by Tim Storm on April 1, 2010
Orange County VA loan borrowers need to understand the difference between Seller Concessions and a Seller Credit for Closing Costs. Most loan programs will allow for the seller to pay some or of buyers closing costs, but VA goes a step further. VA allows for Seller Concessions.
What is a Seller Concession?
According to the VA, a Seller Concession is anything of value added to a transaction by the seller or builder for which the buyer pays nothing additional and which the seller is not customarily expected or required to pay or provide. Below are several examples of Seller Concessions.
- Payment of the buyer’s VA Funding Fee – this can be large for Orange County VA home buyers
- Prepayment of the buyer’s property taxes and insurance. These are items included in “prepaid” expenses.
- Gifts such as a television set or microwave.
- Payment of extra points to provide permanent buydown of the interest rate. For example, if it is customary to pay 1 Origination and 1 Discount for a 5% rate, but the seller pay 2 additional Discount points to buy the rate down to 4.5%, that would be a Seller Concession.
- Provision of escrowed funds to provide temporary interest rate buydowns – like a 2-1 Buydown program.
- Payoff of credit balances or judgements on behalf of the buyer.
Seller concessions do not include:
- Payment of the buyer’s non-recurring closing costs
- Payment of points which are typical for the market
Imagine that. If an Orange County Veteran wants to purchase a home but first needs to pay off credit card debt, he or she could negotiate to have the seller pay off the debt as part of the purchase.
There cannot be more than 4% in Seller Concessions. But remember, you will not need to include normal discount points or buyer’s closing costs as part of the 4% limit.
Talking With an Orange County VA Loan Expert is the First Step
The first step is always to talk with a local Orange County VA loan officer. Your VA loan officer should be able to answer most questions, prepare detailed loan scenarios, and walk you through the VA loan PreApproval process.
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 February 7, 2010
It is possible to purchase a property in Orange County with no money out of pocket if your eligible for a VA loan. Commonly referred to as a VA NO NO, with a little negotiating, it can be done.
What is a VA NO NO?
VA refers to the Veterans Administration, which offers 100% financing for eligible veterans and active duty military personnel. The first “NO” refers to the fact that no down payment is required on a VA loan up to the loan limits for each region. In Orange County, the VA loan Limit for 100% financing is $593,750. The second “NO” refers to negotiating to have the seller pay all the Veterans closing costs. Closing costs, depending on the purchase price, can easily be between 2% and 3% of the purchase price. During the offer/counteroffer stage of a transaction, the buyer needs to negotiate to have the seller pay the estimated amount needed to close and the Veteran can end up purchasing a home with no money out of pocket.
If an Orange County VA eligible First Time Home Buyer plays their cards right, they can purchase a home with no out of pocket funds and the government will pay you $8,000 to do it. To qualify for the Tax Credit, a property must be in contract by April 30, 2010, and then escrow closed by June 30, 2010. The tax credit is equal to 10% of the purchase price, or $8,000, which ever is less. In Orange County, home buyers would be hard pressed to find a property for less than $80,000, so 99% of Orange County First Time Home Buyers should get the full amount.
The first thing to do is check with an Orange County VA Expert Loan Officer who can put together multiple loan scenarios based on your goals and qualifications. Orange County VA loan PreApproval is very important, especially prior to making an offer.
Authored by Tim Storm, an Orange County, CA 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 December 13, 2009
Orange County homeowners with a VA loan are finding there are big advantages to the VA Cashout refinance program. This program actually does not require the loan being refinanced to be a VA loan, as long as the borrower is eligible for a VA loan. The biggest advantage of this program over most other cashout refinance programs is that the borrower can borrow money up to 90% of the properties value, while a Conventional loan allows cashout up to 80% loan to value, and FHA allows cashout up to 85% loan to value.
Orange County borrowers need to keep in mind a few of the differences between the popular IRRRL, or VA Interest Rate Reduction Refinance Loan, and a VA Cashout refinance. The IRRRL program is strictly a “Rate and Term” refinance, and the current loan needs to be a VA loan. Also, income is not verified, and in most situations, there is no appraisal. (Although there have been some changes to the appraisal requirements and some lenders are tightening up this program.) The VA considers any refinance that is not an IRRRL to be a cashout refinance. This means that if an Orange County VA eligible borrower wishes to refinance from a Conventional (Fannie Mae or Freddie Mac) loan, then even if they will not pull cash out, VA still considers it a cashout refinance and it must be underwritten as such.
VA Loans Are Flexible with FICO Scoring
Another big advantage for a VA cashout refinance versus a Conventional cashout refinance is the relative flexibility towards FICO scoring. For VA eligible borrowers with FICO scores under 700, if may make more sense to go with a VA loan even you only plan to pull cash out to 80% loan to value. Fannie Mae and Freddie Mac have instituted pricing “addons” which increase the fees and rate for cashout refinances when the FICO scores drop below 740. If your score FICO drops below 700, the pricing hits really start to add up. With VA, the pricing hits for low FICO’s are minimal.
VA Guidelines Regarding a Cashout Refinance
The actual VA guidelines allow for cashout to 100% loan to value, but finding a lender who will allow this will be difficult. Lenders tend to stay with the 90% rule, although there is some flexibility if the borrower is not actually getting cashout and the loan to value is over 90%. This is something that should be reviewed by an experienced Orange County VA loan officer prior to paying for an appraisal.
Authored by Tim Storm, an Orange County, CA 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 October 23, 2009
VA is one of the only programs currently available that offers 100% financing for Orange County home buyers. Last month, Michelle Tucker, a single VA eligible homebuyer, took advantage of her VA eligibility and purchased her first home in Santa Ana, CA for $375,000. She had no down payment, and the seller paid all of her closing costs.
Michelle bought her home using what is commonly referred to as a VA No No. The “No No” stands for “No Down payment” and “No closing costs”. The seller paid all recurring and non-recurring closing costs for Michelle. Michelle did pay for the appraisal, which was $425 and needed to be paid at the beginning of the process. But other than that, she was able to purchase her home without depleting her reserves.
Michelle began the homebuying process back in May, 2009. After renting for the over 10 years and feeling like property values would never be affordable in Orange County, the real estate downturn hit. Homes that were once valued at close to $600,000 were suddenly worth less than $400,000. Also, creating the perfect storm, interest rates have been very low for most of 2009, and the First Time Buyer tax credit of $8,000 even made it better. First thing Michelle did was contact an experienced, Orange County Direct VA Lender. Her Orange County VA loan officer was able to explain how the program works and prepare several VA loan scenarios based on her qualifications. He even helped to retrieve her Certificate of Eligibility.
As part of the VA PreApproval process, she provided 2 years tax returns and W2’s, paystubs for the most recent month, 2 months bank statements, and copies of her drivers license and social security card. She also provided her DD214. A loan application was completed and credit report run. With FICO scores ranging from 661 to 679, she was good to go. PreApproval only took a few days to complete, and with no costs. Once PreApproved she was introduced to a Orange County Realtor who was familiar with VA financing and also very familiar with the Santa Ana, Tustin, and Orange market areas Michelle was most interested in.
Finding a Home in Orange County is Not Easy
Michelle quickly found that with the drop in home prices also came a flood of renters looking to buy their first home. Also competing for the properties she was looking at were “all cash” investors. While frustrating, she persevered. In June she made offers on 6 homes. In July she made offers on another 8 homes with still no results. Finally, after taking a few weeks off from the home search, she got an accepted offer in August. $375,000 purchase price with the seller paying all of her closing costs, including her “prepaid” expenses such as interest, insurance, and taxes. Escrow was set for a 45 days close. On September 28, 2009, the loan funded and the Deed was recorded. The property was hers.
While purchasing a home can be a frustrating experience at times, working with experienced real estate professionals can help to make it as smooth as possible.
Authored by Tim Storm, an Orange County, CA 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 October 18, 2009
Orange County, CA VA borrowers can take advantage of the VA Streamline Refinance program, also known as the IRRRL, or Interest Rate Reduction Refinance Loan. With rates so low this year, borrowers have been lowering their payments in 2009 without needing an appraisal or even needing to qualify for the loan.
How Does the IRRRL Help Orange County, CA VA Borrowers?
The IRRRL was created to help those who have served our country be able to finance their homes at the best terms possible. With this program there is none of the following.
- *No Appraisal *see below
- No termite inspection
- No credit qualifying
The loan must be current with no more than 1 30 day late within the most recent 12 months. This program is available to Veterans who purchased their home with a VA mortgage or refinanced into a VA loan at some point. There is more than one way to do a VA Streamline Refinance. You can either go for the lowest rate possible and add closing costs into your loan amount, an option that may make sense when you are planning to stay in your home long term. The other option is to go for an interest rate that would allow for the lender to cover some or all closing costs on your behalf. The best idea is to review all options and decide which scenario works best for your individual situation.
*Things may be changing. Many lenders are now requiring appraisals and will not allow the loan to value to be greater than 100%.
Rates are Low. Should I Definitely do a VA Streamline Refinance?
Just because the rate you can get with a VA Streamline is lower than your current rate doesn’t mean it automatically makes sense to refinance. You need to look at the monthly savings a refinance will create and make sure the costs involved in the streamline refinance do not outway the savings. For example, if you’re being told it will cost more than 3 points to get that great, low, advertised rate, the costs may end up being to high that they defeat the whole purpose of refinancing. Make sure that the lender you are working with has your best interests in mind.
Authored by Tim Storm, an Orange County, CA 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
