by Tim Storm on July 31, 2010
There are several differences between the VA home loan program and the Calvet home loan program. California veterans should take time to learn about both programs to determine what is best for them. There are times when the Calvet program is better and other times when the VA home loan program is better. Below are some of the differences, and why at this time the VA home loan program is better for most California veterans purchasing a home.
CalVet vs VA: Who is the Lender?
VA home loans are guaranteed by the Veterans Administration, but the actual loan is made by banks and mortgage banks. The VA’s guarantee on the loan encourages lenders to offer favorable terms to veterans, resulting in low interest rates. With the CalVet program, the state of California is the lender. California uses bond funds to lend to any virtually any Veteran who wishes to purchase a home in California.
Va vs. CalVet | Down Payment Requirements
The loan limits for 100% financing on a VA loan in California vary by county. For example, in Orange County and Los Angeles County, the 100% financing limit is $593,750. California VA loan limits are very high. It is possible to go above $593,750 by coming in with a small down payment. The down payment is equal to 25% of the difference between the 100% financing limit and the purchase price.
The CalVet loan limit in California is $521,250, including the the financed Funding Fee. In some California Counties that limits is higher than VA, and in some counties it is lower. CalVet offers three basic programs: a 100% financing program, a 97% program, and a 80/20 program. There are subtle differences between these programs which need to be understood. While the 100% program allows the VA Funding Fee to be financed into the loan, just like the standard VA home loan program, the 97% program requires it be paid in escrow. This adds a considerable expense, on top of the down payment requirement.
Interest Rates for VA and CalVet home loans
Interest rates will fluctuate for the VA home loan program. This is an area where the VA program can easily beat out the CalVet program, and why the VA program has been more popular over the past few years. In 2010, VA home loan interest rates and been in the 4.5% to 5.5% range. The CalVet interest rates currently range between 5.75% and 6.2% according to information posted on their website. Because CalVet interest rates are based on Bond Funding, their interest rates do not fluctuate. So currently, CalVet interest rates have not changed since May 8, 2009.
Restrictions on the CalVet program
The CalVet program functions differently than the VA home loan program. With most mortgage programs, including the FHA, VA, and Conventional home loan programs, the California home buyer holds title to the home. The lenders holds the lien. Calvet uses a Contract of Sale for the financing instrument. This means CalVet actually holds title. There are advantages and disadvantages to this. It makes it difficult to refinance or get a second mortgage, whether its to take advantage of low interest rates or improve the home. An advantage is that CalVet is able to get group insurance rates for home owners insurance. In some areas where home owners insurance is difficult to get this can be beneficial. VA financing on condos in California can be tricky with either program. The condo project should be on the VA approved condo list.
When beginning the process of buying a home, it is important to find a California VA loan expert who understands the VA loan program and can quickly PreQualify and PreApprove you for a home loan. Finding someone who can answer your questions and provide customized loan scenarios is important.
Authored by Tim Storm, an Orange County, CA VA Loan Officer – Please contact my office at Trust One Mortgage Corporation for more information about an Orange County, CA home loan. 877-786-4243 x 7.
www.OCFHALoans.com
Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.
877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com
*Trust One Mortgage Corporation is licensed and supervised by the California Department of Real Estate (“DRE”), License # 01087829
by Tim Storm on July 8, 2010
Orange County Veterans who have had a short sale are able to purchase a home with $0 down only two years after the short sale. The same goes for veterans who have had a foreclosure. VA is relatively flexible in how they look at foreclosures and short sales, compared to FHA and Fannie Mae.
Short Sale versus Foreclosure
A short sale occurs when a home owner sells their home, even though they owe more than the home is worth. Their Orange County home loan lender needs to sign off on the home sale, since it is the bank who will be taking a loss on the property if it is sold. A short sale can help to preserve a home owners credit compared to going through a full fledged foreclosure. FHA typically requires 3 years after a foreclosure or short sale, unless extenuating circumstances can be proved as the reason for the short sale. Fannie Mae requires between 4 and 5 years after a foreclosure, but will lender to 80% of the properties value only two years after a short sale. But VA, at least for those that are eligible, will lender to 100% of the properties value up to the county VA loan limits. The VA Loan limits in Orange and Los Angeles counties, the $0 down loan limit is $593,750.
Veterans Need Perfect Credit After Foreclosure or Short Sale
The only catch is that the Orange County veteran will need perfect credit since the short sale or foreclosure. Especially over the most recent 12 months. Many times, leading up to the short sale, the seller may have multiple mortgage lates, possibly 90 or 120 day lates. This can really weigh the credit report down and hurt the FICO score. This is why it is important to reestablish credit immediately after the short sale, or foreclosure, and n0t have any more lates after the sale of the home.
Quick Way to Find if you are Qualified for a VA Home Loan in Orange County, California
It is always important to get PreApproved for a VA loan prior to make an offer on a home. I is probably even more important to do after a short sale or foreclosure. Find a reputable VA loan expert in Orange County, CA, and have them prepare personalized VA loan scenarios which will give a breakdown of the purchase price, loan amount, closing costs, and amount needed to close. The VA loan officer can get the Automated Loan Approval, which is an important step in determining early on whether you can get a VA home loan to purchase a home. The key is to make sure to find someone with experience to get them job done easily and quickly,
Authored by Tim Storm, an Orange County, CA VA Loan Officer – Please contact my office at Trust One Mortgage Corporation for more information about an Orange County, CA home loan. 877-786-4243 x 7.
www.OCFHALoans.com
Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.
877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com
*Trust One Mortgage Corporation is licensed and supervised by the California Department of Real Estate (“DRE”), License # 01087829
by Tim Storm on June 14, 2010
It is more important that ever for Condo projects to either keep their FHA and VA project approvals, or if not already approved, submit the paperwork to get approved. Orange County, CA, along with most of Southern California, has a high concentration of condo projects, yet a high percentage of these projects are not approved for FHA or VA financing.
Why is it important for Orange County Condo Projects to be FHA and VA Approved?
Over the past few years home financing has gone through dramatic changes. Guidelines have tightened up. Lenders are especially wary of condo projects and have begun to look very closely at the financial strength of individual associations. Most of the time nobody realizes there is an issue until a seller can’t sell their home, or has to sell at a great depreciated price since the pool of buyers is limited to those who are not using FHA or VA financing. FHA and VA financing combined for more than 35% of all loans in Southern California in 2009. Orange County First Time Buyers looking to buy a condo start with a list of FHA or VA approved projects. Projects not on the list are not even considered in the home buying process.
FHA Eliminated the Spot Approval Program
Up until late 2009, FHA allowed for “Spot Approvals“. A Spot Approval was the financing of one unit in a project that was not approved. That is no longer possible. Now, the project needs to be approved. VA allowed financing on projects that were on the FHA approved list, even if they weren’t on the VA approved condo list. Now, FHA has changed the rules for project approval. VA will still allow financing on FHA approved projects, but it depends on when the project was FHA approved, along with a few other factors.
How Do You Get a Condo Project Approved for VA or FHA Financing?
There is definitely the easy way and the hard way. The hard way to to do it yourself. You will need to put together a package that includes the budget, reserves, financials, investor concentration, etc. Here is the link to the FHA Condo Approval process. The easier way is to hire a company that specializes in getting Condo projects FHA and VA approved. Most of these companies charge a reasonable fee and will handle the process from start to finish. It’s not fun to deal with FHA or VA, so putting this in the hands of a company that does it full time is a great way to go.
With FHA loan limits in 2010 for Orange County at $729,750, and VA loan limits for 100% financing at $593,750, having your condo project approved will help to keep your property value as high as possible.
Authored by Tim Storm, an Orange County, CA VA Loan Officer – Please contact my office at Trust One Mortgage Corporation for more information about an Orange County, CA home loan. 877-786-4243 x 7.
www.OCFHALoans.com
Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.
877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com
*Trust One Mortgage Corporation is licensed and supervised by the California Department of Real Estate (“DRE”), License # 01087829
by Tim Storm on May 22, 2010
This week the VA released VA Circular Letter 26-09-19, which contained good news for Orange County VA loan borrowers trying to purchase a condo. The Circular clarified the VA position as to whether they would allow a VA loan on an FHA approved condo. Up until recently, VA had allowed VA financing on Orange County condo projects that were either on the VA approved list or the FHA approved list. However, at the beginning of 2010 FHA changed their condo approval guidelines, which resulted in VA changing their position and not allowing VA financing on FHA approved condo projects.
Orange County VA Approved Condos
This is great news for Orange County VA loan borrowers who are searching for a condo to purchase. The VA condo approval list in Orange County is somewhat limited. There are quite a few properties that are on the FHA approved condo list which are not on the VA list. Now that VA is allowing FHA approved condo projects for VA loans, Orange County Veterans have more properties available to them. There are a few guidelines and dates to keep in mind.
- VA can accept HUD/FHA/USDA condominium approvals if the project approval was dated prior to December 7, 2009.
- VA cannot accept HUD/FHA/USDA condominium approvals if the project approval was dated on or after December 7, 2009.
- VA cannot accept phases annexed into the project approved by HUD/FHA/USDA if the annexation occurred on or after December 7, 2009. If this is the case then VA will need to review an full project approval package for the entire project.
It is still tricky to find out if a particular condo is VA or FHA approved if all you have is an address. But it’s not too difficult to get a list of approved FHA and VA condo projects within a city or zip code. Just go to the FHA or VA condo approval sites and search by whatever geographical location indicator you wish.
It can be very helpful to consult with an experienced Orange County VA Loan officer who can not only help you to find approved condo projects, but can also take care of the first step in buying a home, which is to get Prequalified and then PreApproved for the mortgage. Once PreApproved for a VA loan, you will be able to confidently make an offer on a home.
Authored by Tim Storm, an Orange County, CA VA Loan Officer – Please contact my office at Trust One Mortgage Corporation for more information about an Orange County, CA home loan. 877-786-4243 x 7.
www.OCFHALoans.com
Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.
877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com
*Trust One Mortgage Corporation is licensed and supervised by the California Department of Real Estate (“DRE”), License # 01087829
by Tim Storm on May 16, 2010
Orange County, CA VA loan borrowers may still be eligible for the $8,000 First Time Buyer Tax Credit. For everyone else the First Time Buyer tax credit expired if they did not have an offer to purchase a home accepted by April 30, 2010. But military home buyers may still have time provided they meet certain qualifications.
Who Qualifies for the Military Extension of the Tax Credit? Must be a member of the “uniformed” services?
- A member of the “uniformed” services, or
- A member of the Foreign Service of the US, or
- an employee of the intelligence agency
- a spouse of any of the above
Are the additional qualifications if an Orange County VA Loan Borrower is interested in the Tax Credit?
Yes, they must have had:
- Extended duty outside the US for 91 days, or
- Extended duty outside the US for 91 days and had to relocate more than 50 miles from principal residence, and
- All this happened between the dates of January 1, 2009 and April 30, 2010.
How Long is the Tax Credit Extended?
Orange County, CA VA loan borrowers have been given an extra 12 months to get an accepted offer on a home. They must have an accepted offer by April 30, 2011, and then they must close escrow by June 30, 2011.
There are a few more items to keep in mind with this extension. To clarify the qualifications, an Orange County VA loan borrower is eligible for the tax credit if they had extended duty, which could be inside or outside the US and is longer than 90 days, and had to move more than 50 miles from their primary residence.
The VA Loan Limits vary from county to county. The VA loan program is really about the only program available for Orange County home buyers to purchase a home with $0 down. While the max price allowed for most of the United States for 100% financing on a VA loan is $417,000, Orange County is considered a “high cost” county because of the high prices of homes. Because of this, an Orange County VA loan borrower can purchase a home for $593,750 with $0 down payment. Los Angeles has the same limit, while San Diego cap’s out at $437,500. The Inland Empire max is $417,000.
The Time to Buy an Orange County Home is Now
In addition to the Federal First Time Buyer Tax Credit, there is also a $10,000 California First Time Buyer Tax Credit. So VA loan eligible borrowers could actually get $18,000 just for buying a home (and with $0 down). With home affordability at an all time high, now is a great time for Orange County VA loan eligible first time buyers to take the next step and get PreApproved for a VA loan.
Authored by Tim Storm, an Orange County, CA VA Loan Officer – Please contact my office at Trust One Mortgage Corporation for more information about an Orange County, CA home loan. 877-786-4243 x 7.
www.OCFHALoans.com
Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.
877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com
*Trust One Mortgage Corporation is licensed and supervised by the California Department of Real Estate (“DRE”), License # 01087829
