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4 myths about the VA loan program

calmythsThe VA loan program is an amazing benefit for our veterans in California. Surprisingly, there are thousands of veterans in California that haven’t used the program because of some longstanding misconceptions about VA loans. Here is the truth behind 4 of the most popular myths regarding the VA loan program…


Myth #1: You need to have perfect credit for a VA loan.

Any credit limit (minimum FICO score) that a lender gives you for a VA loan is a lender imposed limit. The VA does not have specific credit requirements for loans so every lender is different. Most lenders will look for a credit score of at least 620, but some will go even lower, with some lenders going as low at 580. If the first California VA lender you try doesn’t accept your loan request it may be worth looking to see if you can find a California VA lender that will.

Myth #2: VA loans take longer to close than other loans


Many think that the VA loan process is a slow and cumbersome process. However, it has become much faster and a much more streamlined process. According to Ellie Mae, VA and conventional loans both on average close in about 44 days. But for a California lender who specializes in VA loan, even 44 days sounds long. Under 30 days is possible in most circumstances.  Also, VA loans are much more likely to close compared to conventional loans.


Myth #3: VA loans are much riskier

Since no down payment is needed for a VA loan many think it is a riskier loan. Even with no down payment, VA loans have the lowest foreclosure rate compared to any other conventional program. Other requirements like “residual income” help to solidify the safety of the VA program.

Myth #4: VA loans can only be used one time

This might be one of the biggest misconceptions about the VA loan program. There are many veterans that think this is only a one time perk or their eligibility expires after a certain period of time, but this is not true at all. VA loans are a lifelong benefit that can be used multiple times. Eligible veterans have a basic entitlement that represents their ability to use the program. As they pay off their first VA loan, that entitlement restores and are then able to use the VA program again. It is even possible to have more than one VA loan at a time. For example, in high cost counties like Orange County, CA, there is a “bonus entitlement”. The bonus entitlement allows a California Veteran to purchase another home with no down payment. For someone looking to see what their options are while still owning a home with VA financing a true California VA Loan Expert should be consulted.

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 your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.

 

California Veterans Qualify for a VA Refinance Even if they have a Conventional Loan

va refinance from conventional loan in CaliforniaEven 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.