by Tim Storm | Nov 28, 2011 | Blog, VA Loan Information
Before your California home can be approved for VA loan financing, a VA appraisal must be completed on the property.
A VA appraisal involves a thorough inspection of the home and property to determine the current market value of the home. This appraisal is especially geared towards reporting any defects involving safety or security of the home.
So, how does this fit into the VA loan process?
Simply put, even though the VA focuses on assisting veterans in financing a home, the VA must also take precautions to protect the investments of both the borrower and the VA itself with a good appraisal.
Let’s say that a California veteran or member of the military finds a house that he wants to purchase for $500,000. The house seems to be exactly what he’s looking for; single story, pool in the backyard, freshly painted, and located in a nice family neighborhood.
He decides that he wants to use his use his hard-earned military benefits to get a zero money down VA loan. In other words, if approved, he’ll receive a fully financed $500,000 VA loan.
As part of the standard VA loan approval process, a VA-appointed appraiser goes to the property to do an appraisal of the actual worth. Unfortunately, the appraiser discovers that the house needs a new roof, there are cracks in the pool cement, and there are severe irrigation issues throughout the property that need to be fixed, among other miscellaneous flaws.
Tallied up, the appraiser determines the value of the home and property to be $475,000 instead of $500,000.
Because of the large difference between what the seller is asking for and the actual value of the property, the VA ultimately turns down the loan.
Of course, this is a somewhat extreme example, but you get the idea. The VA needs to verify that the actual value of the home and property is close to what a potential borrower wants to pay for it. Neither a mortgage bank to the the VA want to insure homes that are worth less than the loan then you applied. However, if the Veteran believes the home to be worth the full price, he still could pay the difference between the appraised value and the purchase price. Quite often in these situations, the seller and buyer will be able to negotiate a price and still get the deal done.
Here is a list of things to consider when shopping for a new home:
- The appraiser needs to inspect both the inside and the outside of the house. If the house in question is being constructed, the appraiser still needs to analyze the property and construction site.
- The official appraisal report will contain a list of “observable repairs that need to be completed.”
- This report will also contain a list of “customer preference items to be installed.”
- A few small issues with the property won’t immediately disqualify it, but a lot of small issues or a few big issues may.
VA sets the price for most California VA appraisals at $600. (2017)
Authored by Tim Storm, a California VA Loan Officer specializing in VA Loans. MLO 223456. – Please contact my office at the Home Point Financial. My direct line is 949-640-3102. I will prepare custom VA loan scenarios which will be matched up to your financial goals, both long and short term. I also prepare a Video Explanation of the your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.
by Tim Storm | Nov 27, 2011 | Blog
The short answer to the question “How many VA loans can I have in California?” is that there is no limit on the number of times eligible California veterans are allowed to use their VA loan benefits.
This answer often surprises California veteran borrowers who have used the program before.
As you are probably well aware, a VA loan offers many benefits unavailable with Conventional loans. (Learn about refinancing from a Conventional loan to a VA loan in California.)
In many ways, the procedure for getting a second (or third, or fourth…) VA loan is similar to obtaining the initial home financing.
First, veterans must be able to show that they satisfy the basic eligibility rules mandated by the U.S. Department of Veterans Affairs. The eligibility requirements can be found at the following Department of Veterans Affairs General Rules of Eligibility website.
Second, the VA loan has to be received through a lender that has been approved by the U.S. Department of Veterans Affairs. It is important to check with lenders prior to starting the to ensure that they are qualified to provide a VA mortgage. It helps to be work with a local California VA loan lender if you are planning to buy a home in California.
Third, the VA will analyze your mortgage application including your payment history on your previous loan to see if you have a history of paying your mortgage on time or have gone into default at some point.
The VA loses money when veteran borrowers go into default, which means they are essentially doing a cost analysis on you to decide whether or not to grant you another VA loan. In addition, if the VA suffered a loss on a previous loan you will be required to repay it before having your eligibility fully restored.
If you currently have a VA mortgage or have had one in the past, then you already know about the required VA funding fee. However, there are differences between what the funding fees are for first-time VA loan borrowers and subsequent borrowers. Of course, if you are considered by VA to be at least 10% disabled, then the Funding Fe can be waived.
For VA loans, regular military members are categorized as either a first time user or a subsequent user. For first time users the fee structure is set up as follows:
- No down payment: 2.15% fee
- Up to 10% down payment: 1.5% fee
- More than 10% down payment: 1.25% fee
For subsequent users the fee structure is:
- No down payment: 3.3% fee
- Up to 10% down payment: 1.5% fee
- More than 10% down payment: 1.25% fee
The funding fee requirement for both the Reserves and National Guard members is different than that for the regular military. For first time users, the fee structure is:
- No down payment: 2.4% fee
- Up to 10% down payment: 1.75% fee
- More than 10% down payment: 1.5% fee
For subsequent users the fee structure is:
- No down payment: 3.3% fee
- Up to 10% down payment: 1.75% fee
- More than 10% down payment: 1.5% fee
Basically, the only difference between funding fees for first-time and subsequent VA loan borrowers is for “no down payment” scenarios.
If you are planning on making a down payment on your subsequent VA loan, then there will not be any different from what you would pay for a first-time VA mortgage.
It’s important to understand that you may not hold more than one VA loan at a time. The loan you took out previously must be repaid in full before you will be eligible to apply for a new VA mortgage. If you still own the property but it is no longer financed with a VA loan (either because you refinanced or paid off the mortgage) you may request a one-time exception to have your eligibility restored.
Even if the loan was assumed by another party, the loan must either be repaid or if the assumer is eligible for a VA loan, they could transfer their eligibility to the loan.
If you have used your eligibility before, it is important to contact a California VA lender who can help check on your eligibility status.
Authored by Tim Storm, a California VA Loan Officer specializing in VA Loans. MLO 223456. – Please contact my office at the Home Point Financial. My direct line is 949-640-3102. I will prepare custom VA loan scenarios which will be matched up to your financial goals, both long and short term. I also prepare a Video Explanation of the your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.
by Tim Storm | Nov 26, 2011 | Blog, VA Loan Information
California Veterans have been taking advantage of the VA Jumbo loan program in huge numbers in 2017 and 2018. A VA loan is considered to be a Jumbo VA Loan when it exceeds the county limit for 100% financing. While some down payment is required when going over the ZERO Down payment limit, it’s not much. Especially when you consider that many of the high cost areas of California have zero down loan limits as high as $679,650 in 2018.
If you’re looking at buying the California home of your dreams – and the price reflects it – then a VA jumbo loan may very well be the best option for your mortgage.
In most veteran loan scenarios, the VA guarantees up to 25% of the total amount of the loan up to the VA loan limit in your county – which, in much of the US, is $453,100.
But what happens when the value of the loan exceeds your California county VA loan limit?
This is where VA jumbo loans come into the picture.
For the purposes of this example, let’s say that you live in Orange County where the 100% financed VA loan limit in 2018 is $679,650. You find the perfect house for you and your family, and it’s selling for $779,650.
You decide that you would like to use your hard-earned veteran benefits to take out a VA mortgage!
So, the VA guarantees $169,912 of your loan (with $169,912 being 25% of $667,650). But what happens with the remaining $100,000 of the purchase price?
Simple. The U.S. Department of Veterans Affairs mandates that on VA jumbo loans above the county loan limit, the borrower put down 25% of the difference between the cost of the loan and the applicable county VA loan limit.
Continuing on with our VA Jumbo Loan example from above, 25% of $100,000 ($25,000) would be required as a down payment, and the VA would guarantee 25% of $679,650 ($169,912).
Not bad at all! In this example you’re buying your $779,650 California dream home for only $25,000 down in addition to the required closing costs.
The real value of VA jumbo loans is apparent when you compare and contrast it to the standard down payment requirement of a conventional mortgage, which is typically 20% to avoid paying private mortgage insurance, or between 5% and 10% down with mortgage insurance.
This means that for the example $779,650 house, and if you wanted to avoid monthly mortgage insurance, a Conventional loan down payment would be $155,930 while a VA loan down payment would only be $25,000. And no mortgage insurance. That may be the best part.
Please keep in mind while house shopping that VA county loan limits vary throughout California and will be higher in areas with especially high property values, like Orange county, Los Angeles county, Alameda, San Francisco, and a few others. Once again, the standard VA county loan limit is $453,100, but it’s smart to check with your local California VA mortgage lender prior to looking at houses.
For example, as of 2018 the 100% VA county loan limit for Orange County is $679,650! There are 25 counties in California with 100% loan limits higher than the standard $453,100 limit,
To check what the VA county loan limits are for each county in the United States, you can visit the U.S. Department of Veterans Affairs at their loan limit website. For counties that are not listed on the website, the official VA loan limit is automatically set at $453,100.
Why is there such as large difference in county loan limits throughout the nation? In short, because the various housing markets across the country vary greatly.
Wherever you are, if you are in need of a substantial home loan, a VA jumbo loan is certainly worth checking out.
*Updated on January 10, 2018 to reflect 2018 VA loan limits
Authored by Tim Storm, an California VA Loan Officer specializing in VA Loan. MLO 223456. – Please contact my office at the Home Point Financial. My direct line is 949-640-3102. I will prepare custom VA loan scenarios which will be matched up to your financial goals, both long and short term. I also prepare a Video Explanation of the your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.
by Tim Storm | Nov 25, 2011 | Blog
Even if you currently have a Conventional or FHA loan, yes, you can refinance into a VA loan if you are an eligible veteran or member of the armed services. You can even refinance up to 100% of your homes value.
Better yet, you may be able to save a great deal of money with a VA refinance! VA interest rates are very low and have no Monthly Mortgage Insurance.
Transferring from a Conventional or FHA mortgage to a VA mortgage is known as a “Conventional to VA Refinance Loan,” and is a very straightforward process.
Below are some of the advantages offered by switching from a Conventional or FHA mortgage to a VA mortgage:
- You may be able to lower your interest rate and your monthly payment with low VA refinance rates.
- You are not required to put any money down to get a VA loan refinance. Refinance to 100% loan to value.
- Private mortgage insurance is also not required even for those borrowing more than 80% of the home’s value. Not having to pay private mortgage insurance (or PMI for short) can result in significant savings.
- You have the option of refinancing to a fixed rate mortgage to ensure that your interest rates do not fluctuate over time.
Remember, even if you can only lower your interest rate by a .5% percent you could be saving thousands of dollars over time!
Add to that the saved costs of not having to pay private mortgage insurance, and you’re truly looking at substantial savings in both the long and short run.
If you are comfortable with your current mortgage payment you could choose to pay off your loan more aggressively by selecting a shorter term for your refinance loan.
By moving from a 30 year loan term to a 20 or 15 year term you will pay off your loan years sooner, eliminating a decade or more of interest payments. In addition, interest rates for shorter term loans are often lower than 30 year term loans and will save you thousands of dollars in interest paid.
Have us run the numbers so you can see for yourself what you could save.
Authored by Tim Storm, a California VA Loan Officer specializing in VA Loans. MLO 223456. – Please contact my office at the Home Point Financial. My direct line is 949-640-3102. I will prepare custom VA loan scenarios which will be matched up to your financial goals, both long and short term. I also prepare a Video Explanation of the your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.
Before your California home can be approved for VA loan financing, a VA appraisal must be completed on the property.