VA Loans Vancouver Washington
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Having worked with Veterans in Portland, OR and Vancouver, WA for 14 years these are some most common questions I hear.
Why do so many Lenders and Realtors try to deter you from going VA?A Loan Officer has a learning curve of about two years to properly close a VA Loan. Many Loan Officers and Lenders do not want to put in this amount of time and effort just to learn a VA Home Loan. Sometimes you may experience a Lender telling you they know how to do a VA Loan but really they do not. This will usually result in you, the Veteran, becoming very frustrated because the process will take much longer than is needed and it will never seem organized. The biggest draw-back is that those Lenders who do not know VA Loans will also try their best to convince you that VA is not the way to go. This is not true. When it comes to 100% financing there are no Home Loans that beat the terms and monthly payments of a VA Loan. Some may argue that they can beat the payment which may be true but you will find yourself in a short-term Interest Only loan that you will have to refinance out of in a few years. In short, if you are ever told that VA is not the way to go, be very cautious! The person, either Lender or Realtor, probably has never done a VA loan before or has heard rumors that they are hard to do! This is not true if you are working with an experienced person like myself. There are very few cases where VA is not the way to go such as if you know you will be moving within three to five years. In this case an Adjustable Rate Mortgage or possibly an Interest Only Loan would be appropriate. But this is only if you know for sure you will be moving. VA has Adjustable Rate Mortgages for three and five years which would be a great option in this situation. The VA AppraisalOne of the biggest arguments I get when it comes to VA Loans is about the Appraisal Many times people will say that the Appraisal will come in under the sales price or with repairs that will upset the seller. When this is brought up in conversation chances are someone is trying to convince you to not go VA. Once again, be very cautious! If you choose to not go VA based on what you are told by a Lender or Realtor it will cost you a great deal of money. The reason why is because you will be put into a Loan that has Mortgage Insurance, which I explain later, or you will be put into a Loan that has a higher interest rate. On the average it will cost you $75 to $150 more a month in payment. This is the price you will pay to make your home purchase easier for your Lender or Realtor because they don't know how to do a VA Loan. The appraisal appears as a problem to many because of how the VA has set-up the appraisal system. Keep in mind that very few times does a VA Appraisal come in under value. In seven years it has only happened to me four times. Each Loan still closed though. But just so you know, here is how it works. When you find a home and get an accepted offer I will contact the VA over the internet and they will assign me a VA appraiser for your home. Every home is only assigned one VA Appraiser. So if you are assigned one that someone doesn't like it cannot be changed unless a formal complaint is made, usually by the Veteran, and the VA chooses to side with the Veteran. A VA appraiser is just a normal appraiser who you can find in the yellow pages under Real Estate Appraisers. A VA appraiser is an Appraiser who has chosen to apply with the VA to become contracted with the VA. Not just any Appraiser can become a VA Appraiser. The VA has strict experience and business references requirements. You have to know what you are doing to say the least. Once the Appraiser has been assigned by the VA the VA Appraiser has a 10 day time frame to complete the Appraisal. Many times it is done faster. The rumor has it that a VA Appraisal takes many weeks. Not true. I usually get them within a week or so unless rates are so low that everyone is refinancing and Lenders cannot keep up with the increased business. This happened few years back when rates dropped into the high fours. This is no longer an issue and probably will never be again. If the VA Appraiser is having difficulty coming up with the value needed to support the sales price they are required to contact us and give us 48 hours to prove our case. This means we have a small window of time to prove that the value of the home is supported by comparable sales. (For Realtors who are reading this, the VA does not show a great deal of concern on distance of comps to the subject property. Just as long as the comps are very similar.) Do you qualify for a VA Loan?Active Duty components must have a minimum of two years time in service. Reserve and National Guard must have six years time in service. If your Reserve or National Guard unit has been mobilized to active duty and you have less than six years time in service, you quality for a VA Loan. If you were discharged from the military for reason other than your enlistment contract terminating and are unsure if you qualify, call us and we will find out for you! What is the advantage of a VA Home Loan?The VA will allow you to finance 100% of the sales price when purchasing a home. With a VA Home Loan you do not pay mortgage insurance. The VA Home Loan is the only 100% financing option available that allows lower interest rates and no mortgage insurance. What is Mortgage Insurance?Just like auto insurance insures your car or truck in case of an accident, mortgage insurance insures your mortgage in case of foreclosure. For example, lets say you bought a home for $100,000 and had 100% financing. After a few years of making payments, you now owe approximately $90,000. At that time something happened, job loss etc., and the lender foreclosed on your home. The lender would try to resell your home as fast as possible. The lender knows they can resell your home, for 80% of what it is worth, in a very short time. The lender is successful with the resell and they receive $80,000. So what happens to the remaining $10,000 you still owe? Mortgage insurance pays the $10,000. Many people dislike paying mortgage insurance because the chance of their home being foreclosed on is extremely small. Just like you and me, if we were lending someone enough money to buy a home, we would want to be insured that we would get our money back if our borrowers did not pay. As a Veteran, the VA is our insurance. The VA pays the Lender back if they lose money from a foreclosure. What is the first step to getting approved?The first step is to contact us. Fill out the information on the apply online page and we can pre-approve you within 24 hours. Feel free to contact us as well at 1-866-906-7276 toll free. We will also be contacting you to set a time for when we can meet. Here is what we will need from you: Copy of your DD214 or Retirement Points Approval ProcessYour approval will be based upon your monthly debt, income, and credit. Once we have reviewed your monthly debt and income we will get you certified with the VA. Once that is complete and we have an approval from the lender it's time to go shopping for a home! Normally, we can complete the process within a day or two. Sometimes there are a few things to work out but you will be kept informed and know exactly what is happening from day to day. If for any reason you feel as though you cannot get approved, please contact us anyway. We will at least want to let you know what you have to do in order to get approved. This will allow you to have a plan to follow so that you will know what needs to be done to get a loan in the future. Can I use any Lender to get qualified?Yes, you can use any Lender you like if you are purchasing or refinancing a home in Portland, OR or Vancouver, WA. You will find that some Lenders, Banks and Credit Unions do not do VA Loans so it is best to call first before taking the time to go see them. Do I have to use a Lender in the state I am buying a home?No. If you are buying a home in Portland, OR you may use a Lender in Vancouver, WA. If you are buying a home in Vancouver, WA you may use a Lender in Portland, OR. If the property is in Portland, OR or Vancouver, WA you can use a Lender from either state. The Lender just needs to be licensed in the state you plan to buy. How do I get a copy of my DD214 so I can get a VA Loan?How to obtain a copy of your DD214You must have your DD214 if you want to get a VA Loan. Many Veterans have lost their DD214 or simply can't remember where they put it. Here's a tip on a place to look for it, check inside an old Bible you've had for years. Sounds like an odd place but it seems to be one of the most common places Veterans put it when they get out. If you still can't find it go to the following website; http://www.archives.gov/veterans/military-service-records/ Once you get there go to "Launch the eVetRecs System to start your request Online". Another suggestion would be to print out the SF-180 and mail it in. This is located on the same website right next to the online form. Do both of these processes to ensure that you get it. It does not take months to get a copy. It will normally take about three to four weeks. Believe it or not, it's pretty fast. Statement of Service in place of a DD214If you are on active duty you probably don't have a copy of your DD214. In this case you will need a Statement of Service which just needs to signed by your Company Commander. The Statement of Service can be completed on your computer and must have your name, social, rank, date of service and that you are still in the military. Make sure it's printed out on your unit letterhead and have it signed and your Lender can get your Certificate of Eligibility with it. What question to ask if you are declined a VA Home LoanDepending on your past credit history and your current monthly income it is possible to get different answers with each Lender you talk to when it comes to qualifying for a VA Home Loan. The VA has set requirements in place for the Loans they will guarantee or approve. Those requirements are followed by Lenders and they can be added too by each Lender. This means that if a Lender sells their Loans on the secondary market, which most do, the investors on the secondary market can say "we require more from the Veterans we will lend to so we are going to add more requirements". This is why one Lender may tell you that you qualify and another Lender may say you do not qualify. These requirements are either Lender specific or industry standard. Lender specific requirementsThese requirements are items that a specific Lender needs to qualify you for a VA Loan based on either their own portfolio, their own money, or their investors. This could be something like additional cash in savings to show you handle money well or even something like a 24 month rental history compared to a 12 month rental history. These are just two examples of many that Lenders can require. A Lender can add as many requirements to approving a VA Loan as they want, they just can't reduce or take away from the requirements the VA has in place. They must at least meet the minimum requirements the VA has or the Loan will not be guaranteed by the VA. Industry standard requirementsAn industry standard requirement is one that regardless of which Lender you talk to all Lenders will have the same answer. For example, every Lender requires 30 days of pay stubs and the last 2 years of W-2's to qualify any Veteran for a VA Loan. No matter which Lender you talk to this is required which makes these examples an industry standard. If you get declined a VA Loan it may be a decline based on an industry standard so no matter how many Lenders you talk to you will not get approved. If you get declined a VA Loan it may be a Lender specific requirement that you may not be able to meet with that Lender so if you continue to shop around you might find a Lender that will approve you. Conclusion: If you are declined a VA Loan you should ask the Lender if it is because of a Lender specific requirement or an industry standard requirement. Regardless of the answer you get you should always get a second opinion from another Lender. Sellers can pay off some of your debt to qualify you for a VA loanBig Advantage to VA LoansA very big advantage with a VA loan is that a seller is allowed to pay off some of your debt in order to qualify you for the loan. We're not talking huge numbers here but we are talking numbers that could make a difference between being approved or denied for a VA Loan. A seller can pay up to a maximum of 4% of the Veterans closing costs including prepaid property taxes and hazard insurance. Most of the time these closing costs amount to about 3.3% of the loan amount. The remaining .7% can be utilized to pay off debt of the Veteran to qualify them for a VA Loan. Most of the time it is usually a smaller collection or credit card with a small balance. This may not seem like a really big deal right now but if you were in a situation where the Underwriter required a debt of say $1,700 for example to be paid off at closing, this option could be a big help if you don't have that extra cash laying around. Get a Credit Approval first!In order to utilize this option it is best to get a "credit approval" completed before finding a home. That way your file can go completely through underwriting and any debt that needs to be paid off can be determined before you write up a deal on a home. When you have a deal written up by a Realtor on a home you need to make sure you get the correct verbiage from your Lender on how it should be written up in the transaction. Normally it's written something like "Seller agrees to pay up to 4% of the Veteran's closing costs, prepaids and consumer debt". Each Lender is different so be sure to find out before writing up an offer. Not every Lender will do thisAnother thing is that your Lender might not allow the seller to pay off any debt so be sure to check that this is allowed. Just because the VA will allow certain things Like this option does not mean the Lender will allow it. If this is the case that your Lender will not allow this option and you need it to qualify for the VA Loan don't give up there! Shop around until you find a Lender that will allow it! This can be done by asking other Lenders via email or over the phone if they will allow this to be done. You don't have to go in and meet with each one and fill out all of the paperwork each time just to find out. What is Mortgage Insurance and why is it not part of a VA Loan?Just like auto insurance insures your car or truck in case of an accident, mortgage insurance insures your mortgage in case of foreclosure. For example, lets say you bought a home for $100,000 and had 100% financing. After a few years of making payments, you now owe approximately $90,000. At that time something happened, job loss etc., and the lender foreclosed on your home. The lender would try to resell your home as fast as possible. The lender knows they can resell your home, for 80% of what it is worth, in a very short time. The lender is successful with the resell and they receive $80,000. So what happens to the remaining $10,000 you still owe? Mortgage insurance pays the $10,000. Many people dislike paying mortgage insurance because the chance of their home being foreclosed on is extremely small. Just like you and me, if we were lending someone enough money to buy a home, we would want to be insured that we would get our money back if our borrowers did not pay. As a Veteran, the VA is our insurance. The VA pays the Lender back if they lose money from a foreclosure because you sacrificed your time in service for our country while in the military. That is why Mortgage Insurance is not part of a VA Loan. Who qualilfies for a VA Loan?Who qualifies for a VA Loan?Army, Navy, Air Force, Marines and Coast Guard active duty, Reserve and National Guard qualify for a VA Loan. Active DutyIf you served active duty in any branch then you have your VA Loan benefits after two years if you did not serve in theatre. If you served in theatre then you have them after 90 days. Both require an honorable discharge. Reserve or National GuardIf you served in theatre with a Reserve or National Guard unit then just like active duty you get your VA Loan benefits after 90 days. If you only served peace time then you need six years time in service. Each year time in service for Reserve or National Guard components only counts if you attended your annual two weeks of active duty. This is determined by your retirement points, not your DD214 if National Guard, that you can get from your state National Guard headquarters. If you were Reserve then your DD214 will work. Documents needed to determine eligibilityActive Duty: Member 4 copy of DD214 What's the advantage to a VA Loan?The biggest advantage being you don't have to have a down payment. A VA loan has no property restrictions, meaning you can buy in urban and rural areas except for trailer parks. There are also no income restrictions for the Veteran so you can make $200,000 a year and still buy a home going VA with no down payment. Why is income and property restrictions even an issue?The reason I bring this up is because the only other loan that exists that will allow no down payment is the USDA loan. This loan can only be used in certain areas, mainly rural areas and smaller towns, and it has limitations as to how much money you can make depending on the state and county that you reside. What about a Conventional or FHA Loan?These two loans require at least a 3% down payment and they also have mortgage insurance. Mortgage insurance ads an additional $130 or so to your monthly payment or more depending on your loan size. VA loans do not have mortgage insurance. What is the difference between a VA Appraisal and a VA Inspection?The answer is that there is no difference. They are one in the same. It is two terms that are used to describe the same thing. It's very similar to the insurance that must be in place on every home to cover expenses for repairs in case of fire, natural causes or accidents just like insurance for your vehicle. This is referred to as fire insurance, hazard insurance or homeowners insurance. All three are used to describe the same thing. How is this different from a home inspection?When a VA appraisal is ordered on a property that a Veteran has made an offer, the VA sends out an appraiser to inspect the property. This inspection is the same inspection any appraiser performs on any property that they are completing an appraisal on to determine the market value. This inspection for the purpose of the appraisal is not to be confused as a home inspection. A home inspection is completely different and is something that is not part of the VA appraisal. A home inspection is performed by a licensed home inspector and is usually paid for by the home buyer and completed immediately after an offer is accepted. The home inspection is like taking a used vehicle to a mechanic to have it checked out before purchasing in order to determine if there is anything wrong with it. The VA appraisal is not designed and should never be used as a replacement for a home inspection. Similarities of the twoWhen the VA appraisal is completed it is very common to see mediocre repairs that are required to be fixed before closing the VA loan. This is because the VA is fairly conservative in nature when it comes to appraising properties due to their interest in protecting the Veteran from purchasing a home that is below standard. Many times the repairs noted on a VA appraisal can be frustrating because they can be as simple as replacing one board with dry rot on a deck or scraping peeling paint the size of a softball off the side of a house and re-painting it. Because such minor issues can show up on a VA appraisal it is sometimes assumed that the VA is inspecting the property in the same way a home inspector would. Conclusion: In short, there is no such thing as a VA Inspection there is only a VA Appraisal. The VA appraisal determines the value of a home. The home inspection, which is completely separate from the VA, determines if there are problems with the home. What is the VA Funding Fee?The VA Funding Fee is charged by the VA and added to your loan amount. This fee is paid directly to the VA and your lender has no control over it. It cannot be negotiated, it is set. The only way to get out of paying the VA Funding Fee is if you are getting VA Disability. Even if you are only getting 10% VA Disability you do not have to pay this fee. Make sure you let your lender know that you are getting VA Disability because if you don't then they won't know to get it waived for you. Here's how the VA Funding Fee worksIt is based on usage as follows:
Examples
Always remember, tell your lender if you are receiving VA Disability in order to get this fee waived! If you do not it will be charged to you! How to qualify for a VA LoanMany Veterans have received a copy of their Certificate of Eligibility in the mail from the VA. If you do not have one you can mail off for it yourself or have your Loan Officer do it for you. Certificate of Eligibility is only good for six months and then you have to get a new one. Most of the time a Loan Officer can get it for you online which only takes a matter of minutes. If you served in the late 60's to early 70's there is a good chance that you will have to mail in for it. For some reason that timeframe does not pull up online for a lot of Veterans. What is a Certificate of Eligibility?A Certificate of Eligibility (COE) is the form issued by the VA that says you have VA Home Loan Benefits. It does not mean that you can immediately go buy a home. Once you get your COE the next step is to meet with a Loan Officer to see if you qualify for financing with a VA Loan. Once again, a Loan Officer can usually get your COE faster than you can if you do not have it. How do I qualify for financing with a VA Loan?Find a Loan Officer with a Bank or Mortgage Broker. Try to find one with experience closing VA Loans first. Just google it to find one in your area. Once you meet with your Loan Officer they will want to see your
What about Credit?
These are the main points of a VA loan and will surely get you headed in the right direction. |
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