More Veterans are using their Veterans Benefits to buy homes today with VA Loans. The problem many of them encounter is this: Mortgage Loan Originators (MLO) don’t have sufficient experience with VA Loans. This can make for some troublesome times when a Veteran is buying a home. You definitely want to work with an experienced MLO, someone with at least 15 years experience. Take some time when shopping for your VA Loan to interview the MLO before you make a decision.
Some key points for you to know when you interview a Licensed Mortgage Loan Originator (MLO) for your VA Loan:
VA Funding Fee is 2.15% of the Loan Amount (and is always financed) for Active Duty Veterans with at least 180 Days active duty. No Funding Fee for Disabled Veterans.
The Funding Fee is different for other service types/periods, including Reservists.
A Seller can pay all of a Veteran’s Closing Costs, and more.
There’s a lot of misinformation out there about VA Loans and your MLO will need to be available to explain and reassure the Seller and the real estate agents of the VA process. For example, many Sellers and/or real estate agents believe that VA Loans take “a LONG TIME” to approve and close. Not true. (My average closing time on VA loans is about 6-8 weeks compared to 3-4 weeks for FHA). They also believe that VA Appraisals ALWAYS slash the value of the house. Not true. I’ve only seen one VA Appraisal come in slightly less than purchase price in the last couple of years, and, in that case, both the Listing Agent and I suspected the value might be tight before. Bottom Line: your MLO has to have clear communication to make it easier for you to negotiate with Sellers when competing against other Buyers with different financing terms.
If your MLO asks you for your DD-214 right away, then you know you’re dealing with someone with experience. You don’t need the Certificate of Eligibility or COE as we MLO’s can obtain that directly from VA on your behalf.
For a New York Purchase you’ll need some cash for your “Good Faith Deposit” when you sign the contract of sale. It’s the rare Seller who will sign a contract with a Buyer who doesn’t at least put $10,000 on the contract (refundable to the Veteran at closing due to the 100% financing). Not that it’s impossible (I’m working with 3 Veterans right now who have less than $5,000 to put down), but it will require serious negotiating on the part of your MLO, real estate agent, and Attorney.
VA Condos: few and far between because the VA just doesn’t approve enough Condos, so focus on Single Family Homes. Find VA Approved Condos
Two Family Homes: unless you have experience in property management (and can prove it), you’ll have to qualify with your own INCOME for the purchase; rental income will be excluded from the qualifications.
You’ll need a Termite Report but YOU CANNOT PAY FOR IT, the Seller must pay.
We qualify Veterans’ Income two ways: a percentage of monthly gross income, or “Debt to Income Ratio” AND a residual income method which is similar to doing a family budget, so it’s a pretty cool way to qualify you.
Do you have questions? Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in New York State.
Check out my Trulia profile HERE
Check out my Zillow profile HERE
Find me on TWITTER: @tcurranmortgage