Do You Know The VA’s Stance On Occupancy Law

Posted on November 18, 2008
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There are a number of very specific requirements that the borrower must meet in order to get the benefits of VA loan financing. Among those requirements, there are those that have to do with occupancy, meaning the borrower’s living arrangements.

In fact, the law states that those veterans who have gotten a VA-guaranteed home loan must verify that they have every intention of personally dwelling on the premises, and maintain the property as their primary residence. Once this has been certified in writing, the veteran is obligated to move in and take up residence immediately or must intend to do so within sixty days after the closing.

These general requirements are applicable and enforceable for most types of loans that have been guaranteed by the Veterans Administration. The only exception is in the case of IRRLs or Interest Rate Reduction Refinancing Loans. With IRRRLs, the veteran is only required to certify that he or she previously occupied the property as a normal residence.

Some Essential Facts About VA Debt-To-Income Ratios

Posted on November 12, 2008
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As with other forms of loans, the debt-to-income ratio of veteran seeking qualification for a VA loan is a major factor that is established by the Veterans Administration and used by the lender to determine if the borrower is capable of meeting all of the expenses associated with home ownership.

This ratio can be figured by adding the total mortgage payment (all elements of PITI) and adding them to all recurring monthly revolving and installment debt such as car loans and credit cards. This number is then divided by your gross monthly income. In order to qualify for a VA loan, your ratio must be at least 41%. For those borrowers whose number exceeds this percentage, the VA has different guidelines that govern what it calls residual income.

There are other factors can also help to determine whether you will be able to qualify for a VA loan. Some of compensating factors include good credit history, limited use of consumer credit sources, minimal consumer debt, long-term employment, military benefits, liquid assets, etc.

Can Bankruptcy Affect Your VA Loan Eligibility

Posted on November 6, 2008
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Is it possible for bankruptcy to affect a veteran’s eligibility for a VA home loan? In other words, what happens if you file bankruptcy, but you would like to purchase another home at some point in the future? Will there be any hindrances caused by your credit status?

If you are a veteran and you file for bankruptcy, you are still allowed to use VA home loans if you are also eligible under the standard VA policies. Of course, there is a downside. You will most likely be put through a required waiting period. This period is typically two years after the “discharge date” of the bankruptcy. Then you will be able to purchase another house. You need to understand that it is the discharge date and not the filing date that is the starting point of your waiting period.

When you are again eligible to buy another home, the standard credit and income requirements will apply when you are registering with the VA.

What Are Fees That Must Be Authorized By The VA

Posted on October 31, 2008
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Often, when you have a VA home loan there are other fees that may be charged, but which must be authorized by the VA to become applicable. It is the lender that will contact the local VA office seeking approval of these additional fees, which may be included among the closing costs. They may be assessed if they are typically paid the borrower in certain areas or jurisdictions or if they are considered reasonable and customary in the same district.

Take a look at the following fees, many of which that will be covered by the lender if not approved by the VA:

• document preparation fees
• preparing loan papers
• attorneys services other than for title work
• photographs
• interest rate lock-in fees
• postage and other mailing charges
• stationery
• telephone calls
• amortization schedules
• escrow fees or charges
• notary fees
• trustee’s fees or charges
• loan application or processing fees
• charges by loan brokers
• tax service fees

It is also possible that these fees can be incorporated with other closing costs into the cost of the loan and then paid by the seller. There is some room for negotiation in these matters, so it might be helpful to consult the real estate agent or even the lender when deal with this stage of the transaction.

How Can You Cut Down Or Eliminate Your Closing Costs?

Posted on October 25, 2008
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Many veterans have the mistaken impression that the closing costs for a home loan are actually covered by a VA mortgage. This is not true, although you can do a number of things to either minimize or total eliminate many of your closing costs. Most notably, this effect can be produced by thorough structuring of the real estate contract that you obtain.

When you apply for a loan, the amount may be the purchased price or the appraised value of the house, which ever ends up being less in addition to a VA funding fee. This means that if you would like to have your closing costs to be included in the loan, you need to increase the price. More than this, you must include a stipulation in the agreement, which says that the seller will pay the closing costs and other pre-paid expenses equal to the increased price.

This will eliminate your closing costs. Your appraisal value must also equal the value of the increased price for you to benefit from this arrangement.

What Are The Itemized Fees You Can Expect To Pay

Posted on October 19, 2008
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There are a number of itemized fees and charges that make up loan closing fees. Some of these fees have to deal with initial acceptance of the applicant while others involved the paperwork, insurance, and survey among other things. Below is a list of the most common types of VA loan closing fees.

• Appraisal and compliance inspections
• Recording fees
• Credit report
• Hazard insurance
• Survey
• Title Examination and Insurance
• Flood zone determination (This may be assessed to the veteran to determine if their property is located in a special flood hazard area. These rulings are made by neutral third party providers.)
• Prepaid items (These fees include those that the veteran can pay a select point of like taxes, assessments, and similar items for the current year. Not only are there these costs but the deposit that goes towards paying for both tax and insurance accounts.)
• VA funding fee (Veterans are required to pay these fees unless they fall under established exemptions.)

These are the standard types of itemized fees you will have to pay if you have obtained a VA loan.

Some Facts About VA Loan Closing Costs

Posted on October 13, 2008
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According to VA guidelines, a veteran can pay the maximum amount for all standard amounts for any and all of what are called “itemized fees and charges” that are established by the Veterans Administration in addition to a 1% flat charge by the lender as well as discount points. Of course, there are a number of special provisions that are relevant and applicable to other types of VA loans like those that are used in home construction, home improvement, as well as home repair.

The Department of Veterans Affairs has established definite forms of allowable charges and fees that the veteran can pay or closing costs that will be charged to the borrower. These costs are authorized by individual Veterans Administration offices on the local level and per other factors relevant to the individual situation. These costs are those that are generally the responsibility of the borrower while there are other fees that will be restricted to the seller or lender. Examples include credit report fees and appraisal fees.

Specific Protections Of VA Loans

Posted on October 7, 2008
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There are several types of protections given to veterans who obtain VA home loans. They may be applicable only in specific situations or used for very basic or general circumstances. Some have to do with warranties while other have to do with cases where the borrower is facing loan default.

Below are some examples of VA loan protections:

1. The VA will ask the lender if they will extend forbearance to borrower who is temporarily hindered from meeting the loan terms.

2. A borrower who trying to obtain a VA loan will only have to pay fees and charges that are the VA deemed as acceptable.

3. If a veteran want to purchase a newly constructed building, the builder is required to at least a one-year warranty that states the home has been built according to VA-approved specifications.

4. Any homes that were constructed less than a year before a purchase using VA financing must be initially inspected by the VA to assure structural integrity.

5. If any defects are found in a VA-inspected home, the borrower will receive compensation for that that impact livability. This assistance must be obtained within four years of purchase using the home loan.

What Is A Funding Fee?

Posted on October 1, 2008
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If you have already become involved in the process of getting a loan through the Veterans Administration, there is a fee you might want to be aware of as you are proceeding with your application. It is called a funding fee.

Essentially, you will be required to pay a 2% funding fee to the VA unless you happen to qualify for specific exemptions. If you can pay a down payment of 5% or more, this fee will be reduced to 1.5%. If you manage a 10% down payment, that fee will be lowered to 1.25%.

If you are an eligible Reserve or National Guard seeking a loan, you will have to pay 2.75% funding fee. Like other veterans, paying down payments of 5% or more, or 10% or more will reduce the funding fee to anywhere from 2.25% to 2%.

If you are in the process of refinancing a loan with the VA, the new VA loan with have a funding fee of 0.5% to lower the interest rate. If you are a veteran and you’re planning to use an entitlement for a second or subsequent time, and you do not put down at least 5% as a down payment, you will be charged a 3% funding fee.

VA Loan Basics: What Is A Certificate Of Reasonable Value?

Posted on September 25, 2008
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Simply defined, a certificate of reasonable value (CRV) is a document that states what the appraiser’s estimate of the property value for a home the veteran wishes to purchase. This makes an appraisal a necessary step to receiving a VA home loan because the amount of the CRV determines the exact amount of the loan.

VA appraisals are available upon request for every party that may be involved in the home purchasing process. There is a simple form available from the Veterans Administration called a VA Form 26-1805, Request for Determination of Reasonable Value. Once you fill this out, you can send it to the Loan Guaranty Division at the closest VA office to be processed. An appraiser will be assigned to make an assessment, which is turned in to the local VA office. You will have to pay a preset fee for the appraiser’s services.

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