Who is Exempt from the VA Funding Fee?

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The VA Funding Fee is unique to the VA mortgage program. The funds from this fee go directly to the VA to help cover any losses from loans that default. The VA funding fee is an amount equal to a certain percentage of the loan amount which is based on a variety of factors. These factors include the type of military service performed, whether a down payment is going to be paid with the loan, and if this is the first time using the VA program or a subsequent use. The borrower has the option to either pay the funding fee in cash at closing or to include the funding fee into the financed loan amount. It is extremely rare that a Veteran chooses to pay the VA Funding Fee out of pocket versus financing it into the loan, but it is possible.

Funding Fee Exemption

The VA does allow exemptions to the Funding Fee, but only for a few eligible groups. The main group that is exempt from paying the VA funding fee are veterans that have a service-connected disability rating. The other group that is exempt are surviving spouses of Veterans who died in the service, or as a result of service-related disabilities.

 

These two charts below include some addition information regarding how the percentage paid for the VA funding fee is determined. This first chart provides information for VA purchase loans:

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This second chart provides the percentage details for VA cash-out refinance loans:

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Authored by Tim Storm, an Orange County VA Loan Officer specializing in VA Loan. MLO 223456. – Please contact my office at the Home Point Financial. My direct line is 949-640-3102. www.OrangeCountyVALoans.com. I will prepare custom VA loan scenarios which will be matched up to your financial goals, both long and short-term. I also prepare a Video Explanation of your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.

Getting A VA loan after bankruptcy or foreclosure

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Getting a VA loan after bankruptcy or foreclosure is really not that difficult for Veterans in Orange County, CA.  But many Veterans do not realize how quickly the VA loan can become a viable option after a major credit event.

 

Foreclosure and bankruptcy are definite obstacles for many Veterans trying to buy a home, but with the VA mortgage program it is possible to maneuver around these obstacles more quickly than with other types of financing. Bankruptcy’s and foreclosures only require a two year waiting period before qualifying for a VA loan.

Waiting Period After Bankruptcy

There are two primary type of bankruptcy that an individual can file for. A Chapter 7 bankruptcy seizes an individuals assets and liquidates their value to satisfy the necessary debts. All debts are “discharged” through the bankruptcy. The VA program requires a waiting period of two years after a Veteran discharges a Chapter 7 bankruptcy. A Chapter 13 bankruptcy is a court-mandated process that restructures an individual’s debt and sets up a repayment plan. Chapter 13 repayment plans can take anywhere from three years to five years to complete. The VA loan program will allow a Veteran to qualify for  VA loan after only a 12 month wait period, starting from from the date of the filing. The Veteran will need to prove that they have been making their Chapter 13 payments on time, but this is still a very opportunity for a Veteran to purchase a home. A potential borrower with Chapter 13 bankruptcy must also get permission from the bankruptcy trustee before taking on an additional monthly payment. It’s also important to note that it is possible to refinance into a VA loan and pay off the Chapter 13 with proceeds from the loan.

FICO Score Requirements for the VA Loan Program

Many VA lenders will look for a credit score of at least 620 when qualifying for a VA loan, but there are lenders who will go down to a 580 FICO score. Still, it is important to begin working on credit restoration immediately after the bankruptcy is discharged. To minimize the damage, it is very important to put a lot of effort into repairing and strengthening your credit score during their waiting period prior to qualifying. And definitely do not have any late payments after the bankruptcy is discharged.

VA Loan After Foreclosure or Short Sale

A foreclosure or short sale are also significant derogatory credit events. Most loan programs require wait periods of up to 7 years before qualifying for a loan. But VA only requires a two year wait period from the date of the foreclosure or short sale. The “clock” can start earlier than the actual recorded date of the foreclosure if the mortgage for the property was included in an already discharged bankruptcy and the Veteran can prove they moved out of the property prior to the bankruptcy discharge date.

Not all lenders underwrite the same. It is beneficial to meet with a local Orange County VA lender to ensure you are on the proper path toward future qualification. The VA loan specialist you consult with should be able to prepare custom loan scenarios that will provide you with the numbers you’ll need to know about before you start the home buying process.

 

Authored by Tim Storm, an Orange County VA Loan Officer specializing in VA Loan. MLO 223456. – Please contact my office at the Home Point Financial. My direct line is 949-640-3102. www.OrangeCountyVALoans.com. I will prepare custom VA loan scenarios which will be matched up to your financial goals, both long and short term. I also prepare a Video Explanation of the your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.

Finding a VA Approved Condo in Orange County the Easy Way

Orange County VA approved condosFinding a VA approved condo in Orange County, CA  just got easy. While most homebuyers and their real estate agents will first search for a condo and then go through the tedious process of finding out if the condo is even in a project that is approved for VA financing, there is now a website that is specifically for VA approved condo projects in Orange County.

OrangeCountyVACondos.com – VA Approved Condo Search

At OrangeCountyVACondos.com an Orange County Veteran looking for a condo can quickly find VA approved condos in the city of their choice. The site is first broken up into four sections of Orange County. Each city is listed as well. For example, if a buyer wishes to find VA approved condos in Irvine, all they need to do is click on the appropriate Irvine link, and wallah, you are presented with the list of condos, including information on each condo along with photo’s.

Make Sure the Condo is VA Approved Before Making an Offer to Purchase

It is important to double check to make sure the condo you choose to make an offer to purchase on is still VA approved. An experienced VA lender will be able to quickly verify. It is also very important to talk with an Orange County VA lender who can quickly prepare custom VA loan scenarios and work on the PreApproval. By figuring out the financing before making the offer there is a far better chance of having success with not only getting the office accepted but also actually closing escrow.

Authored by Tim Storm, an Orange County VA Loan Officer specializing in VA Loan. MLO 223456. – Please contact my office at the Emery Financial. My direct line is 949-640-3102. www.OrangeCountyVALoans.com. I will prepare custom VA loan scenarios which will be matched up to your financial goals, both long and short term. I also prepare a Video Explanation of the your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.

CalVet Loan or VA Loan | Which is Better for Orange County Veterans?

calvet loan or va loan, which is betterWhich loan program is better for Orange County, CA Veterans – CalVet or VA? It depends on the Veteran and the situation. It also depends on what is happening with interest rates. But in most cases the standard VA loan program will be the best option for a Veteran in Orange County, CA.

Important Differences Between the CalVet and VA Loan Programs

  • Max Loan Limit for 100% Financing.  The 100% VA Loan financing limit in Orange County for a standard VA loan is $625,500 in 2015. And there is are income limitations for VA. Also, it is possible to go even higher than the $0 down limit with VA. This is called a Jumbo VA Loan. Many VA lenders will lend up to $1,500,000.  CalVet will currently lender to $611,901 in “non-target” areas, and the Veteran must have income that is less than $108,360 for a 2 person household, or $126,420 for a 3 + person household. The fact that VA has no limitations just makes it easier to work with.
  • Interest rates.  CalVet has a few different interest rate offerings, depending on the “Mortgage Bond” the loan is based on. The QVMB program interest rate is 3.75% with a 4.09% APR. The QVMB has a max loan of $521,250. The QMB has a rate of 4.25% with an APR of 4.6%. The QMB is the program with income restrictions but the loan limit of $611,901.  As of this writing, standard VA 30 year fixed rates for loans under $417,000 are 3.25% with a 3.291 APR. For VA loans over $417,001 up to $625,500, interest rates are 3.5% with a 3.651% APR.  *Rates effective January 28, 2015. Subject to change.
  • VA Loan fees are typically lower than fees charged on the CalVet loan program. Also, many VA lenders will be able to offer a rate/fee option that would include a lender credit for all closing closing costs.  CalVet charges a 1% Origination Fee on all loans. There will be much more flexibility with a VA loan in helping the Veteran purchase a home with no money out of pocket.
  • Refinancing if interest rates drop. The CalVet loan does not have a refinance program for situations where interest rates drop. On the other hand, the VA program has what is by far the easiest refinance program. It is called the Interest Rate Reduction Refinance Loan, or IRRRL. With the IRRRL, there is no appraisal or income documentation required from the VA loan borrower to complete the refinance. A CalVet borrower would need to refinance completely out of the CalVet loan and into a VA loan in order to take advantage of lower interest rates. However, that is a tough way to go because since the CalVet borrower doesn’t currently have a VA loan, they would need to do a full refinance, with appraisal, termite inspection and clearance, income documentation, and VA Funding Fee. It would have been easier to just go VA in the first place.
  • Loan versus contract of sale. CalVet will actually hold legal title for the Veteran because CalVet us a Land Contract, or “Contract of Sale”. Basically, CalVet purchases the property and then sells it to the Veteran using a Land Contract. CalVet holds title, while the Veteran holds “equitable title”. With VA, the Veteran receives title immediately upon purchasing the home, which is like other standard types of financing.

How To Know Which Loan Type if Best for You

The best way to know which program is best for you is to contact an Orange County Military Lending Specialist, who can prepare custom loan scenarios based on your long and short term financial goals. Financing a home is the biggest investment most people will ever make, so making sure you’re research includes all your option can save thousands of dollars over the life of the loan.

Authored by Tim Storm, an Orange County VA Loan Officer specializing in VA Loan. MLO 223456. – Please contact my office at the Emery Financial. My direct line is 949-640-3102.  www.OrangeCountyVALoans.com. I will prepare custom VA loan scenarios which will be matched up to your financial goals, both long and short term. I also prepare a Video Explanation of the your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.

5 Myths about the VA Loan Program | Orange County, CA

5 VA loan mythsVA loans are probably the most misunderstood mortgage program in Orange County, CA. Real estate agents, Loan Officers, home sellers, and even eligible Veterans often receive incorrect information when they inquire about the VA loan program. A recent VA survey found that approximately half of all military veterans do not understand the VA loan program and how they can benefit from it. With this in mind, below are 5 myths about VA loans that Orange County Veterans, and anyone involved in the sale of a home with VA financing, should know and understand.

Myth 1: The VA Loan benefit has a “one time” use.

Fact: Veterans and active duty military can use the VA loan many times. While there is a limit to the Veterans entitlement which determines the amount of VA loan the VA will guarantee, it is important to know that even if the entitlement was used on the previous purchase of a home, once restored, it can be used again. Also, if the borrower has an outstanding VA loan, it is possible to get another VA loan. If the entitlement available is exceeded with the new purchase then a down payment would be required. But the down payment, in many cases, would still be less than that required by other types of loan programs. In Orange County, where the 2015 VA loan limit is $625,500 for 100% financing, there is “bonus entitlement” available for Veteran because of the it is considered a “high cost” area.

Myth 2: VA home loan benefits expire if they are not used.

Fact: For eligible Veterans and active duty military, VA mortgage benefits never expire. This myth most likely comes from the confusion over the Veteran benefit for education. In most cases the Montgomery GI Bill benefits expire 10 years after discharge. But VA mortgage benefits do not expire. It is not uncommon for a Veteran 30 years removed from the military to use the VA loan program for the first time to purchase a home for $625,500 or more in Orange County. The down payment is less ($0 if the price is under $625,500), there is no mortgage insurance, and the interest rates tend to be better than other types of financing.

Myth 3: A Veteran can only have one VA loan at a time.

Fact: You can have two or more VA loans out at the same time as long as you have not exceeded your entitlement and eligibility. Although, as mentioned above, it is possible to exceed the entitlement by coming in with a down payment. It is not uncommon for someone who is moving to Orange County from out of state to purchase a home with a VA loan while already having a VA loan on their out of state property, which has been turned into a rental. Because Orange County has a higher VA loan limit (and bonus entitlement) than most counties throughout the country, Veterans moving from out of state, or even from a low limit California county, will be able to take advantage of their “Bonus Entitlement” that is available in high cost counties like Orange County.

Myth 4: If a borrower has a short sale or foreclosure on a VA loan, they cannot have another VA loan.

Fact: If an Orange County Veteran has a claim on their entitlement they may still be able to get another VA loan. But the maximum amount they would qualify for may be less. VA is actually more flexible than other types of mortgage programs when it comes to the waiting period required after a bankruptcy, short sale or foreclosure. VA only requires a two year wait period for any of these events. FHA requires 3 years after a foreclosure. Fannie Mae and Freddie Mac require 7 years after a foreclosure.

Myth 5: The seller has to pay all of the Veterans closing costs

Fact: The Veteran is allowed to pay most of the closing costs without any restrictions. There are certain costs that are known as “non-allowables”. Non-Allowables are primarily made of up the escrow closing fee and the lender fees. However, the VA borrower is allowed to pay up to 1% of the loan amount towards “non-allowables”. Since most VA lenders do not charge an Origination Fee and will waive lender fees on VA loans, the 1% allowance covers the other non-allowable costs, meaning that the seller does not need to help the Veteran with closing costs. Just like any real estate transaction, everything is negotiable. In Orange County, where a typical VA loan is higher than $300,000, and can easily be higher than $600,000, that 1% allowance more than covers the non-allowables. Also, in many cases the lender can use a “lender credit” to cover the closing costs for the buyer. So it is still possible for a VA buyer to have no down payment and pay no closing costs (a VA No No) without any help from the seller.

The most important first step in the home buying process is getting Prequalified  for the loan. For Veterans in Orange County, working with a local VA Loan Specialist is important. The VA loan officer should be able to prepare custom loan scenarios and present them in a unique manner that makes it easy to understand the options available.

 

Authored by Tim Storm, an Orange County VA Loan Officer specializing in VA Loans.  MLO 223456 – Please contact my office at the Emery Financial. Direct line at 949-640-3102. www.OrangeCountyVALoans.com. I will prepare custom VA IRRRL loan scenarios which will be matched up to your financial goals, both long and short term. I also prepare a Video Explanation of your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.