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Loan Program Preview: VA Home Loans for Servicemembers, Veterans and Surviving Spouses

March 6, 2014

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Many people have the opportunity of using their VA benefits to purchase a home or refinance a home loan, but do not take advantage of it’s phenomenal rates and benefits such as no monthly private mortgage, up to 100% LTV and qualify up to 60% debt to income ratio.  It only requires a few additional documents (such as a COE and DD214, certified death certificate for surviving spouses), disclosures (such as child care disclosure, nearest relative disclosures, VA forms) and a termite report/clearance is required for all VA loans.

Click Link: VA, FHA & Conforming County Loan Limits

Eligibility Requirements

Your length of service or service commitment, duty status and character of service determine your eligibility for specific home loan benefits.

Purchase Loans and Cash-Out Refinance: VA-guaranteed loans are available for homes for your occupancy or a spouse and/or dependent (for active duty service members). To be eligible, you must have satisfactory credit, sufficient income to meet the expected monthly obligations, and a valid Certificate of Eligibility (COE).

Interest Rate Reduction Refinance Loan (IRRRL): The IRRRL is a “VA to VA” loan, meaning it can only be done if you have an existing VA guaranteed loan on the property. The IRRRL is generally performed to lower the interest and reduce the monthly payment on the existing VA guaranteed loan.

Native American Direct Loan (NADL) Program: The NADL program helps Native American Veterans purchase, construct, improve, or re-finance a home on Native American trust lands. Your tribal organization must participate in the VA direct loan program. You must have a valid Certificate of Eligibility (COE).

Adapted Housing Grants: VA helps Veterans with certain total and permanent disabilities related to your military service obtain suitable housing with either a Specially Adapted Housing (SAH) or Special Housing Adaptation (SHA) grant.

Loan Fees

VA Funding Fee

Generally, all Veterans using the VA Home Loan Guaranty benefit must pay a funding fee. This reduces the loan’s cost to taxpayers considering that a VA loan requires no down payment and has no monthly mortgage insurance. The funding fee is a percentage of the loan amount which varies based on the type of loan and your military category, if you are a first-time or subsequent loan user, and whether you make a down payment. You have the option to finance the VA funding fee or pay it in cash, but the funding fee must be paid at closing time.

You do not have to pay the fee if you are a:

  • Veteran receiving VA compensation for a service-connected disability, OR
  • Veteran who would be entitled to receive compensation for a service-connected disability if you did not receive retirement or active duty pay, OR
  • Surviving spouse of a Veteran who died in service or from a service-connected disability

The funding fee for second time users who do not make a down payment is slightly higher. Also, National Guard and Reserve Veterans pay a slightly higher funding fee percentage. To determine your exact percentage, please review the latest funding fee chart.

Other Loan Costs

Be aware that the lender charges interest, in addition to closing fees and charges. Here are some general rules:

  • The lender, not VA, sets the interest rate, discount points, and closing costs. These rates may vary from lender to lender
  • Closing costs such as the VA appraisal, credit report, state and local taxes, and recording fees may be paid by the purchaser, the seller, or shared
  • The seller can pay for some closing costs. (Under our rules, a seller’s “concessions” can’t exceed 4% of the loan. But only some types of costs fall under this 4% rule. Examples are: payment of pre-paid closing costs, VA funding fee, payoff of credit balances or judgments for the Veteran, and funds for temporary “buydowns.” Payment of discount points is not subject to the 4% limit.)
  • You are not allowed to pay for the termite report, unless the loan is a refinance. That fee is usually paid by the seller.
  • No commissions, brokerage fees, or “buyer broker” fees may be charged to the Veteran buyer

Adding the VA Funding Fee and other loans costs to your loan may result in a situation in which you owe more than the fair market value of the house, and will reduce the benefit of refinancing since your payment will not be lowered as much as it could be. Also, you could have difficulty selling the house for enough to pay off your loan balance.

PMC works hard to help guide clients improve their credit scores before submitting their loan package to the lender for an approval to ensure they are getting the best rate possible for their home loan.  Every 20 pts is a possible .25% better rate/fees, which can save you thousands over the life of the loan.

Read more:  http://www.benefits.va.gov/homeloans/index.asp#

Visit Our Website: http://www.pmccanhelp.com/

FOR A FAST PRE-APPROVAL:   APPLY ONLINE

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