No Down Payment Requirement on VA Loans

Obviously this is a big factor for those who don’t have the money to put down on a mortgage loan. Conventional loans require 5% down payment which can certainly add up quickly the larger the home you look to purchase.

VA Loans Don’t Have PMI

This can lower your payment significantly compared to the high priced PMI charged on conventional loans and also make it easier to qualify for a loan as your debt to income ratios will be lower.

Lower Credit Requirements for VA Loans

This is a huge benefit vs the conventional loan. A customer can get approved for a VA loan with a credit score as low as 620. In most cases, customers looking for conventional loans will have to look for a different product if their credit score drops below 660 and in some cases, 680.

Higher Debt to Income Ceilings on VA Loans

This too is a tremendous benefit for Veterans and current military who might not be able to show a significant monthly income to qualify. Conventional loans, in most cases, will deny the borrower that has a total debt to income ratio of over 45%. This ratio is figured by taking the TOTAL MONTHLY DEBTS including property tax, home owner’s insurance and home association dues and dividing it by the TOTAL GROSS MONTHLY INCOME.

So on a conventional loan payment of $1,100 (Principal and Interest), Monthly tax and insurance of $400, PMI payment of $100 and total monthly debt payments of $400, your total monthly payments would be $2,000. For a conventional loan, your monthly gross income could not be less than $4,444.44 or $53,333 per year. However, on a VA loan, your income could be as low as $3,333.33 or $40,000 per year and qualify for the same loan.

VA Loans Are Assumable

This is a tremendous benefit for Veterans looking to sell their home. The buyer can literally have a rate lower than the market rates making purchasing the house much more attractive. You can see how this would help sell your house in a tough market and gain an advantage over some other homes in your area.

No Lender Fees

If you fill out an Inquiry Form Here, you’ll be connected to a VA Mortgage Specialist that will charge you Zero Fees for your VA loan. That means NO Bank Fees, NO Broker Fees, NO Processing Fees, NO Underwriting Fees and especially NO ORIGINATION FEES.

INQUIRE ABOUT A FREE VA LOAN HERE>>>

Members of the military and certain other federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and qualify for the credit. Thus, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2011. If a binding contract is entered into by that date, the taxpayer has until June 30, 2011, to close on the purchase. Members of the uniformed services, members of the Foreign Service and employees of the intelligence community are eligible for this special rule. It applies to any individual (and, if married, the individual’s spouse) who serves on qualified official extended duty service outside of the United States for at least 90 days during the period beginning after Dec. 31, 2008, and ending before May 1, 2010.

This is a much deserved benefit given to military families. All that qualify should take advantage of the First time home buyer tax credit before it is no longer available.

To get pre-qualified for a VA Loan and take advantage of the extended First Time Home Buyer Tax Credit, Inquire Here>>>

I’m not going to claim to be an expert on Military Loans, unless you’re referring to VA Loans. However, after doing some research. I can tell you that I can see where the allure for Military “Personal” loans might be evident. They make it extremely easy to get a loan…almost too easy.

Military Loans are mainly available to military service members and can be used for a variety of reasons:

• Cash or financial assistance
• Auto repairs
• Debt consolidation
• Travel or vacations
• PCS moves
• Emergencies
• Home repairs or improvements
• Education
• Moving expenses
• Uncovered medical or dental expenses
• Business expenses
• New computer
• Or for hundreds of other reasons that fit your needs.

The main overall purpose of a Military “personal” Loan is for quick cash. I would expect that the main target customer would be those service members and maybe even some veterans that may or may not have a home with equity and simply need a smaller loan quicker. That being the case, I have nothing bad to say about Military personal loans.

A VA refinance could be a very good alternative. However, the downside to doing a VA Refinance and pulling cash out is the funding fee (IF you do not have a service connected disability). The other possible downside is that you are limited to 90% of the value of your home which may lower the amount of cash you can pull out or eliminate the possibility all together. Obviously fees are a non-issue on a VA loan, of course, if you use freevaloan.com to find your VA lender for you.

Thousands of military personnel and veterans are taking advantage of the lower rates and using VA loans as the better alternative for pulling out more money. With the longer term, you’re not putting quite the strain on your wallet as a shorter term personal loan might have.

Either way you go, don’t jump into a quick loan without weighing out your options and comparing the pros and cons of each.

For a quick quote and to see if a VA loan is right for you, Inquire Here>>>

That’s not the secret I’m referring to though, even though many don’t know that is the case. What so many more don’t know, including lenders, is that veterans can have two VA loans at once. It’s called “2nd Tier Entitlement”. The main point to keep in mind if you are looking to qualify for a 2nd VA loan while all or a portion of your basic entitlement is being used, is this – Your 2nd VA loan MUST be more than $144,000.

You probably want to know how figure the maximum VA loan amount should you have a VA loan already, right?

Lenders that truly know how to calculate this number will give you a calculation that might make your head spin. At the very least it should have the same affect as a sleeping pill. It would probably look like this:

zzzzzzzz…….

I actually grabbed that calc from another post to show the example. Now, if I do a reverse calculation, I can find out what the actual original loan amount was on the current home:

$36,000 (basic entitlement) – $21,853 (the assumed remaining entitlement) = $14,147 (actual entitlement used) x 4 = $56,588 (the original VA loan amount on the current home)

You’re probably asking, why would you do that? What purpose would that serve?

Because there is a more TOP SECRET, secret to knowing how to calculate the maximum VA loan if you already have a VA loan…or even if you may have foreclosed on a VA loan and never restored the entitlement. It is absolutely amazing that even the smartest VA Loan Specialists that want to throw the mind-numbing guaranty/entitlement calculation at you, don’t even know this. In fact, even the smartest VA Specialists have used the same calculation above, and because of its complexity, have come back with an erroneous answer.

So imagine, you’re trying to buy a house and have gone almost all the way through the process. You’ve signed the purchase contract, put a huge earnest money deposit down, paid for an appraisal and the loan just went to underwriting. The whole time you’ve put your life in the hands of this seemingly too-smart-for-school VA “Specialist” and believed that s/he has calculated the maximum 2nd tier entitlement correctly. Then the bomb drops. The calculation was off. Now you have to bring an extra $5,600 to the table that you hadn’t budgeted for or simply don’t have.

That’s not a position I would expect any veterans want to be put into. In fact, pretty much all veterans and current military have higher standards than that and expectations that their VA Specialist delivers exactly what they promise with no surprises.

That’s why the more error-free (and Top Secret) solution should always be used….

I bet the curiosity level is pretty high right now. Unfortunately, I’m going to keep it Top Secret. However, if you are a veteran or currently on active duty and are wanting to have 2 VA loans at the same time, and you want to know what the Top Secret calculation is or just want to be sure you have a VA Specialist that knows how to use the calculation correctly to calculate (every time), the maximum 2nd Tier VA loan amount, I will point you in the right direction.

TOP SECRET 2ND TIER MAX LOAN AMOUNT CALCULATION HERE>>>

Termite inspections are required on existing properties if they are located in an area where the probability of termite infestation is “very heavy” or “moderate to heavy” according to the Termite Infestation Probability Map published in the International Residential Code.

Q: Is a termite inspection always required when a veteran is purchasing a property using VA financing?

VA only requires pest inspections when there is evidence of a condition conducive to pest infestation and for properties that are located in an area where the probability of termite infestation is “very heavy” or “moderate to heavy” according to the Termite Probability Map published in the International Residential Code.

If there is a question about the location of an infestation probability boundary line in relation to the subject property, contact the Construction and Valuation Section at the VA Regional Loan Center of jurisdiction to determine if this requirement is applicable.

Q: Is there a required termite form?

There is no VA form to be completed regarding termites. Forms are supplied and completed by the pest inspection company performing the inspection. VA requires the applicable National Pest Management Association form (NPMA-33, NPCA-99A, NPCA-99b) completed by the pest inspection company performing the inspection.

Q: Does VA require that the type of chemical used to treat the property be stated on the termite form?

VA does not have a requirement to disclose the type or name of chemical used by a termite company. VA requires the use of the National Pest Control Association forms, NPMA-33, NPCA-99A and NPCA-99B as applicable. For proper completion, these forms require the inclusion of the brand name of the product used.

Q: When is a termite certification required on condominium units?

A wood destroying insect inspection is required in low-rise and high-rise units only when the fee appraiser observes a potential problem. You will find this information in Chapter 16, Section 16-A.01, page 16-A-4 of the Lender’s Handbook (VA Pamphlet 26-7).

To better find out if your property requires a Termite Inspection, consult a VA Loan Specialist Now>>>

First, regarding occupancy rules, VA requires a veteran obtaining a VA guaranteed loan to certify that he or she intends to personally occupy the property as his or her home. As of the date of certification, the veteran must either personally live in the property as his or her home, or intend, upon completion of the loan and acquisition of the dwelling, to personally move into the property and use it as his or her home within a reasonable time (within 60 days of closing). A spouse can satisfy this requirement if the veteran is on active duty and can’t personally occupy within this time.

In addition, VA loans are not only for Single Family Residences. You can use your VA loan to purchase up to a 4 unit property and one business unit so long as it is not a joint loan, the nonresidential unit doesn’t make up more than 25% of the total floor plan, AND you plan to occupy one of the units of the property.

The occupancy requirement applies to all types of VA guaranteed loans EXCEPT Interest Rate Reduction Refinancing Loans (IRRRL’s) or otherwise known as Streamline Refinances. For these loans, the veteran need only certify that he or she previously occupied the property as his or her home.

What Form Do I show the Lender I’m Eligible?

The first form you need is a Certificate of Eligibility before you can get a VA guaranteed loan.  Below are some instructions for you.

Among categories A, B, and C below, find the one that matches your situation.

Category A: Veterans, Active Duty, and Reservists/National Guard Members Who Have Served on Active Duty

You can get a Certificate of Eligibility in any of three ways:

1. Apply online. Go to the Veterans Information Portal (http://vip.vba.va.gov) and click on User Registration.  For more information, click on this link for user instructions for applying online.
2. Apply through the lender. In many cases, lenders can obtain a Certificate online in minutes through VA’s ACE system.  Check the table below entitled, “Evidence Needed for the Certificate of Eligibility.”
3. Apply by mail. Use VA Form 26-1880.  If you can’t print the form, just call 1-888-244-6711 and follow the prompts for Eligibility.  VA can mail it to you.

Evidence you’ll need when you apply (Category A)

Category B: Reservists/National Guard Members Who Have Never Served on Active Duty

You can get a Certificate of Eligibility in any of three ways:

1. Apply online. Go to the Veterans Information Portal (http://vip.vba.va.gov) and click on User Registration.  For more information, click on this link for user instructions for applying online.
2. Apply through the lender. Your lender can submit your application online for you.  Check the table below entitled, “Evidence Needed for the Certificate of Eligibility.”
3. Apply by mail. Use VA Form 26-1880. If you can’t print the form, just call 1-888-244-6711 and follow the prompts for Eligibility.  VA can mail it to you.

Evidence you’ll need when you apply (Category B)

Category C: Surviving Spouses of Veterans Who Died In Service or As a Result of Service

You must apply for the Certificate by mail.

If your veteran spouse died after service, VA must determine that the death was due to a service-connected disability.  Please allow 2-3 months for this process unless you know that the decision on service-connected death has already been made.

Apply using VA Form 26-1817.  If you can’t print the form, just call 1-888-244-6711 and follow the prompts for Eligibility.  VA can mail it to you.

Send the completed form to:

VA Loan Eligibility Center
PO Box 20729
Winston-Salem, NC 27120

You’re not alone…and it’s not the only choice you have.

What most veterans don’t realize, on July 30, 2008, the President signed the Housing and Economic Recovery Act of 2008 which allows for a “Temporary Increase in Maximum Loan Guaranty Amount for Certain Housing Loans Guaranteed by the Secretary of Veterans Affairs.” As of 2010, this increase is still available, but no one knows for how long, which is the reason why I underline “Temporary”.

Basically, in short, veterans and current military personnel can get a zero down VA Loan over $417,000 in certain High Cost Counties around the United States. In fact, in some counties, you can actually get a zero down jumbo VA loan amount up to $1,094,625 and still with NO mortgage insurance!

Yet there are still so many veterans not taking advantage of this benefit they earned. Either they don’t know about it, they are working with a broker that doesn’t have much experience with VA loans (very common) or they are working with a broker that is not able to offer them (also very common).

With FHA’s mortgage insurance and Jumbo Conforming Private Mortgage Insurance “PMI”, if you are a veteran, VA Jumbo Loans should really be your only choice if you are looking to put less than 20% down.

Lastly, a common mistake made by veterans is to go with a broker they know, a realtor referral or simply, not do enough research. This could be a very costly mistake. Everyone knows that VA allows lenders to charge a 1% Origination fee. Of course, this can make a VA loan very pricey and often times deter the veteran from using their VA eligibility and taking advantage of the many benefits a VA Loan offers.

<<CONNECT WITH A JUMBO VA LOAN LENDER NOW>>

Mortgage Companies (So called Mortgage Bankers) also can have several investors to shop your VA rate for you as well, but the difference is they are the initial lender. They make the decisions for the investor and the investor eventually buys the loan from them allowing them to pay back the money they borrowed from their warehouse lines.

Banks too can do this but one of the major differences is, unlike mortgage companies that have to borrow the money at sometimes ridiculous double digit rates, banks lend their own money. Imagine, as the owner of a mortgage company, you’ve borrowed $10 Million at 14% interest and $5 Million of it you lent out at 5.5% but due to mistakes made on the loans, you can’t sell that book of business off. How would you make up the loss? You would have to start charging more or offering higher rates. If a customer doesn’t do enough research, they are the ones that pay.

Although banks are some of the most secure institutions to get your VA loan from, you need to do your research on them as well. If they portfolio their loans, they too can get themselves in trouble as well. They could be sitting on foreclosed properties costing them Millions in revenue. Guess who will ultimately have to pay? You guessed it. YOU. Although you might get a great deal on a foreclosed home through a large bank, you might pay for it another way in a higher rate or fees.

In addition, pay attention to whether the lender is a L.A.P.P. lender or not. L.A.P.P. stands for Lender Appraisal Processing Program. What this means in short, is the lender has been given full right by VA to issue the N.O.V. (Notice of Value) rather than VA having to do it. Most don’t realize that this can cut at least a week from the processing time. So, knowing that the best rate can be attained from shorter period locks like 20 day or 30 day locks, if you are dealing with a Non-LAPP lender you will more than likely either have to pay money to extend the rate or you could lose the rate all together.

Pay very close attention to the lender that originates your loan for you and do your research. You could save yourself literally thousands in closing costs and higher rates.

VA home loan useful, but watch for snags

For eligible service members and veterans, the Veterans Affairs Department’s home loan guarantee program can be a curse or blessing in today’s housing market. Among the advantages:

• It is among the few mortgage programs now available that does not require a down payment.

• In most locations, lenders will allow purchases of a home worth up to $417,000 without a down payment — and more than $1 million in some high-cost areas.

• Credit underwriting is a little easier with VA loans than with other mortgages. A buyer’s credit scores don’t have to be as high, and loans are possible with as few as six months of work history — not the minimum two years required for most mortgages.

• An inspection of the home is required to ensure it is safe and livable, which provides extra protection for first-time buyers.

But there are disadvantages:

• Not all lenders are willing to work with VA loans.

• A percentage of the loan fee (funding fee), charged by VA to offset the risk of having no mortgage insurance, could be wrapped into the mortgage, ranging from 0 percent for veterans with a service connected disability to 3.3 percent for second time or more use. I corrected this from the original post.

• There are limits on what fees can be charged to the buyer at closing; some sellers don’t want to be part of a sale that could force them to pay more closing costs.  This becomes a non-factor when a veteran works with a VA lender that charges Zero fees.

• A strict home inspection and appraisal process often can make it impossible to buy a home “as is.” If the seller won’t agree to repairs, either done in advance of settlement or by putting money into an escrow account, a VA loan may not be approved. Of course, this should be in the advantage category really, as it is there to protect the veteran from purchasing a “lemon” or “money pit” home that could cost thousands. Conventional loans don’t have this kind of protection. I personally found out the hard way when I got a conventional loan to purchase my house and since have put in THOUSANDS of dollars in repairs that the inspector my realtor recommended didn’t catch. I’ll talk more about this in a separate post.

• Many sellers and their agents believe VA loans involve more red tape than other loans. Many sellers and agents don’t understand VA loans either. This is up to your lender to step in and help them understand the steps involved and relieve them of the mis-guided anxiety they may feel. VA loans should take no longer than a conventional loan if you have the right VA lender working for you.

• Generally, VA home loans are more likely to be accepted in housing markets where troops, veterans and military retirees are a sizable part of the market. This seems like a very one sided comment. It is true but I’m not sure where I see this as a disadvantage…. or an advantage. VA loans are accepted throughout the country, regardless of demographics. Just make sure if you are building a home, you are working with a reputable builder that is approved by VA. Again, I’ll talk more about this in a separate post.