Five
Easy Steps to a (VA) Loan.
- Apply for a Certificate of Eligibility.
A veteran who doesn't have a certificate can obtain one easily by making application on
(VA) Form 26-1880, Request for Determination of Eligibility and Available Loan Guaranty
Entitlement, to the local (VA) office.
- Decide on a home the buyer wants to buy and
sign purchase agreement.
- Order an appraisal from (VA). (Usually
this is done by the lender.) Most (VA) regional offices offer a "speed-up"
telephone appraisal system.
- Apply for your mortgage loan. While the
appraisal is being done, the lender (Houston home loan) can be gathering credit and income
information. We are authorized to do automatic processing, upon receipt of the (VA)
or (LAPP) appraised value determination, the loan can be approved and closed without
waiting for (VA's) review of the credit application. For loans that must first be approved
by (VA), we will send the application to the local (VA) office, which will notify us of
its decision.
- Close the loan and the buyer moves in.
(VA) Financing - a Good Deal for Veterans.
More than 29 million veterans and service personnel are
eligible for (VA) financing. Even though many veterans have already used their loan
benefits, it may be possible for them to buy homes again with (VA) financing using
remaining or restored loan entitlement.
1. Most important consideration, no down-payment is
required in most cases.
2. Loan maximum may be up to 100 percent of the
VA-established reasonable value of the property. Due to secondary market requirements,
however, loans generally may not exceed $203,000.
3. Flexibility of negotiating interest rates with the
lender.
4. No monthly mortgage insurance premium to pay.
5. Limitation on buyer's closing costs.
6. An appraisal which informs the buyer of property
value.
7. Thirty year loans with a choice of repayment plans:
a. Traditional fixed payment (constant principal and
interest; increases or decreases may be expected in property taxes and homeowner's
insurance coverage); b. Graduated Payment Mortgage--(GPI) (low initial payments which
gradually rise to a level payment starting in the sixth year); and
c. In some areas, Growing Equity Mortgages-(Gems) (gradually increasing payments with all
of the increase applied to principal, resulting in an early payoff of the loan).
8. For most loans for new houses, construction is
inspected at appropriate stages to ensure compliance with the approved plans, and a 1-year
warranty is required from the builder that the house is built in conformity with the
approved plans and specifications. In those cases where the builder provides an acceptable
10-year warranty plan, only a final inspection may be required.
9. An assumable mortgage, subject to (VA) approval.
10. Right to prepay loan without penalty.
11. VA performs personal loan servicing and offers
financial counseling to help veterans avoid losing their homes during temporary financial
difficulties.
What is a (VA)-guaranteed Loan.
These loans are made by Houston home loan. (VA's)
guaranty on the loan protects the lender against loss if the payments are not made, and is
intended to encourage lenders to offer veterans loans with more favorable terms. The
amount of guaranty on the loan depends on the loan amount and whether the veteran used
some entitlement previously. With the current maximum guaranty, a veteran who hasn't
previously used the benefit may be able to obtain a (VA) loan up to $203,000 depending on
the borrower's income level and the appraised value of the property.
What Can a (VA) Loan be Used For.
- To buy a home, including townhouse or condominium unit in
a (VA)-approved project.
- To build a home.
- To simultaneously purchase and improve a home.
- To improve a home by installing energy-related features
such as solar or heating/cooling systems, water heaters, insulation, weather-stripping/
caulking, storm windows/doors or other energy efficient improvements approved by the
lender and (VA). These features may be added with the purchase of an existing
welling or by refinancing a home owned and occupied by the veteran. A loan can be
increased up to $3,000 based on documented costs or up to $6,000 if the increase in the
mortgage payment is offset by the expected reduction in utility costs. A refinancing loan
may not exceed 90 percent of the appraised value plus the costs of the improvements. Check
with
- A (VA) lender for details.
- To refinance an existing home loan up to 90 percent of
the (VA)-established reasonable value or to refinance an existing VA
- loan to reduce the interest rate.
- To buy a manufactured housing and/or lot.
Who is Eligible.
Veterans with active duty service, that was not
dishonorable, during World War II and later periods are eligible for (VA) loan benefits
World War II (September 16, 1940 to July 25, 1947), Korean conflict (June 27, 1950
to January 31, 1955), and Vietnam era m(August 5, 1964 to May 7, 1975) veterans must have
at least 90 days' service. Veterans with service only during peacetime periods and active
duty military personnel must have had more than 180 days' active service. Veterans of
enlisted service which began after September 7, 1980, or officers with service beginning
after October 16, 1981, must in most cases have served at least 2 years.
Persian Gulf Conflict. Basically, reservists and
National Guard members who were activated on or after August 2, 1990, served at least 90
days and were discharged honorably are eligible. (VA) regional office personnel may assist
with eligibility questions.
Members of the Selected Reserve, including National
Guard, who are not otherwise eligible and who have completed 6 years of service and have
been honorably discharged or have completed 6 years of service and are still serving may
be eligible. The expanded eligibility for Reserves and National Guard individuals will
expire October 28, 1999. Contact the local (VA) office to find out what is needed to
establish eligibility. Reservists will pay a slightly higher funding fee than regular
veterans. (See paragraph entitled "Costs of Obtaining a (VA) Loan").
Had a VA Loan Before.
Remaining Entitlement.
Veterans who had a (VA) loan before may still have
"remaining entitlement" to use for another (VA) loan. The current amount of
entitlement available to each eligible veteran is $36,000. This was much lower in years
past and has been increased over time by changes in the law. For example, a veteran who
obtained a $25,000 loan in 1974 would have used $12,500 guaranty entitlement, the maximum
then available. Even if that loan is not paid off, the veteran could use the $23,500
difference between the $12,500 entitlement originally used and the current maximum of
$36,000 to buy another home with (VA) financing. An additional $14,750, up to a maximum
entitlement of $50,750 is available for loans above $144,000 to purchase or construct a
home.
Lenders require that a combination of the guaranty
entitlement and any cash down-payment must equal at least 25 percent of the reasonable
value or sales price of the property, whichever is less. Thus, in the example, the
veteran's $23,500 remaining entitlement would probably meet a lender's minimum guaranty
requirement for a no down-payment loan to buy a property valued at and selling for
$94,000. The veteran could also combine a down-payment with the remaining entitlement for
a larger loan amount.
Restoration of Entitlement.
Veterans can have previously-used entitlement
"restored" to purchase another home with a (VA) loan if:
- The property purchased with the prior (VA)- loan has been
sold and the loan paid in full, or
- A qualified veteran-transferee (buyer) agrees to assume
the (VA)- loan and substitute his or her entitlement for the same amount of entitlement
originally used by the veteran seller. Remaining entitlement and restoration of
entitlement can be requested through the nearest (VA) office by completing (VA)-Form
26-1880.
- The entitlement may also be restored one time only if the
veteran has repaid the prior (VA)-loan in full but has not disposed of the property
purchased with the prior (VA) loan.
How to Get a (VA) Loan.
(VA)- Appraisal - Certificate of Reasonable
Value.
The CRAVE (certificate of reasonable value) is based on
an appraiser's estimate of the value of the property to be purchased. Because the loan
amount may not exceed the CRAVE, the first step in getting a (VA)- loan is usually to
request an appraisal. Anyone (buyer, seller, real estate personnel or lender) can request
a (VA) appraisal by completing (VA) Form 26-1805, Request for Determination of Reasonable
Value. After completing the form, it can either be mailed to the Loan Guaranty Division at
the nearest (VA) office for processing or and appraisal can be requested by telephoning
the Loan Guaranty Division for assignment of an appraiser. The local (VA) office may be
contacted for information concerning its assignment procedures. The appraiser will send a
bill for his or her services to the requester according to a fee schedule approved by
(VA). To simplify things, (VA) and (HUD/FHA) (Department of Housing and Urban
Development/Federal Housing Administration) use the same appraisal forms. Also, if the
property was recently appraised under the (HUD) procedure, under certain limited
circumstances, the (HUD) conditional commitment can be converted to a (VA CRAVE). The
local (VA) office can explain how this is done.
It is important to recognize that while the (VA)
appraisal estimates the value of the property, it is not an inspection and does not
guarantee that the house is free of defects. Homebuyers should be encouraged to carefully
inspect the property themselves, or to hire a reputable inspection firm to help in this
area. VA guarantees the loan, not the condition of the property.
Application.
The application process for (VA) financing is no
different from any other type of loan. In fact, the (VA) application form is the same as
that used for (HUD/FHA) and conventional loans. The mortgage lender verifies the
applicant's income and assets, and obtains a credit report to see that other obligations
are being paid on time. If all is well and the appraised value of the property is enough
to cover the loan needed, Houston home loan, in most instances, can then close the loan
under (VA's) automatic procedure. Only about 10 percent of (VA) loan applications have to
be submitted to a (VA) office for approval before closing.
Requirements for Loan Approval.
To obtain a (VA loan), the law requires that:
- The applicant must be an eligible veteran who has
available entitlement.
- The loan must be for an eligible purpose.
- The veteran must occupy or intend to occupy the property
as a home within a reasonable period of time after closing the loan.
- The veteran must be a satisfactory credit risk.
- The income of the veteran and spouse, if any, must be
shown to be stable and sufficient to meet the mortgage payments, cover the costs of
owning a home, take care of other obligations and expenses, and have enough left
over for family support.
Costs of Obtaining a (VA) Loan.
Funding Fee.
A basic funding fee of 2.0 percent must be paid to (VA)
by all but certain exempt veterans. A down payment of 5 percent or more will reduce the
fee to 1.5 percent and a 10 percent down-payment will reduce it to 1.25 percent.
A funding fee of 2.75 percent must be paid by all
eligible Reserve/National Guard individuals. A down payment of 5 percent or more will
reduce the fee to 2.25 percent and a 10 percent down-payment will reduce it to 2.0
percent.
The funding fee for loans to refinance an existing (VA)
home loan with a new (VA) home loan to lower the existing interest rate is 0.5 percent.
Veterans who are using entitlement for a second or
subsequent time who do not make a down-payment of at least 5 percent are charged a funding
fee of 3 percent.
NOTE: For all (VA- home loans), the
funding fee may be paid in cash or it may be included in the loan.
Other Closing Costs.
Reasonable closing costs may be charged by the lender.
These costs may not be included in the loan. The following items may be paid by the
veteran purchaser, the seller, or shared. Closing costs may vary among lenders and also
throughout the nation because of differing local laws and customs.
- (VA) appraisal
- Credit report
- Loan origination fee (usually 1 percent of the loan)
- Discount points
- Title search and title insurance
- Recording fees
- State and/or local transfer taxes, if applicable
- Survey
Why a (VA) Loan. The more you know about our home loan program, the more you will
realize how little "red tape" there really is in getting a VA loan. These loans
are often made without any down-payment at all, and frequently offer lower interest rates
than ordinarily available with other kinds of loans. Aside from the veteran's certificate
of eligibility and the (VA)-assigned appraisal, the application process is not much
different than any other type of mortgage loan. The buyer's loan can be processed
and closed by the lender without waiting for (VA's) approval of the credit
application.
Additionally, under (VA's) Lender Appraisal Processing
Program (LAPP), the Houston home loan may review the appraisal completed by a
(VA)-assigned appraiser and close the loan on the basis of that review. The (LAPP) process
can further speed the time to loan closing, Texas.
Five Easy Steps to a (VA)-Home Loan.
- Apply for a Certificate of Eligibility.
A veteran who doesn't have a certificate can obtain one easily by making application on
(VA) Form 26-1880, Request for Determination of Eligibility and Available Loan Guaranty
Entitlement, to the local (VA) office.
- Decide on a home the buyer wants to buy and sign
a purchase agreement.
- Order an appraisal from (VA). (Usually
this is done by the lender.) Most (VA) regional offices offer a "speed-up"
telephone appraisal system.
- Apply to a mortgage lender for the loan.
While the appraisal is being done, the lender (mortgage company) can be gathering
credit and income information. If the lender is authorized by (VA) to do automatic
processing, upon receipt of the
- (VA or LAPP) appraised value determination, the loan can
be approved and closed without waiting for (VA's) review of the credit application. For
loans that must first be approved by (VA), the lender will send the application to the
local (VA) office, which will notify the lender of its decision.
- Close the loan and the buyer moves in.
(VA) Financing - a Good Deal for Veterans.
More than 29 million veterans and service personnel are
eligible for (VA- financing). Even though many veterans have already used their loan
benefits, it may be possible for them to buy homes again with (VA) financing using
remaining or restored loan entitlement.
Before arranging for a new mortgage to finance a home
purchase, veterans should consider some of the advantages of (VA home loans).
1. Most important consideration, no down-payment is
required in most cases.
2. Loan maximum may be up to 100 percent of the
VA-established reasonable value of the property. Due to
secondary market requirements, however, loans generally
may not exceed $203,000.
3. Flexibility of negotiating interest rates with the
lender.
4. No monthly mortgage insurance premium to pay.
5. Limitation on buyer's closing costs.
6. An appraisal which informs the buyer of property
value.
7. Thirty year loans with a choice of repayment plans:
a. Traditional fixed payment (constant principal and
interest; increases or decreases may be expected in property taxes and homeowner's
insurance coverage); b. Graduated Payment Mortgage--(GPM) (low initial payments which
gradually rise to a level payment starting in the sixth year); and c. In some areas,
Growing Equity Mortgages-(GEMs) (gradually increasing payments with all of the increase
applied to principal, resulting in an early payoff of the loan).
8. For most loans for new houses, construction is
inspected at appropriate stages to ensure compliance with the approved plans, and a 1-year
warranty is required from the builder that the house is built in conformity with the
approved plans and specifications. In those cases where the builder provides an acceptable
10-year warranty plan, only a final inspection may be required.
9. An assumable mortgage, subject to (VA-approval).
10. Right to prepay loan without penalty.
11. (VA) performs personal loan servicing and offers
financial counseling to help veterans avoid losing their homes during temporary financial
difficulties.
What is a (VA)-guaranteed Loan.
These loans are made by a lender, such as a mortgage
company, savings and loan or bank. (VA's) guaranty on the loan protects the lender against
loss if the payments are not made, and is intended to encourage lenders to offer veterans
loans with more favorable terms. The amount of guaranty on the loan depends on the loan
amount and whether the veteran used some entitlement previously. With the current maximum
guaranty, a veteran who hasn't previously used the benefit may be able to obtain a (VA-loan)
up to $203,000 depending on the borrower's income level and the appraised value of the
property. The local VA office can provide more details on guaranty and entitlement
amounts.
What Can a (VA) Loan be Used For.
- To buy a home, including townhouse or condominium unit in
a VA-approved project.
- To build a home.
- To simultaneously purchase and improve a home.
- To improve a home by installing energy-related features
such as solar or heating/cooling systems, water heaters, insulation, weather-stripping/
caulking, storm windows/doors or other energy efficient improvements approved by the
lender and (VA). These features may be added with the purchase of an existing dwelling or
by refinancing a home owned and occupied by the veteran. A loan can be increased up to
$3,000 based on documented costs or up to $6,000 if the increase in the mortgage payment
is offset by the expected reduction in utility costs. A refinancing loan may not exceed 90
percent of the appraised value plus the costs of the improvements. Check with a lender or
(VA) for details.
- To refinance an existing home loan up to 90 percent of
the (VA)-established reasonable value or to refinance an existing (VA- loan) to reduce the
interest rate.
- To buy a manufactured home and/or lot.
Who is Eligible.
Veterans with active duty service, that was not
dishonorable, during World War II and later periods are eligible for (VA) loan benefits.
World War II (September 16, 1940 to July 25, 1947), Korean conflict (June 27, 1950 to
January 31, 1955), and Vietnam era (August 5, 1964 to May 7, 1975) veterans must have at
least 90 days' service. Veterans with service only during peacetime periods and active
duty military personnel must have had more than 180 days' active service. Veterans of
enlisted service which began after September 7, 1980, or officers with service beginning
after October 16, 1981, must in most cases have served at least 2 years.
Persian Gulf Conflict. Basically, reservists and
National Guard members who were activated on or after August 2, 1990, served at least 90
days and were discharged honorably are eligible. (VA) regional office personnel may assist
with eligibility questions.
Members of the Selected Reserve, including National
Guard, who are not otherwise eligible and who have completed 6 years of service and have
been honorably discharged or have completed 6 years of service and are still serving may
be eligible. The expanded eligibility for Reserves and National Guard individuals will
expire October 28, 1999. Contact the local (VA) office to find out what is needed to
establish eligibility. Reservists will pay a slightly higher funding fee than regular
veterans. (See paragraph entitled "Costs of Obtaining a VA Loan").
Had a VA Loan Before.
Remaining Entitlement.
Veterans who had a (VA) loan before may still have
"remaining entitlement" to use for another (VA) loan. The current amount of
entitlement available to each eligible veteran is $36,000. This was much lower in years
past and has been increased over time by changes in the law. For example, a veteran who
obtained a $25,000 loan in 1974 would have used $12,500 guaranty entitlement, the maximum
then available. Even if that loan is not paid off, the veteran could use the $23,500
difference between the$12,500 entitlement originally used and the current maximum of
$36,000 to buy another home with (VA) financing. An additional $14,750, up to a maximum
entitlement of $50,750 is available for loans above $144,000 to purchase or construct a
home.
Most lenders require that a combination of the guaranty
entitlement and any cash down-payment must equal at least 25 percent of the reasonable
value or sales price of the property, whichever is less. Thus, in the example, the
veteran's $23,500 remaining entitlement would probably meet a lender's minimum guaranty
requirement for a no down-payment loan to buy a property valued at and selling for
$94,000. The veteran could also combine a down-payment with the remaining entitlement for
a larger loan amount.
Restoration of Entitlement.
Veterans can have previously-used entitlement
"restored" to purchase another home with a (VA) loan if:
- The property purchased with the prior (VA) loan has been
sold and the loan paid in full, or
- A qualified veteran-transferee (buyer) agrees to assume
the (VA) loan and substitute his or her entitlement for the same amount of entitlement
originally used by the veteran seller. Remaining entitlement and restoration of
entitlement can be requested through the nearest (VA) office by completing VA Form
26-1880.
- The entitlement may also be restored one time only if the
veteran has repaid the prior (VA) loan in full but has not
- disposed of the property
purchased with the prior (VA) loan.
How to Get a (VA) Loan.
(VA) Appraisal - Certificate of Reasonable
Value.
The (CRV)- certificate of reasonable value, is based on
an appraiser's estimate of the value of the property to be purchased. Because the loan
amount may not exceed the (CRV), the first step in getting a (VA) loan is usually to
request an appraisal. Anyone (buyer, seller, real estate personnel or lender) can request
a (VA) appraisal by completing (VA) Form 26-1805, Request for Determination of Reasonable
Value. After completing the form, it can either be mailed to the Loan Guaranty Division at
the nearest
(VA) office for processing or an appraisal can be requested by telephoning the
Loan Guaranty Division for assignment of an appraiser. The local (VA) office may be
contacted for information concerning its assignment procedures. The appraiser will send a
bill for his or her services to the requester according to a fee schedule approved by
(VA). To simplify things, (VA) and (HUD/FHA)- Department of Housing and Urban
Development/Federal Housing Administration use the same appraisal forms. Also, if the
property was recently appraised under the (HUD) procedure, under certain limited
circumstances, the (HUD) conditional commitment can be converted to a (VA)
(CRV). The
local (VA) office can explain how this is done.
It is important to recognize that while the (VA)
appraisal estimates the value of the property, it is not an inspection and does not
guarantee that the house is free of defects. Home buyers should be encouraged to carefully
inspect the property themselves, or to hire a reputable inspection firm to help in this
area. (VA) guarantees the loan, not the condition of the property.
Application.
The application process for (VA) financing is no
different from any other type of loan. In fact, the (VA) application form is the same as
that used for (HUD/FHA) and conventional loans. The mortgage lender verifies the
applicant's income and assets, and obtains a credit report to see that other obligations
are being paid on time. If all is well and the appraised value of the property is enough
to cover the loan needed, the lender, in most instances,can then close the loan under
(VA's) automatic procedure. Only about 10 percent of (VA) loan applications have to
be submitted to a (VA) office for approval before closing.
Requirements for Loan Approval.
To obtain a (VA-loan), the law requires
that:
- The applicant must be an eligible veteran who has
available
entitlement.
- The loan must be for an eligible purpose.
- The veteran must occupy or intend to occupy the property
as a home within a reasonable period of time after closing the loan.
- The veteran must be a satisfactory credit risk.
- The income of the veteran and spouse, if any, must be
shown to be stable and sufficient to meet the mortgage payments, cover the costs of owning
a home, take care of other obligations and expenses, and have enough left over
for family support.
We will be able to discuss specific income and other
qualifying requirements.
Costs of Obtaining a (VA Loan).
Funding Fee.
A basic funding fee of 2.0 percent must be paid to (VA)
by all but certain exempt veterans. A down payment of 5 percent or more will reduce the
fee to 1.5 percent and a 10 percent down-payment will reduce it to 1.25 percent. A funding
fee of 2.75 percent must be paid by all eligible Reserve/National Guard individuals. A
down payment of 5 percent or more will reduce the fee to 2.25 percent and a 10 percent
down-payment will reduce it to 2.0 percent.
The funding fee for loans to refinance an existing (VA-
home loan) with a new (VA- home loan) to lower the existing
interest rate is 0.5 percent.
Veterans who are using entitlement for a second or
subsequent time who do not make a down-payment of at least 5 percent are charged a funding
fee of 3 percent.
NOTE: For all (VA- home loans), the
funding fee may be paid in cash or it may be included in the loan.
Other Closing Costs.
Reasonable closing costs may be charged by the lender.
These costs may not be included in the loan. The following items may be paid by the
veteran purchaser, the seller, or shared. Closing costs may vary among lenders and also
throughout the nation because of differing local laws and customs.
- (VA) appraisal.
- Credit report.
- Loan origination fee (usually 1 percent of the loan).
- Discount points.
- Title search and title insurance.
- Recording fees.
- State and/or local transfer taxes, if applicable.
- Survey.
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