VA LOANS ( Prestamos VA)

VA FINANCING FOR ACTIVE DUTY & VETERANS

1. STEPS IN A VA HOME LOAN PROCESS

  • Determine Eligibility and Entitlement (Obtain the Certificate of Eligibility and Proof of Service)
  • Qualify for a VA Home Loan
  • Prequalification would speed the process
  • Find the right House, make an offer, sign a Sale Contract; in this process is important to use the expertise of a Local Real Estate Agent, remember the Agent Commission is paid by the Seller, so it is a FREE HELPING HAND FOR YOU
  • Loan Process to complete
  • Arrange Home Inspection, is mostly recommended but not required
  • Request Property Appraisal, the VA Regional Office assigns an appraiser. If the appraisal comes short the borrower can make up the difference in cash.
  • Also, VA may allow a waiver of some repairs required for closing but take into consideration that needed repairs may Lower the appraised value.  If repairs will take place after closing an Escrow 1 1/2 of cost of repairs may be required
  • Obtain Homeowners Insurance
  • Pay Fees and Closing Cost
  • Close the Sale

2. PROOF OF SERVICE DOCUMENTS NEEDED:

  • ACTIVE DUTY: Statement of active duty
  • GUARD/RESERVE: Proof of participation in the National Guard or Reserves. NGB Form 22, Separation and Record of Services
  • VETERANS: DD Form 214, Certification of Release or Discharge from Active Duty

LOST OR DESTROYED DISCHARGE PAPERS: NPRC stores military personnel records WW I to present, use GSA Form SF-180 at www.archives.gov/veterans/military-services-records to request a Certificate of Military Service.

3. DETERMINE ENTITLEMENT & CERTIFICATE OF ELIGIBILITY

  • The entitlement is the amount the VA will guarantee to the Lender
    1. www.ebenefits.va.gov/ebenefits/homepage
  • VA Form 26-1880 Certificate of Eligibility (COE) is mailed to the applicant
    1. ELIGIBILITY:  Time of Service required
      1. Active Duty: 90 days
      2. WW II: 90 days
      3. Post-WW II: 181 days
      4. Korean: 90 days
      5. Post-Korean: 181 days
      6. Vietnam: 90 days
      7. Post-Vietnam: 181 days or 2 years
      8. Gulf War: 2 years
      9. Reserves and Guards: 6 years of service or 90 days if mobilized

4. VA FINANCING Basic characteristics:

  • NO INITIAL DOWNPAYMENT IN MOST CASES
  • NO MORTGAGE INSURANCE
  • 100% LOAN-TO-VALUE RATIO
  • 41% DEBT-TO-INCOME RATIO
  • CLOSING COST + FUNDING FEE SHOULD BE PAID BY BUYER OR BY SELLER CONCESSION
  • SINGLE- FAMILY & APPROVED CONDOS CLASSIFY
  • NO penalty for early payoff
  • The loan is assumable by another qualified veteran borrower
  • May apply for a new loan 2 years or sooner after a bankruptcy.

5. CONDOMINIUMS MUST BE VA-APPROVED IN ORDER TO THE LOAN BE APPROVED

6. CLOSING COST & FUNDING FEE: Can be from 3% to 5% con sale price

  • Closing Cost:
    1. The lender may charge a 1% Loan Origination Fee or Itemized it
    2. Other closing costs are: Appraisal fee, survey, prorated county taxes, and insurance escrow, credit report, title insurance, survey, recording fee & stamps, etc
  • Funding fee normally 2.3% but can be lower if a down payment exist.
    1. Purple Heart Recipients have a Funding fee waiver
    2. The funding cost is financed through the Loan, no need to pay at closing
  • PenFED FOUNDATION DREAM GRANTS FOR MILITARY FIRST-TIME BUYERS
    1. Pentagon Fed Credit Union Foundation offers a 2x1 matching found up to $5,000.00 toward the down payment or closing cost.  Example:  You pay $500(min) PenFed give $ 1,000

7. SELLER CONCESSIONS: Seller may provide a Concession up to 4% of the sale price that can be applied to:

  • Payment of the VA funding fee
  • Prepayment of buyer’s property taxes and insurance
  • Gifts, such as a TV or microwave
  • EXTRA POINTS to lower Interest Rates
  • Pay off credit balance or judgments on behalf of the borrower

8. OTHER USE OF VA LOANS

  • VA LOANS can also be used to build, repair, or improve a home or acquire a lot.
  • Vacation and second homes, businesses and farmland are NO ELIGIBLE
  • Refinance to reduce the interest rate or cash out is allowed
  • 4% LIMIT ON SELLER CONCESSIONS

9. BANKRUPTCY OR FORECLOSURE

  • Does not disqualify for future loans
  • Chapter 13 bankruptcy (reorganization and repayment of debt) 1-year bounce-back time
  • Chapter 7 bankruptcy (liquidation of assets and discharge of unsecured debts) 2-years bounce-back time
  • Need to re-establish credit, and maintain a record of on-time payment
  • The borrower must meet lender standards
  • “Lost” entitlement cannot be reused, unless re-pay the claim paid to the lender by the VA.

10. COMPROMISE SALE & VA LOAN BORROWER ASSITANT

  • When a servicemember can not afford the mortgage payment can either request the Assistant of the VA or apply to a COMPROMISE SALE (VA SHORT-SALE) and avoid a FORECLOSURE.

11. FAQs:

  • VA DOESN’T PROVIDE FUNDS, only guarantee a portion of the Loan (UP TO 25%) to the Lender. SEE PUBLIC LAW 116-23 (BWNVV Act)
  • Each service-member has a BORROWER’S ENTITLEMENT, that can be used up to the limit in more than one house, also when a VA Loan is paid, or the house sold the Entitlement allowance is restore.  
  • BASIC ENTITLEMENT is $36,000.00 but can go up to 25% of FHA conforming Loan Limit
  • VA does not limit loans, only a maximum that can be borrowed with a “0” down payment.
  • VA Interest Rate Reduction Loan (IRRL) enables refinancing.
  • All service members qualify but need to meet the Lenders Credit Criteria
  • VA will not pay the Mortgage if the Borrowers dies. The surviving family will have to assume the debts.
  • VA LOANS are usually the best deal, but sometimes the VA Funding Fee + lenders fee may make it the most expensive option.
  • VA LOANS does not limit the type of residential property to buy, can be a single-family, a condo, etc.
  • Visit  https://www.va.gov/housing-assistance/home-loans/loan-limits/

12. MILITARY BUYERS SHOULD:

  • Find a home that meets needs and wants
  • Look for a home that offers Better value than renting, better quality than military housing
  • Good resale or rental potential
  • Door-to-door move

13. MILITARY SELLERS SHOULD LOOK FOR:

  • Quick sale at the right price
  • Enough net sale proceeds for next home purchase
  • No need to bring cash to the closing table
  • Door-to-door move

14. PERMANENT MOVE OF STATION (PCS) PROCEDURE:

  • Orders (normally Dec-Feb to allow move before new school year), lengths and family members included being specified
  • Coordinate with the service (Navy, Army, etc) TRANSPORTATION OFFICE (TO) options, entitlements and moving expenses covered, or go www.move.mil
  • MILITARY MOVERS: Contractors to move military personal.
  • HOUSEHOLD GOODS (HHG) Weight allowance is based on Rank and dependents
  • PERSONAL PROCURED MOVES (PPM) You can Do-it-Yourself (DITY): Service Members are entitled to 95% of what the military would pay for a Government contracted mover.  Also, a PARTIAL-PPM can be arranged
  • SELECT NEW HOME: Rent or buy; contact a Local Real Estate Agent expert.

15. BASIC ALLOWANCE FOR HOUSING (BAH)

  • Monthly Allowance for authorized out-of-base living personnel
  • Base on:
    1. 95% of the local cost for rent, utilities, and renter’s insurance
    2. Rank
    3. Number of dependents
  • If BAH exceeds costs, service members keep the difference
  • BAH is received TAX-FREE
  • BAH never will be lower than the RATE received when moving to the station
  • DURING BASIC TRAINING (Boot Camp): BAH rate determinate by dependents location.
  • DUAL MILITARY COUPLES: It is safe to consider only one BAH allowance, normally the highest rank and dependents.
  • COST-OF-LIVING ADJUSTMENT (COLA): In high-cost Areas, a taxable supplement allowance is assigned.
  • SURVIVOR’S BENEFITS: 365 days of BAH will be given to dependents of a military member who dies in the line of duty.
  • BAH RATES: www.defensetravel.dod.mil/site/bah.cfm

16. DEPLOYMENT- Servicemembers Relief Act (SCRA)

  • Residential Lease: SCRA allow a lease termination when PCS or Deployment Orders will cause an absence of 90days +
  • Mortgage Payment: SCRA provided a grace period, no Foreclosure
  • IRS: Tax collection can be deferred up to 180 after the conclusion of the deployment

17. MILITARY SPOUSES & KINDS

18. ADAPTIVE HOUSING: Help for wounded warriors

  • Special Housing Adaptation Grant (SHA): Improve mobility
  • Specially Adapted Housing Grant (SAH): When the need is due to blindness or loss of an extremity
  • Temporary Residence Adaptation Grant (TRA): If temporary living in a family house.