VETERAN LOAN PROGRAMS

These loans are easier to do than you may think and there are many lenders who do not encourage their use because they do not offer the program. Don't let that affect your right to choose!

The more you know about the VA Home Loan Program, the more you will realize how easy it is to do. This loan requires NO down- payment and offers lower interest rates than some of the Conventional Loan Programs.  The appication is not much different from other loan types.  The Veteran's Certificate Of Eligibility is required and obtainable with a copy of the (DD-214-Discharge form).  The Veterans Administration has a list of VA Approved Appraisers and if the lender is approved through the VA Direct Endorsement program (which allows them to process and underwrite loans and are LAPP approved which is having the ability to underwrite the appraisal for VA) the whole process can be moved along quickly.  This means that rather than be held up by a lender who does not have this Direct VA ability you may have a much smoother than expected experience with a VA Loan.  Having the knowledge and experience makes the difference when providing this well earned program for the Veteran.

VA Loans

Thousands of Veterans are eligible for VA financing. Even though many Veterans have already used their loan benefits, it may be possible for them to buy homes again with VA financing using remaining or restored loan entitlement.

Before arranging for a new mortgage to finance a home purchase, Veterans should consider some of the advantages of VA Home Loans:

• NO downpayment is required, unless purchasing above the VA Loan Limit  ($203,000)
  
• NO- FICO Scoring requirements  (although credit must be acceptable) 2 Year BK OK
  
• Flexibility of choosing interest rate
  
• NO- monthly Mortgage Insurance Premium (MIP) to pay 
  
• Limitation on buyer's closing costs.
  
• VA Approved Appraiser
  

30 Year-15 Year-and 3/1 ARM loan programs:

• a. Traditional fixed payment (constant principal and interest; increases or decreases may be expected in property taxes and homeowner's insurance coverage)
  
• b. Graduated Payment Mortgage--GPM (low initial payments which gradually rise to a level starting the sixth year)
  
• c. In some areas; Growing Equity Mortgages-GEMs (gradually increasing payments with all of the increase applied to principal, resulting in an early payoff of the loan)
  
• d. 3/1 Year Fixed rate that becomes a variable after the 3rd year and then adjust with the market
  

New Construction:  VA requires that it be inspected at appropriate stages to ensure compliance with the approved plans, and a 1-year warranty is required from the builder that the house is built in conformity with the approved plans and specifications. In those cases where the builder provides an acceptable 10-year warranty plan, only a final inspection may be required.

Assumable Mortgage: Subject to VA approval of the assumer's credit. **(Substitution of eligibility retains entitlement)

Are You Eligible?

Veterans with  with current active duty service or with an Honorable Discharge, 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' service. Veterans with active duty service during peacetime periods must have had more than 180 days' active service. Veterans of enlisted service which began after September 7, 1980, or officers with service beginning after October 16, 1981, must in most cases have served at least 2 years.

Persian Gulf Conflict. Reservists and National Guard members who were activated on or after August 2, 1990, served at least 90 days and were discharged honorably are eligible. VA regional office(for your area) personnel may assist with eligibility questions.

Members of the Selected Reserve, including National Guard, who are not otherwise eligible and who have completed 6 years of service and have been honorably discharged or have completed 6 years of service and are still serving may be eligible. The expanded eligibility for Reserves and National Guard individuals will expire October 28, 1999. Contact the local VA office to find out what is needed to establish eligibility. Reservists will pay a slightly higher funding fee than regular veterans. (See paragraph entitled "Costs of Obtaining a VA Loan").

Remaining Entitlement

Veterans who used their eligibility before may still have "remaining entitlement" to use for another VA loan. The current amount of entitlement available to each eligible veteran is $36,000. This was much lower in years past and has been increased over time by changes in the law. For example, a veteran who obtained a $25,000 loan in 1974 would have used $12,500 guaranty entitlement, the maximum then available. Even if that loan is not paid off, the veteran could use the $23,500 difference between the $12,500 entitlement originally used and the current maximum of $36,000 to buy another home with VA financing. An additional $14,750, up to a maximum entitlement of $50,750 is available for loans above $144,000 to purchase or construct a home.

Most lenders require that a combination of the guaranty entitlement and any cash downpayment must equal at least 25 percent of the reasonable value or sales price of the property, whichever is less. Thus, in the example, the veteran's $23,500 remaining entitlement would probably meet a lender's minimum guaranty requirement for a no downpayment loan to buy a property valued at and selling for $94,000. The veteran could also combine a downpayment with the remaining entitlement for a larger loan amount.

Restoration of Entitlement

There are TWO requirements for restoring your entitlement for the use of its full value:

1. Pay off (in full) the previous loan

2. Transfer Title to prvious property

• Note..If a veteran (buyer) agrees to assume your exsisting VA loan and substitute his or her entitlement for the same amount of entitlement originally used by you the veteran seller (or loan you may have assumed by a veteran seller)...the remaining entitlement and or restoration of entitlement can be requested through the nearest VA office. In other words you can use your eligibility again.
  
• Note..The entitlement may also be restored one time only if the veteran has repaid the prior VA loan in full but has not disposed of the property purchased with the prior VA loan.

3 Easy Steps To Take

1. Call Amber Financial and get pre-qualified and apply for Certificate Of Eligibility

2. Find your home and exercise an Offer To Purchase

3. Start application process which includes ordering the appraisal and compiling all required documentaion for underwriting the VA loan for Final Loan Approval. As long you are using Amber Financial or another Direct Endorsement Approved Lender your time and ease on loan will be dramactically different.

Loan closes and you move in!

VA Appraisal- Certificate of Reasonable Value

The CRV (certificate of reasonable value) is based on an appraiser's estimate of the value of the property to be purchased and the loan amount may not exceed the CRV.  ( if the property was recently appraised under the HUD procedure, under certain limited circumstances, the HUD conditional commitment can be converted to a VA CRV) It is important to recognize that while the VA appraisal estimates the value of the property, it is not an inspection and does not guarantee that the house is free of defects. Homebuyers should be encouraged to carefully inspect the property themselves, or to hire a reputable inspection firm to help in this area. VA guarantees the loan, not the condition of the property. 

There are some comments that VA makes the rquirements on the appraisal difficult to work with.  The Veterans Administration is looking at Health & Safety issues in this regard.  So they do want certain common sense things to exsist on the property such as floors, non leaking roofs and working utility items such as plumbing and electricty. Paint on all peeling surfaces is important as bare wood surfaces can lead to dry rot etc.   

Application

The application process for VA financing is no different from any other type of loan. In fact, the VA application form is the same as that used for Conventional and FHA (hud) Loans. The lender verifies the applicant's income and assets, and obtains a credit report to see that other obligations are being paid on time and adress discrepencies. Checks the appraised value of the property to see if it is enough to cover the loan needed and the lender can close the loan. Remember that using an experienced Direct Endorsement lender keeps this process streamline.

Requirements

To obtain a VA loan:

1. The applicant must be an eligible veteran who has available entitlement (spouse needs not be veteran)

2. Veteran must occupy or intend to occupy within a reasonable time after the close

3. Co-borrower must be a veteran and occupy

4. The veteran must be a satisfactory credit risk.

5. The income of the veteran and spouse, if any, must be shown to be stable and sufficient to meet the mortgage payments, cover the costs of owning a home, take care of other obligations and expenses, and have enough left over for family support.

*Amber Financial can discuss with you all additional information and any variations.

What is a Guaranteed Loan?

These loans are made by a lender, such as a mortgage company, savings and loan or bank who is approved by the Veterans Administration.. VA's guaranty on the loan protects the lender against loss if the payments are not made, and is intended to encourage lenders to offer veterans loans with more favorable terms. The amount of guaranty on the loan depends on the loan amount and whether the veteran used some entitlement previously. With the current maximum guaranty, a veteran who hasn't previously used the benefit may be able to obtain a VA loan up to $203,000 depending on the borrower's income level and the appraised value of the property. Your local VA office can provide more details on guaranty and entitlement amounts.

Funding Fee?

A VA Funding Fee of 2.0 percent must be paid (usually financed in the loan) to VA.  Disabled Veterans are exempt!  A down payment of 5 percent or more will reduce the fee to 1.5 percent and a 10 percent down payment will reduce it to 1.25 percent.

A funding fee of 2.75 percent must be paid by all eligible Reserve/National Guard individuals. A down payment of 5 percent or more will reduce the fee to 2.25 percent and a 10 percent down payment will reduce it to 2.0 percent.

The funding fee for loans to refinance an existing VA home loan with a new VA home loan to lower the existing interest rate is 0.5 percent.

Veterans who are using entitlement for a second or subsequent time who do not make a down payment of at least 5 percent are charged a funding fee of 3 percent.

NOTE: For all VA home loans, the funding fee may be paid in cash or it may be included in the loan.

Closing Costs?

Reasonable closing costs may be charged by the lender. These costs may not be included in the loan. The following items may be paid by the veteran purchaser, the seller, or shared. Closing costs may vary among lenders and also throughout the nation because of differing local laws and customs.

• VA appraisal
  
• Credit report
  
• Loan origination fee (usually 1 percent of the loan)
  
• Discount points
  
• Title Iinsurance
  
• Recording fees
  
• State and/or local transfer taxes, if applicable
  

You Earned it Use It!