come across a borrower who is considering a cash-out loan getting only $10-15,000 out for an increased fee expense of $5,000, I help them to realize that this may not be the best option if there are viable alternatives like the two deferred mortgage payments and the escrow refund that come with the VA IRRRL.

The IRRRL (or streamline loan) is a real winner in this area because if the funding fee isn’t already waived, it’s capped at 0.5%—an incredible savings. FHA homeowners (another type of government loan) do not have the same benefit, and must pay an equivalent up-front mortgage insurance premium at full cost (even on the streamline program) on top of their monthly mortgage insurance. Comparatively speaking, the VA funding fee does the same thing as this mortgage insurance, but at a fraction of the cost, especially on the VA IRRRL.

#8: Time & Effort Required

Everyone who owns a home knows what it is like to go through the gauntlet of paperwork and waiting required to see if your loan will go through. Although the VA purchase and cash-out loans are no different than most other loans in the time and effort required, the VA IRRRL has one huge advantage over other loans when refinancing.

The VA IRRRL requires no appraisal and no income or asset verification. This basically means that you don’t have to worry about you home’s declining value, your loss of income, your increased expenses, and all of the paperwork you normally have to come up with for a lender to calculate these things. We require no pay stubs, tax returns, or bank statements. Any borrower can gather the required documentation in less than 15 minutes. Simply knowing that you’ve missed no payments by more than 30 days in the last 12 months and that you’ve got a credit score over 620 (required by most lenders) and no second mortgage (unless your 2nd lien holder is willing to subordinate) is enough to know that you’re automatically qualified for the VA IRRRL. When dealing with an experienced VA streamline specialist, your loan can easily close within 4 weeks, with very little effort required from the borrower beyond the hour or so need to apply for the loan.

#9: Gross Costs vs. Net Costs & Savings Differences

Although not a huge factor, your gross closing costs can be reduced significantly enough to impact your monthly savings. Take into consideration that the VA IRRRL allows you to potentially defer up to two months of mortgage payments and that it may provide an escrow refund if new escrows are being rolled into the loan. These are all part of the gross costs of the loan, and can be reduced a number of ways to free up more monthly savings.

If you are closing late in the year, you will likely see more months of escrows rolled into the new loan than if you close earlier. Regardless of this cost, your net costs remain unaffected. More escrows don’t just mean a larger loan, it also means a larger refund check after closing. Sometimes your loan can be kept with the same lender (even if you go through a broker like Low VA Rates), which would allow you to do an escrow rollover, thereby eliminating the expense of new escrows. Also, you can choose to defer only one month’s payment by bringing a payment to closing, thereby lowering the expenses. The bottom line is this: lower expenses means a lower loan amount, which means more monthly savings.

#10: Expediency & Preparation

The refinance process can be like navigating a jungle at times. Since I took my first loan application in 2002, I’ve learned one thing about mortgages: you have to expect the unexpected. Just about every loan has hiccups and hold-ups that keep it from closing smoothly. For many borrowers, the decision to refinance is finally made when situations come down to the wire. The rates are finally exactly where you want them to be, or your situation dictates that you need to defer two payments sooner rather than later.

So often, I come across borrowers desperate to get the loan closed ASAP, and in many cases we’re able to make it work. In just about every case though, it is wise to get started NOW, even if rates aren’t where you would like them to be. Who knows how long one part of the process may end up taking? Nothing makes for a better broker/borrower relationship than a borrower who gets his paperwork in early and done thoroughly.

Make sure your broker is able to get paperwork and revisions out to you quickly. Invest in the quality of your application up-front, and it will pay dividends. As a borrower, it is wise to make sure you present your broker with detailed, accurate and up-to-date information. No matter what, in the lending business sooner is always better than later. My motto: plan for the worst,  expect the best.

In Closing

That wraps up my top ten factors considered in a VA refinance Loan. Everyone out there has a different situation. Understanding those differences, and how they work with the many options available through the VA’s lending programs, makes it easy for me to help veterans all over the country to find a loan perfect for their situation. I hope you found this to be informative.

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