Category Archives: VA Loans

VA Loans are still 100% financing and no monthly mortgage insurance. This ensures a low payment and higher purchasing power.

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.

FHA-VA-Mortgage

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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“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.

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“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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“Mortgage Monster … or Mortgage Mastermind?”

ToddZillaLoans.com

Cornerstone Home Lending, Inc.           Branch NMLS # 1224262

Todd McManigal   505-918-1028                        NMLS # 267557

tmcmanigal@houseloan.com

 

 

 

Advantages of a VA Loan

Advantages of a VA Loan:

No Down Payment Necessary.

Traditional loans typically require a buyer to provide a minimum of 3.5% to 5% percent of the home’s price as a down payment — and with today’s stricter lending environment that down payment can reach even 15 or 20 percent.

For many first-time home buyers, down payment can come from cash savings or from a gift from family.  Either way, supplying this amount of money upfront may keep renters renting for a long period of time.

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The VA Loan is one of the few programs in the country that does not require a down payment. Of course, borrowers who would like to lower their monthly payments are still able and encouraged to make a down payment that’s comfortable for them.

Less Stringent Qualifying.   

Many first-time home buyers might not yet have a strong credit history, which can make it more difficult to obtain approval for a mortgage or qualify for an affordable interest rate. Since the VA Loan is government-backed, VA Loans are easier to qualify for at competitive rates.

Lower Monthly Payments.

Since VA Loans don’t require the added monthly expense of private mortgage insurance (PMI), they tend to leave more money in your pocket each month and give you more buying power.

In addition, the competitive VA Loan rates can save a typical buyer thousands over the lifespan of the loan.  Advantage Veteran!

 

Additional Benefits to a VA Loan  (BAH) Basic Allowance for Housing

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Cornerstone Home Lending, Inc.   Branch  NMLS # 1224262

Todd McManigal   505-918-1028   NMLS # 267557

tmcmanigal@houseloan.com

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“Mortgage Monster…or Mortgage Mastermind?”

 

Spouses and Occupancy

The VA allows for a spouse to fulfill the occupancy requirement for an active duty military member who is deployed or who cannot otherwise live at the property within a reasonable time.

Unique situations may arise where the spouse of a veteran can fulfill the requirement if employment issues are making reasonable occupancy difficult.

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Deployed service members, both single and married,can provide what the agency considers “valid intent” to occupy. This applies when they’re deployed from their permanent duty station. This provides a degree of necessary flexibility for homeowners who are  actively serving our nation both at home and abroad.

It’s important to note that VA lenders are required to factor in the cost of a couple’s separate living arrangement. That means any rental costs or other expenses associated with the separate housing situations can be factored into the overall debt-to-income ratio and other key metrics.

There is an additional special feature for VA Streamline refinance loans. In these cases, veterans only have to certify that they previously occupied the home. For example, a veteran who buys a home with a VA loan and then gets transferred overseas can rent out the home and still refinance that existing mortgage based on prior occupancy.

 

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“Mortgage Monster … or Mortgage Mastermind?”

                              ToddZillaLoans.com

Cornerstone Home Lending, Inc.  NMLS # 1224262

Todd McManigal    505-918-1028    NMLS # 267557

 tmcmanigal@houseloan.com

VA Occupancy Requirements

VA loans are Owner Occupied loans, meaning  borrowers are expected to live in the properties they purchase.

For most borrowers, that is not a problem, but the issue of occupancy is important, and can cause confusion.  This is especially true for first-time home buyers.

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While VA loans are flexible, government-backed loans, Veterans can’t use one to purchase investment properties or vacation homes. Nevertheless,  the advantages of a VA home loan typically make it the best loan available.

Because VA loans are meant for the purchase or refinance of the borrower’s primary residence, the VA has developed occupancy requirements to ensure owner occupied home ownership.

Occupancy Requirements

Veterans and active duty personnel who secure a VA loan must certify that they intend to personally occupy the property as a primary residence. As a result, home buyers typically have 60 days to occupy the home after the loan closes.  The agency considers this a “reasonable time”.

Occasionally, buyers may find that two months isn’t enough time. The VA does allow homeowners to go beyond that 60-day mark under certain circumstances, however, occupancy at a date beyond one year is generally unacceptable.

Occupancy rules can be especially important for active duty personnel.

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“Mortgage Monster … or Mortgage Mastermind?”

ToddZillaLoans.com

tmcmanigal@houseloan.com

American Mortgage & Equity Consultants, Inc.  NMLS # 150953

Todd McManigal  505-918-1028   NMLS # 267557

Veterans Housing Dreams Fulfilled Here!

Many years ago the real estate industry coined the phrase “The American Dream” when encouraging families to own their own home.

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VA Loan Specialist Make dream possible!

Today, that dream is still alive.  Low interest rates and steady home prices have helped people who have rented most of their lives to step forward and become proud homeowners.

Sometime during WWII, the US Government noticed that while many families did indeed become homeowners, It was difficult for Veterans to do the same.   Welcome to the VA Loan!

Now more than ever, Veterans can leave their landlords behind to accept the keys to their own home.

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Get your keys right here!

The VA Loan still has a zero down payment, lower monthly payments due to no MIP and you can purchase in any desired location with no income limits or special qualifying.

The VA Loan is our passion!  It brings great satisfaction to us every time we assist a family achieve their dreams.

GET MORE INFORMATION HERE or simply email Todd at todd.mcmanigal@amecinc.org

How Much Are You Eligible For with your VA Loan?

Basic Allowance for Housing, or BAH, is paid monthly to eligible service members when government housing isn’t available. Lenders can count BAH as effective income and use it to help calculate how much a borrower can spend on housing each month.

The amount a veteran receives for BAH is based on rank, years of service, dependent status and location.

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In general, service members with higher ranks and more years of service receive more money each month for BAH, though there are exceptions. Rates also tend to be higher in major metropolitan areas or regions with higher costs of living.

BAH rates are set annually. If you decide to spend less on housing than your eligible rate, you can use the difference for other expenses. However, if your housing costs exceed the predetermined BAH rate, you’ll need to make up the difference yourself.

GET PRE-APPROVED FREE!

 

 

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American Mortgage & Equity Consultants, Inc.  NMLS # 150953

Todd McManigal   505-918-1028   or 303-378-1272                               NMLS # 267557

todd.mcmanigal@amecinc.org

Explaining the VA’s Standard for Residual Income

Despite the fact that the majority of VA loans are completed with zero down payment, they continue to be one of the safest lending program available today.

One reason for this success is a unique income standard that aims to ensure veterans can handle the financial burden of a new mortgage payment.

This standard is called residual income.

Monthly Leftovers

Residual income applies only to VA loans.

Basically, residual income is how much money you have left over each month after all of your major expenses are paid. Those leftovers cover typical family needs like gas, food, clothing and utilities.

The VA wants to know that veterans have enough residual income to comfortably run the household financially.  A mortgage payment can put a significant strain on family finances. So prospective VA home buyers must have a minimum amount of residual income depending on where they live and how many people live in the home.

Here’s a look at the VA’s residual income break down:

Table of Residual Incomes by Region

For loan amounts of $80,000 and above

Family Size Northeast Midwest South West

1

$450

$441

$441

$491

2

$755

$738

$738

$823

3

$909

$889

$889

$990

4

   $1,025

   $1,003

   $1,003

   $1,117

5

  $1062

   $1,039

   $1,039

   $1,158

over 5

Add $80 for each additional member up to a family of seven

So, as an example, a Colorado family of four must have at least $1,117 in residual income each month. The standards are higher on the coasts, where the cost of living is typically more expensive.

Additionally, if a family’s debt-to-income ratio is above 41% the residual income requirement increases by 20%.  So for the same Colorado family of four, if the DTI ratio is 42% the residual income requirement would increase to $1,340.

Failing to meet the residual income standard isn’t supposed to result in automatic rejection of a loan application, but it can certainly be a deal breaker. This is a non-negotiable requirement.

How to Count Overtime Income Towards a VA Home Loan

Income isn’t everything when it comes to getting a VA home loan, but it’s a pretty important factor. Obviously, you have to be able to afford the monthly mortgage payments and have enough money left over each month to take care of regular expenses (better known as residual income).

Lenders will want to make sure the money you’re bringing home is stable, reliable and likely to continue. Otherwise, banks and lending institutions won’t count it as “effective income,” meaning it won’t actually count toward mortgage qualification. For example, disability income, child support income, basic allowance for housing (BAH) and overtime can all be counted.

How income is counted may vary due to the type of income reported. Certain sources like child support and overtime are acceptable, but VA borrowers will often need a paper trail documenting their history and must prove the income stream will continue.

Let’s take a closer look at overtime income and what you’ll need in order to have it count toward qualifying for a VA home loan.

Overtime Income

For lenders, it’s about consistency and stability. There are typically two major concerns when it comes to overtime income:

  • Is the borrower guaranteed, required or allowed to work those extra hours?
  • Has the borrower shown an ability to work all those extra hours?

You may wonder why a lender may want to know if you have the ability to work the extra hours, but it’s vitally important.  Lenders want to make sure you can handle the additional workload.  Not everyone is cut out for 60-hour workweeks, leading some to burnout in time.  If this happens, workers tend to ask for and receive less overtime which may make it difficult to make the monthly mortgage payments.

So how do you ease a lender’s mind and get them to count your overtime income? Generally, you’ll need at least a two-year history of receiving that income to make it work, even if your employer confirms the overtime is guaranteed.  Of course, there are some exceptions that can vary by the individual borrower.

Overtime Exceptions

As in life, there are exceptions to most every rule.  For example, let’s say you’re close to having 24 consecutive months of overtime, maybe 20 months.  Underwriting  may be able to calculate your average overtime over the last two years and use the figure, which obviously will be less than what you would have if it was a full 24 months.

People who work a lot of hours but have irregular schedules from one week to the next can also be eligible before the two-year mark. Firefighters and nurses are  good examples . If you work 88 hours one week and then have the next week off, that’s 44 hours in a pay period. In these cases, a VA borrower may be able to count their overtime income with just a year’s worth of tax returns.  Underwriting may consider other factors to offer a final decision on the loan.

Overtime can be tricky.  If you don’t have a 24-month history of overtime with a single employer. but you’re working overtime consistently at both, a lender may be able to count it as long as the income is likely to continue.  Again this is a case by case scenario and Underwriting may consider other factors before offering a final decision on the loan.

As with so many employment issues, each borrower’s situation is different. Lenders will hasten to make broad generalizations because everyone’s employment circumstances are so unique.

If you’re unsure how your employment or overtime situation stacks up, talk with a VA Loan Pro specialist at 505-918-1028. They can let you know what might be possible.

 GET PRE-APPROVED FREE!

 

 

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American Mortgage & Equity Consultants, Inc.  NMLS # 150953

Todd McManigal   505-918-1028   or 303-378-1272                               NMLS # 267557

todd.mcmanigal@amecinc.org