Refinancing Your VA Loan

With such a dramatic drop in mortgage rates in the last several years, many veterans are sitting on VA loans with rates much higher than the current market. And with the media touting "the lowest rates in generations," you can bet a lot of folks are asking about refinancing their homes. Why not, when you can reduce your interest rate and monthly payment using the VA "Streamline" Program with minimal to no out-of-pocket expenses?

What makes this a "streamline" program is that the lender will not always require an appraisal (saving you about $450), a full credit report (only mortgage history and scores), or even ask you for the usual income, asset, or debt information. Many lenders verify your employer, position, and time on the job, but income is not typically taken into consideration. If an appraisal is required, it just has to cover the amount of your new loan. If an appraisal is not required, then the value of your property will not matter, although there are exceptions. This program can even be used for rental properties that are still carrying a VA loan on them.

Depending on the timing of your loan closing, you may be able to "skip" one (or even two) mortgage payments. (The term "skipped" is used loosely here, as those payments are accounted for in your payoff and your new loan balance, but nevertheless, those payments stay in your pocket.) Also, once your current VA loan has been paid in full with your current lender, you will be refunded the entire balance of your escrow account to do with as you wish. The most important benefit is a lower, fixed rate to reduce your monthly housing costs for the life of your VA loan or to cut year's off of your mortgage by refinancing to a 15-year term.

There are basic minimum qualifications to use the VA Streamline Refinance Program. For starters, your current loan must be a VA loan. No past due mortgage balances or late mortgage payments are allowed in the last twelve months with case-by-case exceptions. There are also exceptions for the minimum credit score, but 640 is generally the target on VA. You also cannot get any cash back at closing and the savings on your new VA loan must meet minimum thresholds. As always, other qualifications may apply.

There are real costs involved in refinancing your VA loan of course, but those costs are offset by the amount of money you save every month. The basic formula is to calculate how many months it will take you to recoup the cost of your refinance. Generally, if you plan to own your home at least that long, then refinancing is to your benefit. Be sure to subtract your "skipped" payments and your escrow refund, as those are real dollars you keep in your pocket as a result of refinancing.

Fees Associated With VA Loans

The VA home loan program, like other mortgage programs, has fees associated with it. VA-eligible borrowers should expect to see the following fees in their VA loan closing documents:

• Credit report
• Appraisal
• Compliance inspection
• Lender's origination
• Reasonable discount points (if applicable)
• Pre-paid taxes
• Assessments and insurance
• Hazard insurance
• Flood zone determination
• Land survey
• Title examination and insurance
• Recording/Recording Taxes
• Mailing and/or wire fees
• VA funding fee (VA-approved)

Many of these fees itemized at a VA mortgage closing can be included in the total amount of the loan as long as it does not exceed the conforming loan limit for the county in which the VA mortgage is made. And, a VA buyer can ask the seller to pay closing costs of up to four percent of the total purchase price.

Generally, many of the fees that will be charged on VA loans are also found with other mortgage programs. These include fees for credit report, appraisal, and a compliance inspection.

Also very common charge found in all types of mortgages, including VA loans, is a lender origination fee. The VA allows lenders to charge an origination fee of up to one percent in origination.

In addition to lender origination fee, a VA-approved lender may also charge rate reduction points. This is optional if a borrower wants to lower his or her rate below prime by "paying down" the rate with percentage points. Commonly, one point is worth $1,000. Each state may have established origination and rate-reduction-point fee limits for VA home loans. For most states, the total amount of the origination plus rate reduction fees cannot exceed the state limit when combined. Many VA-approved lenders find themselves providing "free" VA loans when adhering to the state limit. In other words, no origination or point reduction fees are charged because they would exceed the state limit.

It is common to see some of the fees associated with a VA loan lumped into escrow to cover the first year's expenses. Some of the fees that could go into an escrow account include property taxes and insurance. Commonly, these fees are added to the monthly mortgage payment.

Other insurances such as hazard and flood may also appear in the monthly mortgage payment. Hazard insurance is not always required. But, flood insurance is necessary if a property is financed with a VA loan and found to be in a flood zone.

Sometimes, the property lines are not clearly defined in a real estate sale, or there may be a dispute. Another fee that can be charged with a VA-guaranteed loan is for a land survey. If a survey is necessary, the land survey charges will appear in the VA mortgage closing costs.

Just as the lender and insurance companies have their fees, the title company also charges fees. Certain fees associated with the title company include title examination and insurance (different from property insurance), recording charges and mailing/wire fees. When a title company verifies a property deed is free and clear of liens, it takes time and effort; therefore a fee is charged. If the title company should miss something in its research, like a lien on the property, title insurance protects the borrower from any liability for liens found after closing. When the title company provides the new owner's name on the real estate deed with the county recorder, a small fee is associated with this. Finally, when a title company provides the final payout on the loan, a mail or wire fee is often charged.

One fee that is absolutely unique to VA loans is the VA funding fee. VA-approved lenders are required by law to charge a VA funding fee for most VA-guaranteed mortgages. The funding fee can cost anywhere from one-half of a percentage to three and one-third percent subject to the VA-eligible borrower's military circumstances and the type of VA home loan used. Certain disabled veterans and surviving spouses are exempt from paying the VA funding fee.

Considering the fees typically found for conventional and other mortgage programs, fees for VA loans are very similar. For more information about what fees to expect with VA mortgages, contact a VA mortgage professional.

How Can You Know If You Are Eligible For A VA Loan

VA loans can be especially time consuming and many times first-time homebuyers misconstrue how they work. It is imperative to know that the Veterans Administration (VA) guarantees the mortgage loans to veterans who meet exact qualification, however it does not act as the lending agent. Consult a credit counselor and find out what your credit rating is before you apply for any kind of loan. In this way, you can either accept or work on it and thus be prepared before applying for the guaranty.

There is a mandatory VA funding fee for first-time homebuyers. The idea that the veteran is adding to the cost of his own mortgage and not relying on the taxpayer is the reason for the obligatory fee. A fee of two percent is charged for "no down payment" loans to first-time homeowners, but it is three percent for veterans purchasing a second home. The reason for the greater fee for second-time owner is about presumed equity in the property and/or time to save up for the extra cost. Percentage schedules for VA refinance loans do not differ.

For a disabled veteran who suffers from a service-related injury and receives compensation for such, exemption from the funding fee is possible. Spouses of military men who died in the line of service or from injury complications connected to military service are permitted to additional legal exemptions as well. Each case is examined individually and final say on all exceptions is the right of the VA.

VA mortgage loans are amazingly flexible. You can purchase a new home, do home improvements and enhance energy efficiency with the aid of a VA loan. It is always a great idea to ask about the limitations and allowances each VA loan can offer.

One of the most significant factors in determining eligibility for a VA loan is the nature of the discharge. The mortgage loan experience becomes more and more difficult when a discharge is less than "honorable." A local VA office can assist those who might have had other than an "honorable" discharge with filing the proper paperwork, finding out where to send them and knowing how to appeal a decision, if needed.

The proper papers confirming the true conditions of the discharge or its updated standing need to be provided as well as several copies of the DD214 paperwork. A home loan guaranty is not given to any veteran who is unable to maintain monthly house payments.

VA Loans Help Service Members Feel at Home Again

For many young veterans, coming back from service can sometimes be difficult. Feeling at home again is always a big priority. After completing time in the military, many veterans are interested in establishing their roots in a new home. One benefit of military service is the VA loan guaranteed by the Department of Veteran Affairs. This federally-guaranteed VA loan helps veterans build their future with the purchase of a new home.

"The main purpose of the VA home loan program is to help veterans finance the purchase of homes with favorable loan terms and at a rate of interest which is usually lower than the rate charged on other types of mortgage loans," reports the Department of Veteran Affairs.

A VA loan is helpful to veterans who wish to purchase a home. The loans are available to most veterans, including those without great credit. Because interest rates are not heavily credit-driven, veterans with less-than-perfect credit can still have access to very low rates. Another benefit of the VA loan is that no down payment is required on a new home purchase! This allows veterans with no money saved to still take advantage of a VA loan.

Who is Eligible?

VA home loan eligibility is based on the length of time served in the military and the conditions under which the veteran was discharged. Most veterans who have served at least 90 days during wartime, or; served at least 181 days during peacetime are eligible. In addition, members of the Reserves or National Guard are eligible for this VA home loan program if they have served at least six years. In order to be eligible for this loan program, veterans must have been discharged from service under conditions other than dishonorable.

In some cases, VA loans are available to spouses of veterans. A spouse of a deceased veteran may be eligible if the veteran died from service-related causes. Spouses of a veteran who is Missing in Action or has had Prisoner of War status for at least 90 days, may also be eligible for the program. This federally-guaranteed loan will make sure to protect and help veterans and their families.

What are the Credit and Income Requirements?

The VA does not have a minimum credit score requirement. However, most lenders require credit scores above 620. A qualifying veteran's debt to income ratio, in most cases, should be under 41% and the veteran must have sufficient residual income for monthly expenses. The residual income requirements depend on the location of the veteran, as well as the amount of people in their family.

What Kind of Home Can I Purchase and Where?

All of the following homes are eligible for a VA loan:

-1-4 Unit Properties.
-Approved Condominiums.
-Approved Planned Unit Developments (PUDs).
-Approved Manufactured Homes.

The VA guarantees loans for approved homes in the United States, its territories, and possessions.

How Does it Work?

To use a VA loan to purchase a home, a veteran must get pre-approved for the amount needed to finance. Many find it helpful to first obtain pre-approval for their VA loan before looking for a home. This way, the veteran will know how much financial aid they qualify for while shopping for a home.

Service men and women can start their search independently or with the help of a real estate agent. Once a veteran has found the perfect place, the next step is to finalize the purchase agreement and complete the VA loan process. A loan specialist will help guide veterans through the underwriting, loan approval, and closing process. Upon completing these steps, all that is left, is to transfer the title and open the doors to a new home!

How Do I Get Started and Qualify?

To qualify for a VA loan one will need to prove their service, as well as some other details. The following documentation will be needed to help complete the loan process:

-DD-214 or other statement of service.
-Pay stubs to verify one's income.
-W2s for the past two years or tax returns.
-Copy of a veteran's driver's license.
-Bank statements from the last two months or other asset used for down payment (if applicable).
-Home owner's insurance policy, for those that already found a home.
-Copy of social security card.

Top 5 VA Home Loan Features

VA mortgage program is the most appropriate way to finance a house purchase available for the veterans. You cannot save as much money in any other mortgage program as you can save with the VA home loan. It is an extremely beneficial program and even the tremendously popular FHA mortgage program cannot compete with it. There are many advantages associated with getting a VA mortgage out of which following are the five biggest advantages you can access to by applying for a VA home loan:

1. VA HOME LOAN IS A MULTI PURPOSE LOAN:VA home loan is not only applicable to finance a house purchase or condominium but borrowers can use it for other purposes also for example carry out home repair or improvement, reconstructing the home from the beginning or in some cases refinancing an old mortgage. This is what makes it so beneficial and popular.

2. THERE IS NO NEED OF THE DOWN payment: Unlike the other type of loans, VA home loan does not require any large or small down payment and the applicant can gain access to it very easily.

3. THERE IS NO REQUIREMENT OF A PERSONAL MORTGAGE INSURANCE: If you do not want to pay a minimum amount of down payment then you have to opt for personal mortgage insurance. Even the FHA mortgage program has a requirement of some down payment. However, with the VA mortgage loan there is no need of mortgage insurance when there is no down payment.

4. NO PENALTY GIVEN BY THE LENDER ON REPAYING EARLIER: Some debtors like to pay off the loan quickly so that they can get out of their debts as soon as possible. This way they are able to save their money in the end. Hence, if you want to make the repayment quickly, you lender will not charge any kind of penalty. As a matter of fact you can save a lot through this as the interest amount drops.

5. CLOSING COSTS ARE LIMITED: A VA home loan can help you save money on closing costs of the home purchase. This is very much true and if for reassurance, you can ask your lender. They will tell you the entire estimation of the VA loan and will show you that its expenses are lower than usual mortgage program.

Oregon Veterans Have New Home Loan Option

The state of Oregon recently expanded its eligibility requirements for the Oregon Veteran Home Loan Program (ORVET). This state loan program is exclusively designed for veterans looking for a home loan in Oregon. It is secured through special federal bonding that is only available to state home loan programs. This allows the state to provide veterans with lower interest rates than typically available.

Extended Eligibility for Oregon Veterans

The eligibility requirements for this type of loan have recently been expanded to make more veterans eligible. Oregon voters in the November 2010 ballot approved Measure 70 that expands veteran eligibility for the ORVET Home Loan as well as eliminates the constitutional 30-year eligibility restriction previously in place. This constitutional amendment took effect on January 2, 2011.

The new amendment includes more veterans to be eligible for this type of loan. A veteran must have served on active duty with the United States Armed Forces, been discharge or released with honorable conditions and meet one of the following criteria to be eligible for this type of loan:

1) Beginning on or before January 31, 1955 served more than 90 days or 178 consecutive days;
2) Served 178 days or less and was discharged or released from active duty because of a service-connected disability; or has a disability rating from the United States Department of Veterans Affairs; or
3) Served at least one day in a combat zone.

These are the three most common circumstances but there are also many other situations and special situations that allow one to apply. To further investigate a specific veteran's eligibility it's best to talk to a VA loan expert.

In addition, veterans must also meet one of the two following criteria to complete eligibility requirements:

1) Received a combat, campaign or expeditionary ribbon or medal for service; or
2) Is receiving a non service-connected pension from the United States Department of Veterans Affairs.

Similarities of a VA Loan and ORVET

This product is very similar to a federal VA home loan, both programs offer up to 100% financing and no prepayment penalties. In addition, there are 15 and 30-year terms available, interest rates are generally low and the current maximum for the loan amount is $417,000.

Differences Between a VA Loan and ORVET

Although, an ORVET is similar to a VA loan its eligibility is separate and distinctly different from a federal VA loan. The ORVET program offers conventional loans so there is no funding fee but there may be monthly mortgage insurance instead.

Other ways that it is different from a VA loan is that an ORVET is serviced exclusively in Salem, Oregon and not sold to investors. In addition, there are no pricing adjustments for manufactured homes classified as real property and there is guaranteed acceptance loan cancellation life insurance available.

It is important to understand that an ORVET is not a federally-guaranteed VA loan, but a conventional loan. However, the expanded eligibility of this type of loan makes it advantageous for many veterans living in Oregon. To learn more about the new eligibility requirements, research this program and VA loans.

VA Home Loan - Top Tips and Tricks From a VA Loan

Introduction - VA Home Loans

First let's recognize the fact that many Veterans are unaware of their housing benefit afforded to them from the Veterans Administration (VA). Secondly, there are many Veterans that are aware of their housing benefit but don't utilize it. Perhaps one of the best benefits provided by the VA, every honorable veteran is entitled to is a VA Home Loan.

What is a VA Loan?

A residential mortgage loan in the United States of America and is guaranteed by the U.S. Department of Veterans Affairs (VA). The loan is not issued by the VA rather you must obtain one through a mortgage banker/broker.

Why a VA Home Loan?

There are many benefits in comparison to other mortgage finance programs currently offered. The most important detail of a VA Loan to many is 100% financing. Zero down allows you to save thousands of dollars immediately in comparison to a conventional loan that may require 10-20% down payment. The second most common detail that benefits the Veterans is looser qualification guidelines. It's estimated that 80% of Veterans would not qualify for a conventional loan.

VA Home Loan Benefits

There are many benefits to a VA Loan in comparison to other programs. Below you will find a few of the highlights of the VA Loan program. It's strongly recommended that you contact a VA Loan Specialist to learn more about qualification and the benefits you are entitled to:

• 100% Financing | Zero Down Payment

• Easy to Qualify (looser guidelines)

• Lower Interest Rates

• Lower Monthly Payments

• No Private Mortgage Insurance (PMI)

• Loan is assumable

How Do I Get Started Loan?

Easy, simply contact an approved VA Lender and speak with a VA Loan Specialist. Not all lenders are approved to originate a VA Loan and even if they are approved it is wise to work with someone that has expertise and experience specifically with VA Loans.

How Do I Select The Best VA Lender?

While there are many lenders approved, you will definitely want to work with a specialist specific to VA Home Loans. Choosing a lender or mortgage professional that doesn't have the experience will prove to be time consuming and frustrating. Search for an approved VA Lender that has accolades and respect from their borrowers, public & industry. All lenders will have customer testimonials but only a few will be recognized by independent third parties. VA Lenders are not tracked closely like an FHA Lender and you may come across some lenders SELF PROCLAIMING to be the best with funny asterisks next to the claim. May I recommend an industry publication the Scotsman Guide (Google - scotsman guide top originator) and you will find independent industry recognized lenders.

VA Home Financing Summary

If you have served your country then contact a VA Mortgage Professional and get started with your VA Home Loan. If you're eligible you won't find a better financing program available.