A VA refinance can be a great way take advantage of low interest rates in 2012, even if your Orange County property has lost most of its equity. It is possible to refinance into a VA loan from a non-VA loan up to 100% loan to value. Not only that, the VA loan limits are high. And VA 30 year fixed rates are low, even lower than most Conventional loan programs. The VA 100% financing limit in Orange County and Los Angeles County in 2012 is $621,000. But it possible to get a VA loan up to a loan amount of $1,500,000 with far less equity than a typical Jumbo lender would require.

Orange County 2012 VA Loan Limits

Near the end of every year VA will announce their new loan limits. In 2012, the loan limits for Orange County  is $621,000 up to 100% of the properties value. While most lenders will only allow a refinance up to 90% of the VA limit, there are lenders who do allow a refinance to 100% of the properties value, as long as the loan is within the 100% financing limit. While there are many eligible Veterans in Orange County, many of them are aware of the benefits of the VA program when it comes to refinancing. But with the drop in property values, more Orange County Veterans, who initially bought their home with Conventional financing, are finding that they can save hundreds per month by taking advantage of their VA benefits.

For example, an Irvine homeowner who financed their home in 2008 with a $500,000 Conventional 30 year fixed loan at 5.5% would have a payment of $2,838. Let’s assume the property was worth $600,000 in 2008. Now, 4 years later, the loan balance is down to approximately $470,000 and their property is also now worth $470,000. Their lender won’t refinance them since they don’t have 20% equity, and they also are not eligible for the HARP refinance program since their loan is not Fannie Mae or Freddie Mac.As of April 2012, VA interest rates are ranging between 3.75% (4.016 APR) and 4.25% (4.492 APR). Let’s assume the homeowner chooses a VA loan at 4%, which also allows for all closing costs to be paid using a lender credit. There is a VA Funding Fee equal to 2.15% based on this Veterans first time use of the VA eligibility. They end up with a new loan of approximately $480,000 (Funding Fee was $10,000). Their principal and interest payment would drop to $2,296, a $541 monthly savings. If the Orange County VA borrower was to continue to make the save payment on their VA loan as they were making on their 5.5% Conventional loan. They would end up paying their loan off 5 year sooner, savings over $175,000 over the life of the loan. This is only possible because of the flexibility of the VA loan program.

Jumbo VA Loan in Orange County to $1,500,000

This also works for loan amounts over the 100% financing limit. It is actually possible to get a VA loan up to $1,500,000. While 100% financing is not allowed over the $621,000 limit, very little equity, especially compared to a normal Jumbo loan program, is required. To figure out the loan amount allowed, take 75% of the  difference between the properties value and the Orange County 100% limit of $621,000. Add the difference back to $621,000 and that is the base VA loan amount. For example, let’s say a Newport Beach homeowner who is VA eligible owes $1,000,000 on a home that is  worth $1,221,000. By taking 75% of the difference between $621,000 and $1,221,000 ($600,000 x 75% = $450,000) and adding it back to $621,000, we find the base VA loan will be $1,071,000. This means the Newport Beach Veteran can refinance his VA loan up to 87.7% of the properties value, and at a great 30 year fixed rate with no monthly mortgage insurance. There is not a Jumbo lender out there that will even touch this program. But again, the key is the borrower need to be VA eligible.

The property does need a termite inspection and and items on the termite report cleared prior to funding. VA also requires an impound account for property taxes and insurance. Besides that, there are many benefits to a the VA refinance.

• Refinance to 100% loan to value with no mortgage insurance.
• Combine a 1st and 2nd mortgage or equity line up to 100% loan to value.
• Pull cash out up to 95% of the properties value.
• Refinance a st mortgage and “subordinate” a 2nd mortgage to 115% of the properties value.
• Very low 30 year fixed rates and 5 year ARM’s
• Flexible qualifying – relatively high debt to income ratios

While most Orange County property owners are not eligible for VA financing, those that are should research their options when they are looking to refinance. Finding a knowledgeable Orange County VA lender is an important step in determining whether a VA refinance is a viable option. The VA lender should be able to provide a detailed custom analysis that compares your current loan to a new VA loan.

Authored by Tim Storm, an Orange County, CA FHA and VA Loan Officer – Please contact my office at Emery Financial Group, a division of W.J. Bradley Mortgage Capital LLC for more information about an Orange County, CA home loan.  Direct:  949-829-1846   MLO 223456

The CalVet loan program or the standard VA loan; which is better? It all depends on when the question is being asked and where you plan to buy a home. There are several distinct advantages the standard VA loan program has as of right now, September 2011, over the CalVet loan program. The biggest factor pushing most Veterans and active duty military personnel into the standard VA loan program is interest rate. But there are differences in loan limits which can sometimes favor the CalVet program depending on the California county the Veteran is purchasing in.

Low Interest Rates Favor the VA Loan Program

2011 has been a banner year for low interest rates. In September 2011, interest rates even hit all time lows. VA 30 year fixed rates are averaging 3.75% (3.98% APR)APR to 4.25% (4.48% APR) this year. VA interest rates have been consistently low for the last several years. CalVet loan program interest rates range from 5.5% (5.9% APR) to 5.95% (6.36% APR), which is a full 1.75% spread over the standard VA loan progam interest rates. To show what that interest rate spread does to the payment, lets compare a $300,000 loan. At 4%, the payment is $1,432. At 5.5%, the payment is $1,703. That is a $271 monthly payment difference, in favor of the standard VA loan program.

VA Loan Limit in Orange County is $700,000 | CalVet is $521,250

The VA loan limit for 2011 in Orange County, CA is $700,000, meaning a Veteran can purchase a home with Zero Down in Orange County (and Los Angeles) up to a $700,000 purchase price. A Veteran can even go with a higher priced home by bringing in a small down payment. The CalVet loan program caps out at $521,250. So for Orange County homebuyers looking at properties above a $521,250 price, who are undeterred by the higher interest rate a CalVet loan has, would still go VA because of the high loan amounts allowed.

VA vs CalVet | Homeowners Insurance

One advantage CalVet does over VA is a comprehensive homeowners insurance policy, which includes guaranteed replacement for your home, even in natural disaster situations like an earthquake or flood. Private insurance companies will charge extra for this type of coverage, and “guaranteed replacement” in California is very difficult to come by.

CalVet Does not offer a Refinance Program

CalVet requires that you apply for the loan before taking title to the property. Translated, this means it is only for a purchase, not a refinance. In contrast, VA offers the IRRRL program, or Interest Rate Reduction Refinance Loan. With this program you can lower your rate (if rates drop) without needing a full appraisal and without needing to qualify. It is a very “streamlined” process. However, it is only for current VA loan borrowers. For those Veterans who wish to refinance into a VA loan from a Conventional or FHA loan, they would need an appraisal and full income documentation. But the good news is they could refinance up to 100% of the properties value.

CalVet offers home Improvement loans up to $150,000 at competitive rates, which is a nice feature. VA does not currently have a home improvement loan program. However, another option is to use the FHA 203K Rehab loan program, which can later be refinanced into a VA loan.

VA Loan Versus CalVet Loan | Which is Better?

It depends. For most Orange County Veterans, the standard VA loan program is the way to go. Lower interest rates and higher loan amounts are two benefits that are hard to ignore. But it is important to keep abreast of changes. Who knows. VA could lower the 100% financing limit in 2012. Or interest rates, which change daily, could go up for the VA program. It is important to consult with an Orange County, CA VA loan expert who can prepare custom loan scenarios based on a Veteran’s qualifications. The VA loan expert can then help the Veteran get a VA Loan PreApproval.

Authored by Tim Storm, an Orange County, CA FHA and VA Loan Officer – Please contact my office at Alpine Mortgage Planning for more information about an Orange County, CA home loan. 877-786-4243 x 7.  Direct:  949-829-1846   MLO 223456

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

* Alpine Mortgage Planning is licensed and supervised by the Department of Corporations under the California Residential Mortgage Lending Act. NMLS 81395.

Good news for Orange County, CA Veterans as the Department of Veterans Affairs announced that the Funding Fee on VA loans will decrease. VA Circular 26-11-12, released on September 8, 2011, gives the breakdown of the decrease, which could save Orange County homes buyers using the VA loan program throusands of dollars, depending on the purchase price of the home they are buying. The new Funding Fee rates go into effect for all loans closed on or after October 1, 2011, and is in effect for 12 months.

VA Funding Fee Chart for Loan Closed On or After October 1, 2011

Example of Benefit to Orange County, CA VA Loan borrowers

How much will this be a benefit to Orange County home buyers using VA financing? Well, because home prices tend to be on the high end in most parts of Orange County, the lower Funding Fee percentages will save thousands. For example, an Orange County Veteran purchasing a home in Irvine for $500,000 with no down payment, and using their VA eligiblity for the first time, would need have a Funding Fee of $10,750 added to their loan. ($500,000 * 2.15% = $10,750.) Using the new percentage, the Funding Fee would only be $7,000. ($500,000 * 1.4% = $7,000.) That saves this Irvine Veteran$3,750. The Funding Fee is financed into the loan, so the Veteran won’t actually feel the savings immediately, but there will be an effect on the monthly payment, in this case about $35 per month.

VA Loan PreApproval is the First Step

The first step in determining how this change will effect your purchase is to contact a local Orange County VA lender. A VA loan specialist will be able to prepare custom loan scenarios based on your qualifications and payment comfort level. The scenarios will give you a complete breakdown of the purchase price, loan amount, payment, closing costs, and amount needed to close. If you are planning on going with a “VA NO NO“, where you not only don’t come in with a down payment but also have the seller pay your closing costs, the scenarios will let you know how much of a seller credit is required. It is also possible to adjust the interest rate in order receive a lender credit towards closing costs. Your financing should be determined prior to making offers on homes.

The 100% VA financing loan limit in Orange County, CA for 2011 is $700,000. The limit is typically changed, either up or down, at the end of September of each year. And while Fannie Mae, Freddie Mac, and FHA loan limits in Orange County will all be dropping from $729,750 down to $625,500, the Department of Veteran Affairs announced the VA loan limits will be extended through the end of 2011.

How Does This Effect the Maximum VA Loan Limit?

It is important to note that there is not a “maximum” VA loan limit. There IS a maximum “guaranty” provided by VA for loans meeting VA guidelines. In Orange County, a Veteran can still purchase a $700,000 home with no down payment. If the Veteran or Active Military wants to purchase a home for more than the 100% limit ($700,000), then a down payment is required. The down payment is equal to 25% of the difference between the $700,000 VA 100% financing limit and the higher purchase price. For example, if the purchase price will be $800,000, then the down payment required would be $25,000, or 25% of the difference between $700,000 and $800,000.

While there is not a maximum “loan limit”, most lenders will not lend above $1,500,000. Still, the VA program has provided a great way for Veterans to refinance their Convention loan to a low 30 year fixed rate, even when they have lost equity in their home. A “Jumbo” 30 year fixed rate is typically .75% to 1% higher than the going VA 30 year fixed rate.

Will the 100% Financing Limit in Orange County go Up, or Down, in 2012?

The Veteran’s Benefits Improvement ACT of 2008 provided a temporary increase in 100% VA financing limits for loans closed from January 1, 2009 through December 31, 2011. In 2008 the limit was only $417,000. In 2009 the limit increased dramatically to $737,000 in Orange County. In 2010 the limit dropped to $593,750, and in 2011 went back up to $700,000. Right now it is tough to tell what will happen with the VA loan limit. It most likely won’t go up. Based on what is current happening with the Fannie Mae/FHA loan limits, the better guess is loan limits will drop. But how far? We should have a better idea within the next few months.

Veterans Purchasing Luxury Homes in Orange County Should Act Now

Because of the uncertainty regarding the Orange County 100% financing VA loan limit, Veterans who are considering a purchase of a home greater than $417,000 should get serious about finding a home before the end of 2011. The first step in determining eligibility and qualifications is to contact an Orange County Direct VA lender. The lender should be able to quickly retrieve your Certificate of Eligibility, as well as provide customized loan scenarios which will give the Veteran the details of a transaction that are needed when planning for a large financial event.

Authored by Tim Storm, an Orange County, CA FHA and VA Loan Officer – Please contact my office at Alpine Mortgage Planning for more information about an Orange County, CA home loan. 877-786-4243 x 7.  MLO 223456

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

* Alpine Mortgage Planning is licensed and supervised by the Department of Corporations under the California Residential Mortgage Lending Act. NMLS 81395.

A common question among Orange County Veterans is “what are the VA loan requirements” and “am I eligible“. Because for several years in Orange County, the VA loan limits were too low to help a Veteran purchase a home, the VA program was seldom used. But now, with the $0 down loan limit in 2011 at $700,000, the VA loan program has become very popular. With low 30 year fixed rates, no down payment requirements, and flexible qualifying, any active duty military or Veteran thinking of purchasing a home in Orange County should learn about the VA loan program and the benefits it provides.

Eligibility Requirements for VA Loan Program

Orange County Veterans with active duty service (who were not dishonorably discharged) during World War II and later periods are eligible for VA loan benefits. World War II (September 16, 1940 to July 25, 1947), Korean conflict (June 27, 1950 to January 31, 1955), and Vietnam era (August 5, 1964 to May 7, 1975) veterans must have at least 90 days of service.

Orange County Veterans and active duty military personnel who served during peacetime must have had more than 180 days of active service. Veterans of enlisted service starting after September 7, 1980, or officers with service beginning after October 16,1981, must in most cases have served at least 2 years.

The VA does not require that you have a certain credit score in order for approval. The actual mortgage lenders, however, are allowed to set their own standards for VA loan requirements. Most Orange County direct VA lenders require a minimum FICO score of 620 for loan amounts under $417,000. For loan amounts over $417,000, known as “high balance VA loans”, the FICO may need to be higher.

Since early 2010, most VA lenders in Orange County, and throughout the country, have tightened their lending and credit score requirements, making home financing harder to come by for those with credit issues or other criteria that makes their loan more risky.

To learn more about this, our article Credit Score Requirements For Orange County, CA VA Mortgages is a great place to start.

There are three specific pieces of documentation a lender will need to determine your eligibility:

• A DD214 for discharged veterans.

• A statement of service for active military personnel.

• A certificate of eligibility (COE) to determine you have VA entitlement. Most Orange County VA lenders can quickly retrieve your Certificate of Eligibilty on your behalf.

Because each VA lender has different qualifying guidelines, the next step is to contact your local Orange CountyVA loan expert to find out if you meet their VA loan requirements such as minimum FICO/credit scores, debt-to-income (DTI) ratios, and find out what your California county’s maximum loan amount is.

Lastly, if you have either had a divorce, filed bankruptcy, or had a previous home go into foreclosure, you are not immediately disqualified from a VA loan, although there are some additional restrictions.

You can find more information regarding these topics in our articles titled Divorce And VA Loan Eligibility, Does A Bankruptcy Mean I Can’t Get A VA Loan? and Can I Get A VA Loan If I’ve Had A Recent Foreclosure?

Authored by Tim Storm, an Orange County, CA FHA and VA Loan Officer – Please contact my office at Alpine Mortgage Planning for more information about an Orange County, CA home loan. 877-786-4243 x 7.  MLO 223456

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

* Alpine Mortgage Planning is licensed and supervised by the Department of Corporations under the California Residential Mortgage Lending Act. NMLS 81395.