VA things to know!

Useful information that service members need to know about VA Loans:

Your VA loan is reusable. You can use your full VA entitlement over and over again as long as you pay off the previous loan each time.

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VA loans are for Owner Occupants on primary residences only. Since VA loans are for primary residences, The property must be ready for occupancy, not a home needing rehab work. Veterans looking to purchase investment property, fix-up property or vacation homes will have to let us know what their goals are and we will advise you on loan programs available.

They’re not issued by the VA. The VA isn’t in the business of issuing home loans. Instead, the agency provides a guaranty on each qualified mortgage loan.

Guaranteed by the government. If you have a VA entitlement, the agency guarantees up to a quarter of the loan amount. The guaranty gives lenders confidence and helps service members to secure great terms and rates.

Are they available after foreclosure or bankruptcy. Service members with a bankruptcy in their history or whom lost a home to foreclosure can secure a VA loan. Even borrowers who have had a VA loan foreclosed on can still utilize their home loan benefit.

VA loans do come with a mandatory fee. All those great benefits come with a cost: the VA Funding Fee. This fee (usually about 2 percent of the loan amount) helps the VA keep the program going and is required on both purchase and refinance loans. It can be rolled into the loan amount or may be waived entirely for those with service-connected disabilities.

They do have restrictions on who can be a co-borrower. Some loan programs have few restrictions as to who can be a co-borrower. That’s not the case with the VA loan program. The only acceptable co-borrower is your spouse or another eligible veteran who will live in the home with you.

The BIG advantage of a VA loan is that they don’t require mortgage insurance. Mortgage insurance is a monthly fee borrowers of other programs pay but not required on a VA loan.  For instance, an FHA loan requires 1.35% of the annual loan amount to be paid as mortgage insurance.  This is on top of the principal and interest payment and is due for the life of the loan.  For example an FHA loan with a balance of $250,000 would likely have a monthly mortgage insurance payment of more than $200.  This is a huge savings to the Veteran and may allow the Veteran to purchase in a higher price range than borrowers using other loan programs.

Conventional loans typically charge mortgage insurance on loans where the borrower is putting less than 20 percent down. For Instance, a $250,000 purchase would typically call for $50,000 as down payment to avoid either up front or monthly mortgage insurance.

The VA’s guaranty eliminates the need for any mortgage insurance or mortgage insurance premium, helping borrowers save even more money each month.

They don’t have a prepayment penalty. You can make extra payments any time you want, saving large amounts in interest over the life of your loan. You can even structure your payments to automatically deduct a little extra every month. Just an extra $100 per month can shave years and tens of thousands of dollars from the balance.

Would you like to get Pre-Approved?

 

Take just a moment and email me for a Quick Application.  I will let you know how much you qualify for–then you can start working with the Realtor.

Are you a Veteran?  CLICK HERE

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godzilla02

“Mortgage Monster … or Mortgage Mastermind?”

                       ToddZillaLoans.com 

Cornerstone Home Lending, Inc.      Branch  NMLS # 1224262

Todd McManigal   505-918-1028                    NMLS # 267557

                tmcmanigal@houseloan.com

 

 

 

 

Guaranty v. Guarantee: Does Every Veteran Automatically Get a VA Home Loan?

When considering a VA loan, there is some confusion between the VA Guaranty and the word guarantee.

A guaranty is issued when someone other than the borrower agrees to pay  for the borrower’s debt in the event that person defaults. It is similar with VA loans, the guaranty is the VA’s promise to repay a portion of the loan if you, the Veteran defaults. That financial pledge helps gives lenders the confidence to extend financing to qualified veterans with no money down.

But the VA guaranty doesn’t mean veterans and active military members are guaranteed a home loan. There is nothing guaranteed when it comes to qualifying for a mortgage, even for those who have proudly served our country.

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No Guarantee

The VA program is an incredible benefit meant to honor the service and sacrifice of military members and their families.  For nearly 70-years, the VA loan program has helped open the doors of homeownership to more than 20 million military borrowers.  Some of the major benefits of VA loans include:
1.  The ability to purchase with no money down
2.  No need for private mortgage insurance, which is required for other loan types unless you put down at least 20 percent
3.  More flexible and forgiving credit and income requirements
4.  Competitive interest rates that are often lower than conventional and FHA rates
5.  Fewer closing costs than other loans
These benefits are possible because the VA promises to repay at least a quarter of the loan amount if one of its borrowers defaults on the mortgage. The VA itself does not actually make home loans. It relies on private mortgage lenders to extend financing to military borrowers who meet both lender guidelines and the VA’s requirements.
Despite the VA guaranty, lenders are still responsible for the majority of the loan should the veteran default. As a result, VA-approved lenders will have their own requirements for a mortgage, many of which go beyond what the VA wants to see.

Credit scores are perhaps the most common example. The VA doesn’t require borrowers to hit any specific credit score in order to participate in the program. You simply need to be deemed a “satisfactory credit risk”.  This is demonstrated by a history of making on-time payments. But lenders are going to have a minimum qualifying score, in part because credit scores are indicators of your willingness and ability to repay debt.

Best Available Loan Program

Mortgage lenders would like to repay every service member or Veteran with a mortgage loan, but as much as they might like to extend credit to veterans and military families, mortgage lenders can’t simply give loans to everyone wants one.

A mortgage is a significant financial outlay, and lenders who make loans to borrowers whom can’t pay them back don’t stay in business very long.
It’s important to remember that even though there’s no guarantee when it comes to VA loans, these government-backed mortgages are often the only way veterans and military borrowers can make homeownership a reality. FHA and Conventional loan types will require some manner of down payment and often have higher credit score requirements than VA lenders.
So while there’s no guarantee, VA loans often represent the best available loan program for military borrowers looking to purchase a home.

                     Equal Opp Lender Logo

godzilla02

“Mortgage Monster … or Mortgage Mastermind?” 

ToddZillaLoans.com   

Cornerstone Home Lending, Inc.   Branch NMLS # 1224262

Todd McManigal   505-918-1028                     NMLS # 267557

tmcmanigal@houseloan.com

How Much Home Can I Afford?

For most of us, especially first time home buyers, we want to know “How much home can I afford?”  While this process seems daunting, it comes down to simple math.

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Call me or email me at tmcmanigal@houseloan.com for a quick calculation.

The factors that we consider in this calculation are annual income, existing debt payments, proposed property taxes and hazard insurance, down payment ( if any), interest rate and proposed term of loan.

 

Getting Pre-Approved

The first step toward securing your loan is getting pre-approved. This involves a pre-qualification process, where  we assess your financial situation and determine how much you qualify for.  Once this is complete, we work together to submit a completed loan application to the lender for approval.

This process seems like a hassle but it is actually quick and painless.

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godzilla02

“Mortgage Monster … or Mortgage Mastermind?”

ToddZillaLoans.com

Cornerstone Home Lending, Inc.           Branch NMLS # 1224262

Todd McManigal   505-918-1028                        NMLS # 267557

tmcmanigal@houseloan.com