| Q:
Does my entitlement guarantee that I will get a home loan?
A:
No, VA cannot compel a lender to make a loan that would
violate their lender policies. Lenders must also comply
with VA income and credit standards. If a lender is
unwilling to make a loan to you, we can only suggest
that you try other lenders.
Q:
How much is my entitlement?
A:
Your basic entitlement is $36,000. For loans
in excess of $144,000 to purchase or construct a home,
additional entitlement up to an amount equal to 25 percent
of the Freddie Mac conforming loan limit for a single
family home may be available. This loan limit can change
yearly. The conforming loan limit for 2008 is $417,000
($625,500 for Hawaii, Alaska, Guam and U.S. Virgin Islands).
This means that qualified veterans could get a no down
payment purchase loan for those amounts.
Q:
How do I get a Certificate of Eligibility?
A:
ACE (automated certificate of eligibility): It may be
possible to obtain a Certificate of Eligibility from
your lender. Most lenders have access to the ACE system.
This Internet based application can establish eligibility
and issue an online Certificate of Eligibility in a
matter of seconds. Not all cases can be processed through
ACE - only those for which VA has sufficient data in
our records. However, veterans are encouraged to ask
their lenders about this method of obtaining a certificate.
You
can apply for a Certificate of Eligibility by submitting
a completed VA Form 26-1880, Request For A Certificate
of Eligibility , to the Winston-Salem Eligibility Center,
along with proof of military service. In some cases
it may be possible for VA to establish eligibility without
your proof of service. However, to avoid any possible
delays, it's best to provide such evidence.
Q:
How do I obtain a VA Home Loan?
A:
Here are the steps:
* Select a home and discuss the purchase with the seller
or selling agent. Sign a purchase contract conditioned
on approval of your VA home loan.
* Select a lender, present them with your Certificate
of Eligibility and complete a loan application.
* The lender will develop all credit and income information.
They will also request VA to assign a licensed appraiser
to determine the reasonable value for the property.
A Certificate of Reasonable Value will be issued. Note:
You may be required to pay for the credit report and
appraisal unless the seller agrees to pay.
* The lender will let you know the decision on the loan.
You should be approved if the established value and
your credit and income are acceptable.
* You (and spouse) attend the loan closing. The lender
or closing attorney will explain the loan terms and
requirements as well as where and how to make the monthly
payments. Sign the note, mortgage, and other related
papers.
* The loan is sent to VA for guaranty. Your Certificate
of Eligibility is annotated to reflect the use of entitlement
and returned to you.
Q:
What are the benefits of a VA home loan?
A:
There are many benefits of a VA Home loan:
* Equal opportunity.
* No down payment (unless required by the lender or
the purchase price is more than the reasonable value
of the property).
* Buyer informed of reasonable value.
* Negotiable interest rate.
* Ability to finance the VA funding fee (plus reduced
funding fees with a down payment of at least 5% and
exemption for veterans receiving VA compensation).
* Closing costs are comparable with other financing
types (and may be lower).
* No mortgage insurance premiums.
* An assumable mortgage.
* Right to prepay without penalty.
* For homes inspected by VA during construction, a warranty
from builder and assistance from VA to obtain cooperation
of builder.
* VA assistance to veteran borrowers in default due
to temporary financial difficulty.
Q:
What can VA not do?
A:
Guarantee that a home is free of defects. VA
guarantees only the loan. It is your responsibility
to assure that you are satisfied with the property being
purchased. The VA appraisal is not intended to be an
"inspection" of the property. You should seek
expert advice (a qualified residential inspection service),
as necessary, BEFORE legally committing to a purchase
agreement.
If
you have a home built, VA cannot compel the builder
to correct construction defects although VA does have
the authority to suspend a builder from further participation
in the home loan program.
VA
cannot guarantee that you are making a good investment.
VA cannot provide you with legal services.
Q:
Is a guaranteed loan a gift?
A:
No, it must be repaid, just as you must repay any money
you borrow. If you fail to make the payments you agreed
to make, you may lose your home through foreclosure.
Q:
Can I get a loan for a home outside of the United States?
A:
Unfortunately, the law only allows VA to guarantee loans
on property in the United States, its territories, or
possessions.
Q:
Can I get a VA loan if I have had a bankruptcy in the
last few years?
A:
The fact you and/or your spouse have been adjudicated
bankrupt does not in itself disqualify you for a VA
home loan. The following rules apply:
* If the bankruptcy was discharged more than 2 years
ago, it may be disregarded
* If the bankruptcy was discharged within the last 1
to 2 years, it is probably not possible to determine
that you and/or your spouse are a satisfactory credit
risk unless both of the following requirements are met:
.....- you and/or your
spouse have reestablished satisfactory credit, and
.....- the bankruptcy was
caused by circumstances beyond your and/or your spouses
control (such as unemployment, medical bills, etc.)
* If the bankruptcy was discharged within the past 12
months, it will not generally be possible to determine
that you and/or your spouse are satisfactory credit
risks.
Q:
Why do I have to pay a fee for a VA home loan? Since
I paid a fee for my first loan, why is there a larger
fee for my second loan?
A:
The VA funding fee is required by law. The fee is intended
to enable the veteran who obtains a VA home loan to
contribute toward the cost of this benefit, and thereby
reduce the cost to taxpayers. The funding fee for second
time users who do not make a down payment is slightly
higher. The idea of a higher fee for second time use
is based on the fact that these veterans have already
had a chance to use the benefit once, and also that
prior users have had time to accumulate equity or save
money towards a down payment. Second time users who
make a down payment of at least 5 percent pay a reduced
funding fee of 1.5 percent, the same as first time users
making the same down payment. For a 10 percent down
payment, the fee drops to 1.25 percent. The effect of
the funding fee on a veteran's financial situation is
minimized since the fee may be financed in the loan.
National Guard and Reservist veterans pay a slightly
higher funding fee percentage. To determine the exact
funding fee percentage, please review the funding fee
table.
Q:
I want to buy a house with a VA loan. Do I need to occupy
the property?
A:
The law requires that you certify that
you intend to occupy the property as your home. This
requirement is considered satisfied if you actually
intend to occupy the property as your home and in fact
so occupy it when the loan is closed or within a reasonable
time afterward.
Q:
I am a single veteran stationed overseas and want to
buy a home in my home town. My friends who are married
can do this with their spouses occupying the property
in their place, but VA says I can't do this with my
parents or other relatives occupying on my behalf. Isn't
this discrimination against single veterans?
A:
The law specifically provides that occupancy by the
veteran's spouse satisfies the personal occupancy requirement.
The law makes no provision for occupancy by any other
relatives as a substitute for personal occupancy by
the veteran.
Q:
May a veteran join with a non veteran who is not his
or her spouse in obtaining a VA loan?
A:
Yes, but the guaranty is based only
on the veteran's portion of the loan. The guaranty cannot
cover the nonveteran's part of the loan. Consult lenders
to determine whether they would be willing to accept
applications for joint loans of this type. Lenders that
are willing to make these types of loans will likely
require a down payment to cover risk on the unguaranteed,
nonveteran's portion of the loan. Unlike other loans,
the lender must submit joint loans to VA for approval
before they are made.
Both
incomes can be used to qualify for the loan. However,
the veteran's income must be sufficient to repay at
least that portion of the loan related to the veteran's
interest in (portion of) the property and the nonveteran's
income must be adequate to cover the rest.
Q:
If a veteran dies before the loan is paid off, will
the VA guaranty pay off the balance of the loan?
A:
No. The surviving spouse or other co-borrower
must continue to make the payments. If there is no CO-borrower,
the loan becomes the obligation of the veteran's estate.
Mortgage life insurance is available but must be purchased
from private insurance sources.
Your
California, Nevada and Oregon VA Specialist is:
Dan Sherbondy Dan@dantheloanman.com
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