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Why California Veterans Should use the VA Loan Program to Buy a Home

by | Jul 17, 2017 | Blog, VA Loan Information, VA Loan PreApproval

 

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Buying a home can be a difficult proposition for most non-Veteran Californian’s. The biggest hurdle to buying a home in California is the down payment. But this is where California Veterans have a big advantage over non-Veterans, because the VA loan program eliminates the need for a down payment. The VA mortgage is an amazing program that has helped Veterans across the country purchase homes. The VA doesn’t fund the loans but acts as an insurer or guarantor to reduce the risk for VA approved lenders. Since the VA guarantees a portion of the loan (25% of the loan), VA approved lenders in California are able to fund loans with no down payment and competitive interest rates.

No Down Payment Required up to County Loan Limit

The best thing that can be said about the VA mortgage program is that there is no down payment required. Based on the county VA loan limits that the VA announces each year, a California Veteran can purchase a home with $0 down payment. This enables Veterans to save thousands of dollars out of pocket while qualifying to purchase a home.

No PMI on VA Loans

Another big benefit for California Veterans that can save them thousands of dollars over the life of the loan is that there is no Private Mortgage Insurance (PMI) required. With other types of home financing that are used by non-Veterans, when there is a down payment less than 20%, PMI is required. This is designed to protect lenders against the risk of the borrower defaulting. Since the VA guarantee 25% of the VA loan, there is no need for lenders to require PMI. With no PMI, California Veterans can save hundred’s of dollars a month and thousands over the life of the loan.

Competitive Interest Rates on VA Loans

va interest rateVA loans also tend to have lower interest rates when compared to Conventional programs for non-Veterans. VA loans tend to have interest rates that are anywhere from .125% to .5% lower than Conventional programs, depending on factors like FICO score and loan to value. Lower interest rates means veterans will save thousands of dollars over the life of the loan. Lower interest rates is also a big reason why the VA program may be better for a Veteran than a Conventional loan, even when the Veteran has a down payment of 20% or more. It makes sense to always include VA financing in your loan comparison analysis no matter how much down payment will be used.

Underwriting and Credit Flexibility on VA Loans

On top of these benefits, the VA program doesn’t have a prepayment penalty and also has more flexible underwriting and credit guidelines than other types of home loan programs.  The VA program has provided the ability for thousands of California Veterans to be able to get a loan for a home that wouldn’t have been able to otherwise. When it comes to securing financing for a home, in most cases the VA loan is the best option for California Veterans.

The first step in determining whether you qualify for a VA loan is a quick phone call to your trusted California VA Loan Specialist. After a 5 minute consultation the VA loan specialist should have enough information to prepare custom loan scenarios and then can carefully educate you on the numbers to make sure you stay within your budget.

Authored by Tim Storm, an Orange County 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. www.CaliforniaVALoanExpert.com. 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.

Getting a VA Loan in California After a Bankruptcy or Foreclosure

by | Jul 5, 2017 | Blog, VA Loan Information

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Buying a home using VA financing in California after a foreclosure or bankruptcy is possible sooner than many Veterans realize. But it does take some planning in order to make sure the VA loan is approved. Understanding the wait periods that VA requires after a bankruptcy or foreclosure are critical, as is understanding what it takes to reestablish credit and make sure credit your report errors are fixed PRIOR to making an offer on a home.

With most types of home financing, having a bankruptcy or foreclosure is a significant road block that can prevent you from being able to get a mortgage. The good news for California Veterans is that the VA mortgage program is the most flexible and has the shortest timeline for waiting after a bankruptcy or foreclosure compared to other loan programs.

VA Loan After a Bankruptcy

Can I get a VA loan after a bankruptcyWith a Chapter 7 bankruptcy, which seizes and liquidates assets to repay debts, a potential borrower has to wait 2 years before being able to qualify for a VA loan. The clock on the 2 year waiting period starts once the bankruptcy is discharged, not when bankruptcy is filed. With Chapter 13 bankruptcy, which is a debt restructuring plan that is mandated by the court, a borrower may be eligible for a loan just 12 months after their bankruptcy filing date. In this case, good credit and no late payments are critical to being able to qualify. A potential borrower will also need to get permission to take on additional monthly payments from the bankruptcy trustee. The VA program can even be used to payoff a Chapter 13.

Filing for bankruptcy can create a significant hit to a borrowers credit (FICO) score which can potentially delay qualifying for a loan and purchasing a home. Lenders are usually looking for at least a 620 FICO score for a VA mortgage, but there are some lenders who will go as low as 580.  A bankruptcy could knock a potential borrower well below that mark. After the discharge of the bankruptcy and during the two year waiting period it is very important to work on repairing your credit score. Working with a credit repair professional can be well worth the money for anyone who has no prior experience with credit repair.

For those California Veterans with a foreclosure you will be happy to know that the wait period is also only 2 years. ( A Conventional loan requires a 7 year wait period which is one reason why the VA program is so awesome).The combination of both a bankruptcy and a foreclosure does not necessarily lengthen the time table  before getting a VA loan. In most cases this scenario is viewed on a case by case basis so it is important to consult a VA lender to ensure you are following the proper steps toward future qualification.It also important to understand that when you include a mortgage in a bankruptcy which results in a foreclosure of the home, that means you had a foreclosure. Again, to make sure you understand the timeline before being able to qualify for VA financing, talk to a California VA Loan Expert.

Authored by Tim Storm, an California Loan Officer specializing in the VA Loan Program. MLO 223456. – Please contact my office at the Home Point Financial. My direct line is 949-640-3102. www.CaliforniaVaLoanExpert.com.com. 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.