Tuesday April 15, 2014
 
Guidelines for using your VA certificate

VA Eligibility Guidelines

The Department of Veteran Affairs provides a guaranty, backed by the U.S. government, on VA loans made by any qualified VA mortgage lender protecting them from loss if the Veteran should default on the loan throughout the United States and its territories.

The Veteran Affair's (VA's) Home Loan Program is for active duty military personnel, veterans and certain members of the reserves and National Guard.

The VA loan program provides an outstanding product with benefits for those individuals who have served or are actively serving and meet the VA loan requirements. VA mortgage loans may be used for your primary residence only.

Benefits for obtaining a VA mortgage loan:
  1. Mortgage loans for veterans at 100% (no down payment) of the purchase price, unless purchase price is above reasonable value(appraisal).
  2. All closing cost may be paid by seller.
  3. Negotiable interest rates
  4. No Private Mortgage Insurance(PMI).
  5. The mortgage "is" assumable by other qualified buyers, making the process of selling easier.
  6. No prepayment penalties
  7. You may finance the VA's funding fee
  8. Assistance for borrowers in foreclosure or default due to temporary financial difficulty.
Drawbacks to a VA mortgage loan:
  1. You may have to pay a fee to the VA up to 5 percent depending on eligibility to acquire your mortgage loan (the average fee is 2%).
  2. If you allow someone to assume your VA mortgage loan you will lose the ability to use your VA certificate of eligibility until that mortgage note is paid off by the party assuming the mortgage loan. "Your eligibility can be restored sooner if the buyer is also a qualified veteran and is willing to substitute his/her available eligibility for that of the original veteran."
Obtaining a VA loan with a Bankruptcy:
  1. If your bankruptcy was discharged more than two years ago, it may be disregarded.
  2. If your bankruptcy was discharged within the last 1 to 2 years, the following requirements must be met:
    1. you and/or your spouse must have reestablished satisfactory credit, and
    2. the bankruptcy was caused by circumstances beyond your and/or your spouses control (such as unemployment, medical bills, etc.)
  3. If your bankruptcy was discharged within the past 12 months, it will generally not be possible to determine whether your a satisfactory credit risks.
Veterans Affairs (VA) Mortgage Loan limits 2013

The basic entitlement for a VA mortgage loan is $36,000. For mortgage loans that exceed $144,000 on a purchase or construction, additional entitlement may be available up to an amount equal to 25 percent of the Freddie Mac conforming loan limit for a single family home.

The conforming mortgage loan limits for 2013 are $417,000 ($625,500 for Hawaii, Alaska, Guam and U.S. Virgin Islands). This means that qualified veterans can receive a no down payment purchase up to these loan limits.

The veterans affair fee is currently just over two percent on no down payment loans for a first-time use. The funding fee for second time users who do not make a down payment is over three percent.

The basic idea behind the higher fee for second time users is based on two reasons.  One is the fact these veterans have previously used their benefit once already, and second they've had a chance to accumulate equity or save money towards a down payment on their next house.

Percent Down Veteran Fee National Guard Reserve Fee
0% to 4.99% 2.15% 2.40%
5% to 9.99% 1.50% 1.75%
10% and up 1.25% 1.50%
  1. Second use with less than 5% down requires 3.3% funding fee.
  2. No funding fee is required if you are a disabled veteran.
  3. The funding fee may be financed into the mortgage loan.

For 2013 VA county mortgage loan limits for high-cost counties
click here

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