VA Loan Program is not just for first time home buyers

Orange County Veterans, home buyerMany Orange County, CA veterans think that the VA loan program is only for first time home buyers. Or is for low income home buyers. In Orange County especially, that is not even close to the truth. In the OC, where the 100% financing limit for a VA loan is $668,750 in 2013 *, there are many second and third time users of the VA program.  *2014 limit is $687,500

VA offers Veterans a great way to finance a home. Along with no down payment, there are several other advantages to VA financing.

  • VA allows for higher debt to income ratios than most other types of financing
  • VA more flexible guidelines when it comes to credit. Issues like bankruptcy, short sales, and foreclosure are more quickly forgiven with VA financing than other types of financing.
  • There is no monthly mortgage insurance on the VA loan program, even though the down payment requirements are low to $0. Other programs, like the FHA program, require the borrower to pay a fairly high mortgage insurance payment each month. This saves veterans money every month versus other loan programs.
  • VA does allow for financing above the counties $0 loan limit. This is known as a Jumbo VA loan. The Orange County 100% limit is $668,750 in 2013.  *2014 limit is $687,500

How to get Prequalified for a VA Loan in Orange County, CA

Getting prequalified for a VA loan is fairly easy. The most important step is to find an Orange County loan officer who specializes in VA loans. Probably more than any other type of loan program, working with a loan officer who is very familiar with VA guidelines can save time and stress. The loan officer should be able to provide custom loan scenarios. And meeting the loan officer is also possible when you choose someone who is local to you.

Authored by Tim Storm, a California Mortgage Loan Officer MLO 223456 – Please contact my office at the Emery Financial. Direct line at 949-640-3102. www.OrangeCountyVALoans.com

VA Home Loans versus CalVet | Which is Better for California Home Buyers

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 Californiavary by county. For example, in Orange County and Los Angeles County, the 100% financing limit is $679,650 (2018 loan limit). California VA loan limits are very high. It is possible to go above $679,650 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 limit 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 quickly fluctuate.

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 Loan Officer specializing in VA Loans. MLO 223456. – Please contact my office at Fairway Independent Mortgage Corporation NMLS #2289. My direct line is 714-478-3049. I will prepare custom VA loan scenarios that 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.

Contact us for your Orange County VA Mortgage:

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

tstorm (at) ochomebuyerloans.com

 

VA Home Loans Remain Unchanged for Orange County Borrowers

While other loan programs continue to go though multiple guideline changes, the VA loan program has been mostly unchanged for Orange County VA home loan borrowers. FHA and Fannie Mae have recently tightened their guidelines. VA has not.

FHA and Fannie Mae Tighten Condo Financing Guidelines

FHA and Fannie Mae recently tightened their guidelines for financing on condominiums. FHA, which has an extensive approved condo list in Orange County, recently started requiring that projects on the list be “recertified”, a costly and time consuming process. Also, projects that were not previously on the list will need to go through a full review and approval process, which will take even more time and more cost. Plus, there is no guaranty that a project will be financeable. Even Fannie Mae is requiring a much more thorough look at condo projects. Each lender has their own approved condo list for Conventional loans, making lending on condo’s very tricky. VA is the only program that continues to have a valid project approval list. This is a big advantage for Orange County VA home home buyers interested in a condo. If they specifically look at VA approved condo projects, they will have an advantage over FHA and Fannie Mae home buyers. The key is to know how to find Orange County condo projects on the VA approved list.

Fannie Mae Lowers the Debt to Income Ratios

In December 2009 Fannie Mae decreased the debt to income ratios used to qualify borrowers. Although the “guideline” ratios rae still 28/36, it was possible to get a home buyer approved with a debt ratio of 60% in some cases. Now, Fannie Mae will not allow ratios over 45%, unless there are strong compensating factors. In ases with strong compensating factors, they will allow a ratio of 50%. This dramatically effected the amount borrowers can qualify for. VA guidelines remain unchanged, with some borrowers getting approval with debt ratios as high as 60%.

FHA Increases the Upfront Mortgage Insurance Premium

FHA increased the Upfront Mortgage Insurance Premium to 2.25%. The UFMIP is similar to the VA Funding Fee, which on a typical transaction is 2.15%. The great thing about VA loans is there is no a Monthly Mortgage Insurance, which FHA has. Fannie Mae also requires Mortggae Insurance if the down payment is less than 20% of the property value. There is talk that FHA may increase the Monthly Mortgage Insurance beyond the current .55%. (versus VA, which is 0%).

So while all of these changes have taken place, the VA loan program has held steady. Orange County mortgage rates on VA loans are also very low, as are interest rates for most programs. Compared to Fannie Mae, VA is actually very competitive. Fannie Mae has “pricing hits” that begin when the loan to value is over 60% and when the FICO is less than 740. The pricing hits can really add up if the FICO score drops under 660, or if the property is a condo over 75% loan to value. If the loan is a cash out refinance, be prepared to pay extra for a high rate. VA does not have pricing hits and will even allow a VA cash out refinance to 90% of the properties value. Imagine the following scenario: cash out to refinance on a condo for a borrower with a 660 FICO score at 80% loan to value. (Fannie Mae won’t even go over 80% on a cash out refi, and FHA won’t allow over 85%.)

The first step an Orange County VA eligible home buyer needs to take is to talk to an Orange County VA lender who can answer questions and prequalify you for a loan before you begin looking at homes.

Authored by Tim Storm, an Orange County, CA Loan Officer MLO 223456– Please contact my office at Emery Financial Group for more information about an Orange County, CA home loan.  877-786-4243 x 7.

www.OCFHALoans.com

Contact us for your Orange County VA Mortgage:

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

 

Orange County Home Buyers Eligible for VA Financing Have Big Advantage Purchasing Condo’s

In 2010, VA loan eligible home buyers have a big advantage buying Orange County condo’s if the project is on the VA approved list. They have an advantage over other buyers because of the recent changes for FHA and Conventional Fannie Mae guidelines as they relate to Condominium Approved projects.

FHA Recently Changed their Condo Project Approval Guidelines

The recent FHA changes to their condo project approval guidelines will have an immediate affect on Orange County buyers who are looking to purchase a condo. FHA had a list of approved projects, but recently made significant changes to the list, essentially wiping the list out. Now, projects that were previously approved will need to be “recertified”, which, at least for now, will take some time since nearly 100% of the projects on the list will need to be recertified. The certification process will take time, and is not a sure thing. At the same time, Fannie Mae has also tightened their condo lending guidelines. Conventional Fannie Mae financing is already difficult to get unless the buyer has at least a 20% down payment. On a condo, 25% down is preferred. With only 20% down on a Fannie Mae loan, a condo buyer would need excellent credit and would have an interest rate increase for having such a “small” down payment.

VA Has Not Changed their Condo Lending Guidelines and Still Has a Condo Approval List that is Valid

This is where the qualified VA buyer steps in. If the condo project is on the VA Condo Approval List, no “extra” approval is necessary, and no “recertification” is required. Up until recently, VA accepted FHA approved projects for financing. On  November 30, 2009, the VA released Circular 26-09-19 which states that they will no longer accept HUD (FHA) Approved projects, but if the projects have already made it on the VA list under the old FHA/HUD condo approval guidelines, then the project will remain on the VA list. This is key.

The first thing an Orange County VA home buyer should do is get PreQualfiied and then PreApproved for a VA loan. An Orange County Direct VA Lender can help them get their Certificate of Eligibility, but the buyer will also need to provide paystubs for the most recent 30 days, tax returns and W2’s for the most recent 2 years, and bank statements for the most recent 2 months. With the $8,000 First Time Home Buyer Tax Credit rapidly coming to an end, now is the time to act.

Authored by Tim Storm, an Orange County, CA Loan Officer MLO 223456– Please contact my office at Emery Financial Group for more information about an Orange County, CA home loan.  877-786-4243 x 7.

www.OCFHALoans.com

Contact us for your Orange County VA Mortgage:

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

 

Orange County VA Home Loan Limits for 2010

The Veterans Administration recently announced the VA 100% financing loan limits for Orange County, and the limit was reduced. In 2009 an Orange County VA eligible home buyer could purchase a home with $0 down up to a price of $737,500. In 2010 the limit has been reduced to $593,750.

The reduction on the loan limit should not have much of an effect for most Orange County VA home buyers. Since they are still eligible to purchase a home of almost $600,000 with no down payment, the decrease will barely be felt by 99% of buyers.

Orange County VA Home Buyers Can Still Get Loan Over $593,750 * 2011 increased to $700,000

Although the limit has been reduced, Orange County VA home buyers will still be able to buy homes valued at greater than $593,750 with a VA loan. The high-balance VA Jumbo mortgage program started in 2008. VA eligible home buyers just need to come up with a down payment equal to 25% of the difference between the 100% financing limit and the purhase price of their home.

Example VA eligible Purchase  for Placentia, CA

For example, if Mike Smith is looking to purchase a home in Placentia for $693,750 (for this example, $100K over the 100% financing limit), then Mike would need to have a down payment of $25,000. That is not bad. That works out to a 3.6% down payment, plus there is no Monthly Mortgage Insurance.

Example of VA Purchase in Tustin, CA

Just for another example, let’s assume that Jill Monroe, a VA eligible home buyer, is looking to purchase a home in Tustin, CA for $650,000. That is $56,250 over the 100% financing limit. 25% of $56,250 is $14,062. Jill would need to come up with $14,062 for the down payment, only a 2.1% down payment.

Southern California VA Loan Limits for 100% Financing

County Name Single Family Home

($0 DOWN AND UP TO)
LOS ANGELES $593,750
ORANGE $593,750
RIVERSIDE $417,000
SAN BERNARDINO $417,000
SAN DIEGO $437,500
SANTA BARBARA $417,000
VENTURA $486,250

 

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 MLO 223456– Please contact my office at Emery Financial Group for more information about an Orange County, CA home loan.  877-786-4243 x 7.

www.OCFHALoans.com

Contact us for your Orange County VA Mortgage:

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