Common VA Loan Questions
If you are concerned about the complexity of securing a VA loan, you really don’t need to worry. There is just a small amount of bureaucracy standing in your way and loans are frequently made available for properties without you needing to make a down payment. VA loans also offer more favorable interests rates than other loans. Veterans applying for their VA loan will find that the application process is very similar to applying for standard mortgages and loans. There are just two additional requirements: The first is the veteran’s Certificate of Eligibility and the second is the VA-assigned appraisal. If you use a lender that is approved for automatic processing, then the process is even simpler. This will mean that your loan can be processed and closed by your lender without them having to wait for credited approval from the VA.
The VA Home Loan is very flexible in terms of what it allows you to do. Of course, the loan covers the purchase of homes (this includes a townhouse or a condominium in a VA-approved project). In addition, the VA Home Loan can help you to build a home or even build a home and improve it. The VA Home Loan also covers the renovation of an existing home through the installation of energy-related features. Finally, it covers the purchase of a manufactured home and/or lot. When it comes to manufactured homes, there is a specific requirement that land must be included with the property and that the home itself is at least 24-feet wide. In addition, there must be an identifiable tag on the manufactured home. You should bear in mind that due to the increased risk that comes with manufactured homes, most lenders are unwilling to lend against them.
The VA authorizes a maximum guarantee of 25 percent of the loan amount up to $113,275. This makes the maximum VA home loan $453,100. There is a slight difference in the eligibility amount according to the state you are executing the loan in Hawaii and Alaska have a maximum guarantee of 25% of the loan amount up to $169,912. This means that the maximum VA home loan in HI and AK is $679, 650.
In instances where a married couple are both eligible for VA loan benefits, they may purchase a property together. However, it is not possible for the guarantee amount to exceed the lesser of 40 percent of the home loan amount, or $36,000 ($105,250 for certain loans over $144,000).
Let’s imagine a scenario where you are a veteran who purchased a home with your spouse using your VA home loan. If you divorce and your ex-spouse is awarded the home, how would you get your eligibility back? In this scenario (where the property is awarded to your ex-spouse as a result of a divorce), entitlement cannot be restored. The only scenarios where this could happen is if your ex-spouse refinanced the property and/or paid off the VA loan in full. Or—if both you and your ex-spouse are veterans—your ex-spouse substitutes their entitlement.
When a VA guaranteed property is foreclosed, it can be acquired by the Department of Veterans Affairs (VA). Properties acquired this way are marketed via Ocwen Federal Bank FSB, West Palm Beach, Florida. Local listing agents list these properties using local Multi-Listing Systems (MLS). A comprehensive list of available properties is also published on the Ocwen website. If you find property there that interests you, you should contact a real estate broker to organize a visit and tour the home.
There is a lot of misinformation out there that can confuse first-time buyers who are seeking to use a VA loan. It is important to remember that the VA does not typically act as a lending agent, but rather handles the guaranty of the loans. The VA can offer a guaranty when veterans meet the specific requirements. The first requirement is a good credit rating. For this reason, it’s important for you to visit a finance expert who will be able to advise you on your current rating and inform you what steps you need to take to improve it. You should always remember that this guaranty is not an automatic benefit but is available exclusively to veterans who can prove they have the income to handle payments on the house. This is why working with financial planners and credit councilors is so important.
While the VA is responsible for loan guaranty, it is up to you to choose the type of loan that works best for you. While you will be eager to get into your new home as soon as possible, it makes sense to invest time in your search for a loan. The more time that you set aside for research, the more favorable the loan rate you will be able to find. You should feel comfortable consulting with experts and legal advisors within the real estate business. If you can find a business that specializes in working with veterans, this could be particularly helpful and significantly speed up the process. The longer you spend searching for the best loan out there, the more likely it will be that you find a fixed-rate loan. Alternatively, you can go for an adjustable-rate loan. With these types of loans, interest can be adjusted up to one percent annually, but only up to five percent over the total time of the mortgage.
Pre-approved loans are a great option. They help you to save time and show sellers that you are a serious potential buyer. Once you have a concrete figure for your VA home loan, you will know exactly which price range you should be looking at. When you begin the search for your home, you will find that having a pre-approved loan is a great help throughout the process.
Lenders approved by the VA get you started in the VA loan guaranty process using the Automated Certificate of Eligibility (ACE) system. For the ACE system to work properly, you must have an adequate amount of existing information within the database. If this is not the case, you will be asked to complete VA Form 22-1880. This form is a Request for a Certificate of Eligibility and is simple to complete. Once you’re done that, simply send along the form to your regional Eligibility Center along with a copy of your DD-214 discharge paperwork. Veterans seeking proof of eligibility should bear in mind that the process can be complicated if you have any discharge other than honorable. If this is the case, the VA will have to investigate the discharge to make sure that it was not dishonorable. If you find yourself in this situation, you should be sure to contact your local VA office and seek help there. This is also where you should file an appeal if you wish to contest the results of your eligibility request.
Not necessarily. While it can complicate the process of achieving eligibility, the VA will check to ascertain the exact details of the discharge. If you know that your discharge was anything other than honorable, you can get advice from your local VA. The staff there will be able to help you file the appropriate paperwork and pursue an appeal if necessary. You will most probably have to include copies of your DD-214 form and any supporting paperwork that demonstrates you did not receive a dishonorable discharge or that your discharge was modified, upgraded, or corrected.
The DD-214 form is undoubtedly the most important military document that a veteran has. The DD-214 is the discharge paperwork that offers proof of a veteran’s military status (retired, separated, or discharged). It also details the nature of a veteran’s discharge as well as their status with the National Guard or a Reserve Unit. A missing DD-214 form can certainly disrupt the VA processes but, thankfully, you can get a replacement by contacting the National Personnel Records Center. To get this replacement, you will need to complete an SF-180 form and explain the reason why you need a replacement. You will be expected to also provide your name, rank, and social security number. It is important for veterans who have recently left the military from an overseas location to remember that their paperwork may be delayed overseas for up to a year. This is because the paperwork needs time to become part of the National Record Center archives. Even in this scenario, there are options available to you: You should contact the orderly room, First Sergeant, or Sergeant Major at your final base and request a copy.
If you are thinking about interest-rate reduction refinancing on your existing VA loan, you should be sure to check directly with your lender. This is a big opportunity for veterans, and there is no need to re-establish your VA loan eligibility: You can simply ask the lender to make use of the VA's "email confirmation procedure." You can also get another VA loan by simply re-using your VA loan eligibility. To use your VA eligibility, you must be able to present evidence of having successfully completed payments on the previous note. In addition, you must have sold the property. When it comes to applying for re-eligibility, you must provide copies of paperwork that demonstrates your previous VA loan has been fully paid. You can get this in the form of a letter from your bank or a copy of the “Closing Disclosure” document.
It is possible to renew a VA certificate of eligibility on a one-time basis. In this instance, you will qualify if your existing loan has been paid in full, but you still own the property. In normal circumstances, you must provide evidence that you have sold the property; however, the one-time exception means that you can renew the VA certificate of eligibility. This process is simple: You just need to complete VA form 26-1880 before sending it to your local VA Eligibility Center. It is important to remember that being released from your liability or having the debt waived by the VA is not synonymous with having paid off your loan: In these scenarios, you will be required to repay the government's loss. Only then can you expect the certificate of eligibility to be renewed.
There are specific circumstances in which veterans can be exempt from paying the funding fee that is associated with a VA home loan. The first group consists of veterans who are receiving disability compensation for medical issues related to their service. Next, veterans who are not drawing retirement pay are entitled to exemption from the VA home loan funding fee. The next group consists of the surviving spouses of veterans who died in service or from disabilities arising from service-related injuries. In this case, it does not matter whether the surviving spouse has his or her own entitlements. You should always remember that it is the VA that has the final say on whether exemptions are passed. They deal with them on a case-by-case basis. If you have doubts, you should contact your local VA to review the service records and get a decision.
VA mortgages are not intended for veterans to purchase a building that they intend to use as a rental property. This is why, after purchasing a home with a VA loan, you must occupy the house within sixty days of the loan closing and certify that you are personally living in the house. Of course, there are exceptions if you purchase a house that is in the process of being built, for example. This requirement applies to all VA guaranteed loans except the Interest Rate Reduction Refinancing Loan (IRRRL). In this instance, the veteran must certify that the dwelling was previously occupied as a home.
If a veteran files for bankruptcy, they still have the option to apply for a VA home loan if they are eligible. However, the purchase of another home can only take place at least two years after the “discharge date” of your bankruptcy has passed. Once that time has passed, veterans are eligible to buy another home with the usual credit, and income requirements applied.
Veterans must fall within a certain debt ratio to qualify for a VA home loan. To arrive at this figure, your income, credit and debit cards, and new indebtedness as a consequence of the VA mortgage, are computed. The maximum debt ratio a veteran can have while still qualifying for a VA home loan is 41%. This figure is just one that is used alongside a range of others: a reliable income and credit rating are also taken into account. This is why it’s so important for veterans to speak with financial planners and debt counselors to put themselves in the best possible standing in advance of the application process.
If you are a veteran who owns a home and would like to refinance it, VA financing is a great option for you. VA refinancing means that your existing real estate debt is covered by the proceeds of the new VA mortgage. To qualify for home equity refinancing, you must use the same property as before. This method is known as “Cash Out” refinance and is only available on the property that is used as your regular residence. Refinancing can be available for up to 100% of the appraised value of the property, plus all the additional closing costs in a lot of cases. Naturally, your home must have enough equity to account for the loan. You should remember that the terms available to you for home equity refinancing will vary from state to state. Your local VA rep will be in the best position to offer you advice.
The VA home can do much more than just cover the purchase of existing homes. Veterans planning on using it should be comfortable asking their local VA rep what options they have. For example, VA home loans can be used to buy a home in need of renovations while also contributing to the cost of those repairs. The VA loan can also be used to pay for energy-efficiency work to be conducted on a veteran’s existing home. In some circumstances, the VA loan can also be used to purchase a manufactured home and lot.
One of the reasons that the VA Funding Fee exists is to reduce the taxpayer burden brought about by the program. First-time buyers using the VA are required to pay just over two percent of the value of the property for a “no money down” loan. On the other hand, second-time buyers will find themselves paying just over three percent. These same fees apply to VA refinance loans. Some veterans are exempt from paying the funding fee. Veterans receiving disability compensation (or those who are entitled to it but not drawing retirement pay yet) do not have to pay the funding fee. Likewise, surviving spouses of veterans who died in service (or from later complications arising from injuries inflicted in service) are also exempt from paying the fee. If you are in doubt about whether you have to pay this fee, you should certainly check with your local VA rep who will be able to consult your service records and help guide you through the process.
Some veterans that are exempt from the funding fee. Veterans receiving disability compensation (or those who are entitled to it but not drawing retirement pay yet) do not have to pay the funding fee. Likewise, surviving spouses of veterans who died in service (or from later complications arising from injuries inflicted in service) are also exempt from paying the fee. If you are in doubt about if you have to pay this fee, you should certainly check with your local VA rep who will be able to consult your service records and help guide you through the process.
If a veteran would like their legally married spouse to co-sign a VA loan, that is a definite possibility. In fact, there is no penalty at all, and the loan remains guaranteed by the VA. This is also the same in a scenario in which two unmarried military members would like to co-sign a VA loan. There is just one instance in which the VA makes an exception, and that is when a military member or veteran would like to co-sign with an unrelated, non-military person. In this circumstance, the guarantee from the VA is limited to the amount of interest that a veteran has in the property. Some lenders will not allow these types of loans. If you would like to enter into one, you will have to spend the appropriate amount of time tracking down the right lender that can make it possible.
The VA authorizes a maximum guarantee of 25% of the loan amount of $113,275. By extension, the maximum VA home loan is $453,100. This varies in the states of Hawaii and Alaska, where 25% of the loan amount is covered up to $169,912. This makes the maximum VA home loan $679,650 in those two states.
Lenders who work with veterans must abide by the federal Fair Housing Law. This law prohibits lenders from refusing to negotiate with veterans, discriminating when it comes to their finances, and any practice that attempts to obscure the status of a property. Given that lenders are well aware of these laws, you should not experience these problems. However, if you do feel that your lender is violating those laws, you can file a Housing Discrimination Complaint form (Form 27-8827) with your local VA.
If a VA loan is foreclosed, the VA will assume control of that property. Those properties are then offered to the public in the same fashion as repossessed HUD and USDA Development homes. There is a list of foreclosed single-family houses on the homesales.gov website. These properties are managed by different agencies, and you can browse by local listings and see what is available in your area. If you find a property that interests you, you should complete and submit the Offer to Purchase and Contract of Sale VA form to a broker. Naturally, the regular eligibility and credit terms apply here. Your lender will be able to clarify any doubts or concerns you have about the terms and conditions of this type of purchase.
The biggest advantage that veterans can give themselves when applying for a VA Home Loan is having their credit optimized. This is because eligibility depends on the veteran’s debt ratio. When it comes to managing credit scores, veterans should enlist the help of a credit counselor. These professionals will help veterans get their debt ratio as far as possible below the 41% maximum debt ratio that is allowed for eligibility. There is a range of tips and tricks that can help improve credit rating, such as eliminating credit card debt and prioritizing the paying off major debts.
There is a lot of misinformation that can make purchasing a home quite complicated for first-time buyers. Essentially, it is important to remember that the VA does not act as a lending agent. Rather, the VA is the body responsible for guaranteeing the loans of veterans. The VA does this by offering a guaranty to veterans that have a good credit rating and meet the other essential requirements. This is why it is so important for veterans to liaise with a credit advisor to get their credit score in the best shape possible. The VA can only offer a home loan guaranty to those veterans who have a sufficient income to cover payments on their new home: A VA loan guaranty is not an automatic benefit.
Veterans must remember that, if they use the VA Home Loan to purchase a property, the VA is not in the business of offering guarantees that the home will be free from defects. They cannot offer any form of legal counsel to veterans and, while the VA does perform an initial appraisal of the property, this shouldn’t be mistaken for a formal inspection or approval of the property. So, remember: It is up to you as the buyer to seek out expert advice on the state of the property before you purchase it.
The VA loan does not generally cover the purchase of a farm, except if the farm in question has a residence upon it where the veteran is planning to live. If the veteran makes this kind of purchase and intends to operate a farm business, they must be able to demonstrate the viability of the business. If a veteran has their mind set on a farm but their VA loan cannot cover it, there are other options available. The Farms Home Administration has demonstrated a preference for veterans in the past and veterans can use this to finance their farm operation.
VA loans can only be used to purchase properties within the United States, as well as its territories and possessions. This means that veterans can use their VA loans in Puerto Rico, Guam, the Northern Mariana Islands, Virgin Islands, and American Samoa. Applications for VA loans within those locations will follow the established process, but if you would like extra clarifications on any special requirements, your VA rep will be able to provide you with the guidance that you need.
If a veteran passes away before paying off his or her VA loan, the responsibility for that veteran’s mortgage passes to either the spouse or the veteran’s estate. That is, of course, unless mortgage life insurance has been purchased. But bear in mind that this is not offered through the VA and veterans must seek out a qualified private insurance company to handle that service. The terms and conditions will vary from agency to agency. Veterans should remember the VA has a “Leniency Policy” for qualified borrowers who fall on temporary hard times.
Yes. If a veteran sells the property that was purchased using a VA loan, he or she is released from the obligation toward the loan. However, veterans should remember that in the case of loan assumption, this is not automatic: The borrower needs to request a “Release from Liability” notice from the VA to request the liability be transferred to the new owner. This is not the case, however, for loans closed before March 1, 1988. With that said, it is still important for veterans to request the form regardless.
However, this can occasionally create issues because VA mortgage payments can sometimes be sent to the old loan holder. This means that the new loan holder may believe you have missed a payment and issue a notice of non-payment to you. In this scenario, it is important to contact the new loan holder to clarify what has happened. Of course, it is technically the responsibility of those two parties to resolve the issue but, by being proactive, you can avoid any potential damage to your credit rating and payment schedule.
Common Refinance Questions
The mortgage checkup can review your entire financial picture and assess its general state of health. The vast majority of American homeowners will have their mortgage as their biggest debt, and the equity in their home is their biggest holding. Given its importance, why wouldn’t you have it checked over occasionally, just like you go to the doctor for a checkup or the garage for a service? Contact us to have us look over your mortgage without obligation and see if there are any savings you can make.
Household APR is the average rate of interest you are paying for all of your debts. It’s a simple matter to calculate this, and it can quickly and easily show you whether taking on refinancing for a portion or 100% of your debts could make economic sense. If you don’t want to make the calculation, give us a ring and we are quite happy to do it for you.
There are many ways in which qualifying property owners can realize the equity in their home father purposes. Lenders will generally want to see better than average credit scores, full-time work, and a considerable amount of equity. Get in touch and we can show you what your current equity position is, and how you can get locked into low-interest rates at once
You may very well have to pay an application fee and any closing costs. You can also voluntarily pay for discount points if you want a lower interest rate.
There are many motivations for people to refinance existing loans, which include getting lower rates of interest, making lower payments each month, or reducing or extending the loan term. Other reasons for refinancing include moving from fixed rates to adjustable rates or vice versa or putting all their debt in one place by increasing the loan on their property and paying off other debts with the extra. Come and have a chat with us to see if refinancing would suit your needs.
The majority of mortgage payers will be paying off a proportion of the principal (the sum which you borrowed), interest, i.e., a charge on borrowing money, taxes charged by the county or municipality, and insurance, which offers you and your lender protection against damage to the property through fire or other means. You can use our loan calculators to get an estimated monthly payment rate or speak to us directly and we can offer you a customized quote for the property you own or that you wish to buy.
A locked interest rate means that you will receive the rate you were offered on application, whether or not the rates change prior to closure. Generally, you can lock your rate down for between 30 and 60 days, or longer subject to a payment. Obviously, this decision is dependent on which way you expect interest rates to go prior to closing your deal. Even experts find this difficult to predict at times, so you need to see what the Federal Reserve Board are saying and ask your financial advisers for their advice. We'll be happy to offer you a customized quotation and give you our very best expert advice as to your best option.
If you wish, you can prepay some of the interest on your loan when you close the deal, which will be offset against your payments so you will enjoy a reduction in the interest rate of your mortgage. Every discount point equates to 1% of your total loan. Whether or not this is advantageous is chiefly dependent on the length of time you plan to remain in your property. You need to calculate how much you will save on each monthly payment by paying points; then you need to work out the period of time necessary for the monthly savings to add up to a sum greater than what would you would pay for points. If you work out that in five years you would save the amount you would pay for points, and you mean to remain in your house for 10 years, clearly paying the points might be beneficial. Get in touch and we can provide you with an accurate customized quotation.
Private Mortgage Insurance covers your lender against their losses if you default on your loan. You will generally be asked to provide PMI if you are borrowing more than 80% of the value of your property. If you don’t have a 20%+ down payment to make on your home, you'll probably be required to get PMI. Many types of PMI are available, including ones at no cost which you can easily cancel when your equity gets to 20%. Get in touch and we’ll find you the best option.
Mortgage lenders take your credit history into account, but it’s only one element of the process; you’re not automatically disqualified for having not been able to meet your bills in the past. There are a number of ways in which people with poor credit can still get a mortgage and rise above previous financial mishaps. Get in touch and we will do our very best to help you overcome your credit history and become a homeowner.
Lenders examine many factors when considering an application but, in general, there are four main elements, which are: Income/debt: What do you have coming in in terms of salary and investments, and what are your outgoings in terms of covering other debts? This equation shows the lender whether you have enough money left over after other outgoings to pay your mortgage. Assets: All lenders need to see that you can afford to pay all necessary expenses entailed with home purchasing. Credit: The way you have managed other debts (or not) will show the lender whether you are a good risk in terms of being able to keep up payments on your loan. Property: The lender needs to know that the property you are interested in has sufficient value so that if you default on your mortgage they can recoup their losses by selling the property.
Common Jumbo Questions
This varies depending on how good your credit rating is. If you have a credit rating of 700+, you can get jumbo loans requiring just a 5% down payment. If your credit isn't quite as good as that (and not many people's is) you'll probably be asked for at least 10 to 15%. Description
Yes, every state in the union.
Yes, the majority of condos can be purchased with jumbo loans.
Definitely, whatever your occupation is you can qualify for this type of loan if your credit score, etc. is good enough.
There are a variety of options, e.g., taking out one loan for the whole 95%, or two loans (“piggybacking”), the 80-10-10 or 80-15-5 programs. What works best for you is dependent on your credit score, what reserves you have, and so on.
You can, jumbo loans are available with fixed rates or adjustable (ARM) rates at 5/1, 7/1 or 10/1.
No, you may sell your property and repay your mortgage at any time without being penalized.
Either of these methods may be advantageous, depending on what interest rates and terms you can obtain. You could take refinancing with your main home and take out $250,000; with such a low LTV you will certainly get good rates. Equally, you might want to consider raising a Home Equity Loan (HELOC) on your main home for the same amount. If you do this, the closing costs won’t be as high. Get in touch and we’d be delighted to run the numbers for you.
That’s dependent on your credit score and how much you want to borrow. If you want to borrow less than $1 million then you should aim to have enough left, after the down payment, to pay a minimum of 3 to 4 months of repayments. If you want to borrow more than that, you may be required to show that you have a year’s worth of repayments in hand. You can count retirement instruments such as a 401(k) or IRA towards this.
With 90% LTV the most you can borrow is $3 million, however you have to have a very high – 720+ – credit score for this.
Yes, there are jumbo loans available from the VA up to $1.5 million. There are several factors which influence what might be the best jumbo option for you, but generally, if you’re eligible, VA is a good way to go.
Yes, take a look at the Jumbo Purchase page, which details what buyers with a short sale in their credit history can do.
You can be pre-approved for a jumbo loan with a single telephone conversation, frequently in less than 30 minutes. The loans are usually closed in around 30 days from the signing of your sales contract.