A VA Loan have huge benefits if a borrower qualifies:
Borrower/Buyer must have received an honorable discharge from a branch of the United States Armed Services and have a valid VA Certificate of Eligibility.
VA Loans and USDA Loan products are the most affordable loan products that offer 100% financing and are insured through a government entity. Collectively add the zero down payment and up to the 4% closing costs can be covered by sellers concessions the VA Loans product probably affords the best opportunity for first time homebuyers of any loan product. The immediate financial benefit of sellers concessions up to 4% closing costs combined with the zero down payment allows the borrower minimal out of pocket money for closing. Some of the closing costs includes title charges, recording fees, appraisal fees, transfer stamps, origination fees, points, attorney’s fees, homeowners insurance, escrows (pre-paids), and any other charges associated with the purchase of the home by the veteran. Consider closing costs can range from 2% to 5% of purchase price and the most popular loan product is FHA requiring a minimum 3.5% down payment consider this math on a $200.000 home for comparison. Closing costs of 3% and minimum down payment of 3.5% = 6.5% of $200,000 (200,000 X .065 = $13,000). When you look at this example and you have VA benefits with the current historical low interest rates it seems to make good financial sense to look for a home. Whether a person rents or buys they pay for the place they live.
Sellers concessions is money given towards closing out of the Seller’s received at closing. For example if the the agreed price of the home is $200,000 and the seller offers up to $5,000 of sellers concession at closing and assuming closings costs equal 3% of purchase price the immediate out of pocket expense is several thousand dollars
$200,000 X .03 = $6,000 to close, Sellers concession $5,000. leaving $1,000 of closing costs to be paid by the buyer.
Closing Costs – $6,000
Sellers concession $5,000
Borrower obligation $1,000
If a seller cannot see their way clear to offer concessions a VA borrower may be able to get a lenders credit by the mortgage lender to cover partial to all of their closing costs in lieu of a higher mortgage interest rate on their VA loan.
The VA Loan product is an outstanding product and for the majority of those with VA eligibility it is the best way to finance a new home. Like any other government insured loan there are loan limit caps, the maximum amount of money allowable to finance, For a VA Loan the cap is $417,000 in most areas, however several parts of the country like many counties in California VA Loan Limit caps can exceed over $1,000,000 if the property is located in high cost areas. FHA loan limits are capped at $271,500 n most areas unless the property is located in a deemed high cost area. California has many counties if not most counties deemed as high cost areas therefore FHA Loan limit is as much as $625,500. Fannie Mae (FNMA) and Freddie Mac (FNMC), the two major mortgage giants that set the Conventional mortgage regulations have capped conforming loan limits at $417,000 unless the property being considered is located in a high cost area.
2016 VA Refinancing Guidelines allow for VA Streamline Refinance mortgage where the homeowners does not need a new appraisal, no employment verification, and no credit scores. As long as you have been timely on all of your VA monthly mortgage payments for the past 12 months, you can qualify for a VA Refinance Mortgage, also known as IRRRL and your credit scores, income, or value of your home has no impact on your eligibility for a VA mortgage loan. Your credit scores can be under 500 FICO credit scores and you can still qualify for a VA Streamline Refinance mortgage loan.
VA loans are governed by the Department of Veteran Affairs and sets regulations and on VA Loans and VA Mortgage Lending guidelines. When a borrower applies for a VA Loan they will need to provide income documentation, a credit report will need to be pulled and an appraisal of the property is required. A Cash Out VA Refinance will require all income documents, credit and an appraisal, However, VA Streamline Refinance known as an Interest Rate Reduction Refinancing Loan (IRRRL) do not require income documentation, credit pulled, nor an appraisal and normally can close within three weeks or less. Provided the borrower has been timely on all of your VA monthly mortgage payments for the last 12 months. Further your credit scores, income or value of your home has no impact on your eligibility for a VA Loan. Your credit scores can be under 500 FICO and you can still qualify for a VA Streamline mortgage loan
For more information any refinance or new mortgage loan and to find a VA refinance mortgage lender, whether it is a cash out VA refinance mortgage loan or a VA Streamline mortgage, please contact The Larry Stepp Team at Gustan Cho Associates. We are available 7 days a week, holidays and weekend to provide you information.
Larry Stepp 407-922-4755 LarryS.HomesNetwork@gmail.com