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The first step in the VA Loan Home Buying process is to firm up your financing and get pre-approved for your loan. This really sets the stage for all that follows and effectively drives your home searching adventures.

Ask you real estate agent for recommendations on some qualified, experienced local lenders/loan officers. A knowledgeable mortgage professional will be able to analyze and assess your financial status, and help determine the best loan product for your particular situation/budget.

One of my preferred lending partners is Cheri Kesti, Branch Manager and Mortgage Consultant with Windermere Mortgage Services here in Silverdale. I don’t recommend Cheri to my Buyer clients because she’s affiliated with Windermere. I endorse her because she consistently gets the job done, on time, and without a lot of added drama!

I’ve asked Cheri to provide some basic comparative information and the primary benefits of associated with using VA financing:

Cheri states “VA home loans are an excellent choice when compared to conventional, FHA, or USDA home loan options, which can often carry higher interest rates, or greater closing costs for the veteran or active-duty home buyer.”

Here are some basic highlights of the VA home loan:

• Lowest interest rate for zero down payment
• Lowest Buyer Paid-out closing costs
• No monthly mortgage insurance
• VA funding fee is waived if there is a service-related disability
• Applicable VA funding fee may be financed into the loan
• VA maximum loan amount is $700K with minimum down payment or $417K with zero down payment
• VA home loans are assumable
• Principal balance prepayment – without penalty
• The seller is allowed to pay up to 6% of the purchase price toward any or all of the following:

1. Buyer closing costs and permanent interest rate buydown
2. The VA funding fee (or any portion of it)
3. The buyer’s revolving or installment debt, prepaid interest, taxes, and insurance (not to exceed an additional 4% of the purchase price)

As stated above, the VA loan allows veterans 100% financing without paying private mortgage insurance. A VA funding fee of up to 3.3% of the loan amount is paid to the VA and is allowed to be financed into the loan. In a purchase, veterans may borrow up to 100% of the sales price or reasonable value of the home, whichever is less. Since there is no monthly PMI, more of the mortgage payment goes directly towards the Buyer qualifying for the loan amount, allowing for larger loans with the same payment. In a refinance, qualified veterans and active-duty personnel may borrow up to 90% of reasonable value, where allowed by state laws.

VA loans allow veterans to qualify for loans amounts larger than traditional Fannie Mae or conforming loans. VA will insure a mortgage where the monthly payment of the loan is up to 41% of the gross monthly income vs. 28% for a conforming loan assuming the veteran has no monthly bills.

Eligibility for the VA loan is defined as Veterans who served on active duty and have a discharge other than dishonorable after a minimum of 90 days of service during wartime or a minimum of 181 continuous days during peacetime. There is a two-year requirement if the veteran enlisted and began service after September 7, 1980 or was an officer and began service after October 16, 1981. There is a six-year requirement for National guards and reservists with certain criteria and there are specific rules concerning the eligibility of surviving spouses.

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Rich Jacobson is a licensed real estate professional providing knowledgeable empowerment and relentless representation for his clients of residential properties and vacant land throughout all of Kitsap County WA and portions of Pierce, Mason, and Jefferson Counties. You can also find him at KitsapLife.com, ActiveRain, and Crabbing in the Hood, or e-mail:  kitsapagent@gmail.com

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One of my most favorite and popular series I’ve authored since jumping into the blogging fray has been ”Adventures in 1st Time Home Buying!” a fun and informative collection of 10 articles created specifically to guide 1st Time Buyers through the home purchasing process.

As a veteran who proudly served on-board a submarine in the US Navy, my first two homes were purchased using VA financing. Living here in Kitsap County WA, home to the Bangor Sub Base and Puget Sound Naval Shipyard, many of my Buyer clients are Active-Duty military and choose VA loans when buying their homes.

Given the unique nuances and pros/cons of VA financing, I thought it would be helpful to publish a series of articles geared towards helping Active-Duty service members and veterans to better understand the VA loan process, and equip them to intelligently navigate the potential challenges they may encounter.

First, let’s dispel what is typically the most common misnomer about VA loans:

A VA loan is a mortgage loan guaranteed by the U.S. Department of Veterans Affairs, and may be issued by any number of qualified lenders, i.e., banks, savings & loans, credit unions, mortgage companies, etc.. However, neither the loan nor the money borrowed is provided by the VA.

The VA Loan began in 1944 through the original Servicemen’s Readjustment Act (also known as the GI Bill of Rights). The GI Bill was signed into law by President Franklin D. Roosevelt and provided Active-Duty Service Members and Veterans with a federally guaranteed home loan with no down payment. This program made the dream of home ownership a greater reality for millions of service people and veterans. The GI Bill has contributed more than any other program in history to the welfare of  our uniformed personnel, veterans, and their families.

In our next installment, we’ll compare the VA Home Loan with other loan products, and help to determine if VA financing is the best choice for you.

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Rich Jacobson is a licensed real estate professional providing knowledgeable empowerment and relentless representation for his clients of residential properties and vacant land throughout all of Kitsap County WA and portions of Pierce, Mason, and Jefferson Counties. You can also find him at KitsapLife.com, ActiveRain, and Crabbing in the Hood, or e-mail:  kitsapagent@gmail.com

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Posted in Adventures in VA Loan Home Buying, Buyers | 2 Comments »

Tags: active-duty, Kitsap County WA real estate, military relocations, PCS, va buyers, va financing, va home loans, va mortgages

Here’s a really excellent video from WAHomeOwners.com that provides a brief overview of the $8000 Federal Tax Credit Program for 1st Time Home Buyers

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Tags: $8000 tax credit, 1st time home buyers, federal programs

“And you will know the truth, and the truth shall set you free.”

John 8:32

Okay, so the topic of VA appraisals here in Kitsap County WA isn’t on quite the same level playing field as Biblical Truth, but the principle is still the same.

One of my marketing catch phrases is ‘providing knowledgeable empowerment’ for my clients. By that, I mean, one of my primary goals is helping to better educate my clients through my years of experience, training, and education as a real estate professional, so as a result, they are more empowered to make intelligent and prudent decisions regarding buying or selling real estate.

As an advocate for my clients, it is my responsibility to educate and inform my clients about the entire real estate transaction process, from start to finish. One of the reasons for doing so is to better prepare them for any potential pitfalls, delays, or challenges that may occur. As much as we may try to achieve a smooth and timely closing, there is always the possibility for a problem to occur that is outside of our ability to control.

Such is the case with VA appraisals.

Here in WA State, most residential real estate contracts require a formal home inspection contingency process. The Buyer contracts with a professional inspector who conducts a full complete home and pest inspection. From the results, the Buyer then petitions the Sellers to repair or remedy any issues of concern. Once the Sellers agree to the terms, the contract then moves along through the ‘Pending’ status onto closing.  Usually all that remains is for the Buyer’s loan documents to be sent to the Escrow company.

It is at this point that many people get a false sense of hope/assurance that nothing can go wrong, especially in a VA Loan transaction. One thing I always tell my clients is that nothing is a done deal until your Underwriter ‘funds’ the loan, and the County records the deed. Once those two things happen, you can let your hair down and celebrate. But until then, there is always the chance that something can go sideways, however slight.

In almost every residential real estate transaction, your lender will order up an appraisal of the property to determine that its valuation is closely aligned to the agreed contract sales price.

However, in a VA transaction, the appraiser many times does more than simply determine market valuation. They can also identify potential safety hazards, structural concerns, or other defects, and make them ‘conditions for funding.’ This means that these issues must be resolved/corrected prior to closing. Some of these items may have already been uncovered and negotiated during the inspection. Still others may be in addition to what was handled during the inspection process.

While there is no doubt some standardized procedure to conducting VA appraisals, it’s always interesting (frustrating) to note how each appraiser can vary in their findings. One appraiser will come in at value with no conditions, while another appraiser will call out a long laundry list of ‘conditions for funding.’ At times there seems to be no rhyme or reason to the process.

Unfortunately, there are times when the ‘conditions for funding’ cannot be easily resolved, and the deal falls apart. But in many instances, with both Buyers, Sellers, and agents working together, a remedy can be achieved to satisfy the appraiser’s conditions.

Just knowing that the potential for these kinds of issues exist helps to eliminate any last minute surprises, and can mentally prepare Buyers for the possibility.

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Rich Jacobson is a licensed real estate professional providing knowledgeable empowerment and relentless representation for his clients of residential properties and vacant land throughout all of Kitsap County WA and portions of Pierce, Mason, and Jefferson Counties. You can also find him at KitsapLife.com and Crabbing in the Hood, or e-mail:  kitsapagent@gmail.com

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Tags: bangor subase, Kitsap County WA real estate, naval base kitsap, Silverdale WA Real Estate, va appraisals, va appraisers, va loan

This morning during the NAR (National Association of Realtors®) Mid-Year Legislative Meeting in Washington, D.C., HUD Secretary Shaun Donovan said that the Federal Housing Administration is going to begin permitting its lenders to allow 1st Time Home Buyers to use the $8,000 tax credit (originally provided in the American Recovery and Reinvestment Act) as a down payment.

Previously, most Buyers wouldn’t receive the credit until after they filed their tax return, and as such, it was proving to be a deterrent in keeping some people from using the credit. NAR has been actively pressing for the change.

“We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a down payment,” Donovan says. His remarks came in an address to several thousand REALTORS® gathered Tuesday morning at “The Real Estate Summit Advancing the US Economy” at the 2009 REALTORS® Midyear Legislative Meetings & Trade Expo in Washington, D.C..

He says FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.

For the full story, go HERE.

C O R R E C T I O N / U P D A T E:

I just came across this greatly informative video on Facebook from my good friend, Ken Cook, with Novation Mortgage in Marietta GA. Evidently there is some misinformation coming from the Feds regarding the use of this credit as a down payment. Fancy that!

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Rich Jacobson is a licensed real estate professional providing knowledgeable empowerment and relentless representation for his clients of residential properties and vacant land throughout all of Kitsap County WA and portions of Pierce, Mason, and Jefferson Counties. You can also find him at KitsapLife.com and Crabbing in the Hood, or e-mail:  kitsapagent@gmail.com

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Posted in Buyers, Real Estate Bites | 1 Comment »

Tags: 1st time buyers, down payment, nar, tax credit