Major VA Loans
Now that we are seeing an upswing in the VA loan housing market, stats are showing more than ever that active military service personnel and veterans are using their VA Home Loan benefits more than ever before.
For 2014, the VA loans showed a significant increase in home loan volume, with more than 11,344 VA home purchase guarantees issued, an increase of over 22.1 percent compared with 12.7 percent the same period one year earlier.
If you’re a active military member or veteran in the market for a VA home loan, there are two basic things you need in order to get the process moving. One is your basic eligibility for the VA mortgage itself, the other is how much of that entitlement you have coming. First time home buyers with enough time in the service to qualify for a VA mortgage don’t have any worries when it comes to the entitlement issue; if you have never used your VA loan benefits and you qualify, you have 100% of your VA loan entitlement available to you.
To start the process, you must apply for a Certificate of Eligibility from the Department of Veterans Affairs. When the VA responds to your application, they issue qualified applicants a Certificate of Eligibility telling your lender (and you) two things:
- The borrower has served in the military long enough to earn and use VA loans benefit.
- The amount of the borrower’s entitlement to use for the VA loan.
It’s easy to assume that because you’ve served in the armed forces you’re automatically eligible for ALL the benefits offered by the Department of Veterans Affairs; the truth is that vets and active service members are eligible for VA guaranteed home loans only when they meet certain general rules:
- The applicant must have served on active duty in the Army, Navy, Air Force, Marine Corps, or Coast Guard after September 15, 1940.
- The applicant must not have a dishonorable discharge.
- The applicant must have served at least 90 days or more during wartime or 181 continuous days or more during peacetime
For most veterans on active duty today and for many who have retired or separated, the following rules also apply:
There is a two-year duty requirement for those who served
- As an enlisted member after September 7, 1980.
- As an officer after October 16, 1981.
For all who joined after these dates, VA regulations require:
- 24 continuous months of active duty military service.
- The full period for which called or ordered to active duty, but not less than 90 days (any part during wartime) or 181 continuous days during peacetime operations.
These rules mean brand-new recruits, basic trainees and recent graduates of military technical school programs are not eligible for a VA loan…yet. New recruits and basic training graduates who want a VA home loan should begin working on their credit history between the time they join the service and the time they become eligible for a VA loan so that when the time comes the military member is completely ready to apply for a VA guaranteed mortgage.
What Are The Major Types Of VA Loans?
VA PURCHASE LOANS
The VA Loan Process in a VA Purchase
As an active military member or Veteran, you are entitled to use your VA benefits to obtain a VA Home Loan. If you qualify, the program allows you to purchase your primary residence with 100% financing. This means all you would pay out of pocket at closing is the closing costs on the loan. However, it is possible, with seller concessions, to purchase your home with little or no money out of pocket. Unlike other loans, this loan does not have mortgage insurance.
There are some basic steps involved in obtaining VA Home Loans. The more information you have about the VA loan process, the more you will realize how uncomplicated the process is. Other than requiring a certificate of eligibility and an appraiser assigned by the VA, the VA mortgage loan process is very similar to the conventional loan process. Here are the steps you will need to take:
- Obtain a certificate of eligibility (COE). As a veteran you may obtain your COE by completing VA Form 26-1880, and mailing it, along with proof of military service, to an eligibility center. In a lot of cases, it may be possible to obtain your COE from your lender using the ACE (automated certificate of eligibility) system.
- Find and select a home for purchase. With your real estate agent’s assistance, you may choose to sign a purchase contract conditioned on the approval of your VA home loan. A pre approval from a VA lender will make this process easier, but does not necessarily replace the condition of final approval.
- Provide the lender with your COE and complete the loan application. The lender will compile all credit and income information. They will also arrange for the VA licensed appraiser to determine the reasonable value for the property.
- After the appraisal is completed, the lender will determine if the loan is approved. The lender will take into account the credit and income information, as well as the appraised value of the property and other factors to make a decision. If your lender is approved by the VA to process home loans through the automated system, as we are, the loan can be approved upon receipt of the appraised value determination.
- Finally, you’ll close the VA loan and move into your new house. The lender and title company or closing attorney will coordinate the closing process and explain the key loan terms and requirements
This is all important information to have at your disposal before trying to fill out the very first form—don’t start applying for your VA loan eligibility or the loan itself without having all the right details at your disposal whenever you need them. Your mortgage advisor is available to answer any questions that you need answered and guide you through the process.
The Advantages of VA Loans for First-time Home Buyers
Many VA-eligible borrowers have found excellent reasons to finance a home using the VA Loan Guaranty Program. For first-time home buyers, there may be even more reasons to take advantage of the popular home financing program for veterans.
First-time home-buyers are often young couples just starting families. Many don’t have a large amount of cash to put down on a home purchase. With a VA-guaranteed home loan, eligible borrowers can get into a great starter home with zero money down. Most other mortgage programs require between 3.5 and 20 percent in cash down – even for first-time buyers. A zero-down VA loan can save thousands up front.
Another big money saver for VA borrowers is the absence of a private mortgage insurance premium each month. Most traditional mortgage programs require borrowers to pay mortgage insurance if there is less than 20 percent equity in the home. Private mortgage insurance, or PMI, is not needed or allowed in the VA home loan program because the federal backing eliminates the need for PMI. Therefore, VA borrowers are never charged PMI. For first-time home buyers, savings of up to hundreds each month can be important for establishing college funds and other future financial planning.
We have written a in-depth step by step guide called “Simple Steps to Getting A VA Loan” this ebook is packed full of insights, checklists and will answer most of your questions before you start your loan application: Download for free below.
VA REFINANCE LOANS
Sometimes you require additional cash now, for a real need. Perhaps you want to payoff a 2nd mortgage, need to consolidate some high interest credit card debt, or perhaps it’s time to make improvements that will increase the value of your home prior to sale. In cases like these and more, your home could be looked upon a source of equity which you can borrow against – if the terms, conditions and timing are right. Check with your Mortgage Advisor and Lender on this for further details as each refinancing situation is different.
The VA Loan Process in a VA Refinance
A VA Refinance can be a very simple, quick process. You want to remember one thing: documentation. You can use your VA Benefits to refinance your home and get your payments down where you would like them, in as little as 3-4 weeks. What can help you speed things up is having all the documentation that you need.
The following is a list of some of the documents you may need when completing a VA Cashout Refinance. This list “does not” apply to the VA Streamline Rate Reduction Program:
- A copy of your driver’s license, or government issued photo I.D.
- A copy of your W2’s for the past 2 years or complete tax returns if self employed
- Your last 30 days worth of pay stubs, showing your current year-to-date gross income.
- A copy of your DD Form 214 release paper or Statement of Service if active military
- The “Note” from your current mortgage
- Awards letters showing any disability, pension, or Social Security monies you are receiving
- A copy of the Declarations page from your Home Owner’s Insurance policy
Before you apply for the loan, the first thing you should do is find as much of that paperwork as possible. This can cut significant time off of the total loan process. There may of course be other things you are asked for, but this should get you started on the right foot. After you have submitted your application, your loan is goes through an automatic underwriting system, which gives approval for qualified applicants to go ahead to process the loan.
Processing the loan is where the bulk of time goes into completing your loan. Our processors consider documents and information to see if the applicant qualifies. One of the first things needed — and also one of the most important — is the appraisal. An appraisal for a VA Loan is different from a conventional loan because the appraiser must be approved by the VA. The VA requires the lender to submit the request for the appraisal to them, after which the VA assigns a local VA licensed appraiser. Once the appraisal has been ordered, the appraiser will contact the borrower within 1- 2 business days to schedule a good time for the appraisal to be done. When the inspection is complete, most appraisers will work as quickly as possible to get the report back to the lender.
There is one more inspection that must be completed: a wood-eating pest inspection. VA wants to make sure that there are no termites or other pests eating away at the home. Any licensed pest inspector of the borrower’s choosing can complete this inspection, but the borrower needs to tell the inspector that this is for a VA loan, as they have some specific paperwork they are required to use. When the inspection is done, either the borrower or the inspector must send a copy of the report to the lender, along with the invoice.
Meanwhile, there are many forms that the processors will be ordering and completing such as: a current Certificate of Eligibility, a Verification of Benefits, verifying income and employment, obtaining various payoffs, and obtaining a preliminary title report on the property to make sure there are no additional liens on the house or lot.
Once all the paperwork and documentation have been gathered, the loan is submitted to an underwriter who will review the entire loan file. Our department has our own in-house team. The processing team is in close communication with the borrower’s VA Loan Specialist during the process, and that Specialist will keep the borrower informed as these steps are completed.
Once approved, all that remains to be done is to schedule the closing time with the title company. Once closed, the loan will fund after 3 business days, and at that time the borrower would also receive any money he or she is getting from the refinance.
VA Cashout Refinance Loans can be an incredible benefit for you and your family. Whether you’re looking to consolidate debt, take cash out for home improvements or other reasons, or get out of a bad loan and into one that’s backed by the Department of Veteran Affairs, our team of Licensed VA Mortgage Advisors are happy to assist you in this process and make it as smooth as we can. We would love to help you and assist you in anything you need!
VA Streamline (IRRRL) Refinancing
If you already have a VA loan and would like to look at lowering your rate the VA Streamline Refinance or Interest Rate Reduction Refinance Loan (IRRRL) for short is an efficient and fast way to adjust your current VA loan for a better rate. This program is also popular when you want to convert out of an adjustable rate mortgage (ARM) into a fixed or even look at shortening the term of your loan to save on interest over the life of the loan.
This refinancing type gives you the benefits of faster processing because your current VA Loan is under the same program so there’s less hassle in processing the loan leading to a quicker response and approval.
The primary advantages of VA streamline refinance are as follows:
- No Appraisal
- No Income Check
- No Out-of-Pocket Expenses
- Closing Fees can be rolled into your refinancing loan
- Skip up to (2) mortgage payments
- Receive an escrow refund after funding
- Reduced documentation
- Very Fast turn-times
Quick note: The VA loan being streamlined can be a primary residence, second home, or investment property.
Lower Rates Can Save You Thousands
Interest rates are very competitive and low presently, even a reduction of half a percent can really add up to thousands in savings over the term of your loan:
[row][column width=”1/3″]Current Loan Amount with a Reduction In Your Rate[/column][column width=”1/3″]Total Savings Per Month[/column][column width=”1/3″]Total Savings Over 30 Years[/column][/row]
[row][column width=”1/3″]$ 125K – .75%
reduction in rate[/column][column width=”1/3″]$ 56.11[/column][column width=”1/3″]$ 20,197[/column][/row]
[row][column width=”1/3″]$ 125K – 1.5%
reduction in rate[/column][column width=”1/3″]$ 109.72[/column][column width=”1/3″]$ 39,500[/column][/row]
[row][column width=”1/3″]$ 225K – .75%
reduction in rate[/column][column width=”1/3″]$ 100.99[/column][column width=”1/3″]$ 36,397[/column][/row]
[row][column width=”1/3″]$ 225K – 1.5%
reduction in rate[/column][column width=”1/3″]$ 197.50[/column][column width=”1/3″]$ 71,099[/column][/row]
[row][column width=”1/3″]$ 325K – .75%
reduction in rate[/column][column width=”1/3″]$ 145.87[/column][column width=”1/3″]$ 52,511[/column][/row]
[row][column width=”1/3″]$ 325K – 1.5%
reduction in rate[/column][column width=”1/3″]$ 285.77[/column][column width=”1/3″]$ 102,699[/column][/row]
[row][column width=”1/3″]$ 425K – .75%
reduction in rate[/column][column width=”1/3″]$ 190.75[/column][column width=”1/3″]$ 68,669[/column][/row]
[row][column width=”1/3″]$ 425K – 1.5%
reduction in rate[/column][column width=”1/3″]$ 373.05[/column][column width=”1/3″]$ 131,298[/column][/row]
[row][column width=”1/3″]$ 525K – .75%
reduction in rate[/column][column width=”1/3″]$ 238.63[/column][column width=”1/3″]$ 84,826[/column][/row]
[row][column width=”1/3″]$ 525K – 1.5%
reduction in rate[/column][column width=”1/3″]$ 460.83[/column][column width=”1/3″]$ 165,898[/column][/row]
There is a variety of factors that go into these calculations and they may vary from lender to lender and are for illustrative purposes only. All loans are subject to approval from the lender and require proof of eligibility and agreement to all terms and conditions related to your specific loan agreement documents.
- We promise that your loan process will be much shorter than your first VA loan experience.
- Closing costs and fees can be financed into your new loan so you avoid any out-of-pocket expenses
- The VA Streamline or IRRRL allows for flexible choices of rates, whether it is a adjustable rate or fixed rate loan.
- Your monthly mortgage payment must be lower with the IRRRL loan than your previous VA loan’s monthly mortgage payment; the streamline can be higher than your current amount if you are taking on refinancing with an adjustable rate loan.
- You should not have any late payments within the past year on your pre-existing VA loan.
Are You Ready For Refinancing
Getting started with streamline refinancing could not be any easier and you can expect the whole loan processing to be very fast compared with your previous VA loan. The VA Loan Advisors at Moreira Team Mortgage are ready to guide you through the VA Home Purchase, VA Cashout Refinance, or VA Streamline process and can answer all the questions upfront.
Speak with a mortgage advisor today
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