VA Loan Reader Question: Buying Land With a VA Loan - 02/29/12 06:30 AM
A reader asks, “Can I use a VA loan to buy land in order to build on?”
There are two sections of the VA loan rules which offer guidance for the eligible uses of VA loans. One is Chapter 3 of the VA Lender’s Handbook, which states the following in Section 2, Eligible Loan Purposes:
“The law authorizes VA to guarantee loans made to eligible veterans only for the following purposes…” which include “To purchase or construct a residence, including a condominium or cooperative unit, to be owned and occupied by the veteran as a home…”
Some private-company VA loan websites … (1 comments)

VA Loans and Final Payoff - 02/29/12 05:35 AM
We write a lot about the beginning of the VA home loan process, but not much about the end, when the loan is considered paid in full. What happens when the VA loan is to be paid off?
As we’ve mentioned before, the VA borrower’s final mortgage loan payment may be higher than the amount paid over the lifetime of the loan. This could be due to several reasons, but VA loan rules prohibit a final payment larger than two times the average of the preceding installments on the loan. (There are some limited exceptions to this rule in some cases.)
… (0 comments)

VA Loan Amortization - 02/28/12 05:51 AM
VA home loans are required to be paid in full within what the Department of Veterans Affairs describes as the “estimated economic life” of the home. This is calculated at 30 years and 32 days for “maximum maturity”.
The VA Lender’s Handbook states, “every loan must be repayable within the estimated economic life of the property securing the loan,” and the repayment period for VA mortgages begins “from the date of the note or other evidence of indebtedness.” But what about VA home loans that are issued with payments due that, based on the terms of the loan or the final … (0 comments)

VA Loan Appraisal Rules: Your Mileage May Vary - 02/28/12 05:49 AM
A reader asks, “I’m getting ready to make an offer on a house which sides to a freeway sound wall. Will this type of location disqualify the house for a VA loan?”
While the Department of Veterans Affairs does specify a wide range of conditions for which a home may not be acceptable for a VA mortgage loan, the rules for what the VA terms Minimum Property Standards do not address each and every situation a home buyer might face. Questions like these may have different answers depending on where the home is located.
For example, the VA appraiser may review … (1 comments)

VA Loan Credit Checks - 02/27/12 06:56 AM
When you apply for a VA guaranteed home loan, you are required to give your consent to a series of lender verifications on your employment history, credit history and credit score.
But the lender isn’t permitted to do these checks without permission–VA loan rules require the borrower’s authorization in order to proceed.
According to the VA Lender’s Handbook, Chapter 4, in the section called How To Underwrite A VA Guaranteed Loan, the lender is instructed to “Obtain all necessary verifications” using your authorization.
According to the rules, “The applicant’s authorization can be obtained for each verification needed, or on one blanket … (0 comments)

VA Loans: Enlistment Verification - 02/24/12 04:40 AM
Military members applying for VA insured home loans should know about the VA loan rules for service members within a year of their current re-enlistment date. The Department of Veterans Affairs has additional paperwork requirements for VA loan applicants currently serving who are near the end of their current military service commitment.
The VA Lender’s Handbook instructs lenders to “identify servicemembers who are within 12 months of release from active duty or end of contract term. Find the date of expiration of the applicant’s current contract for active service on the LES (for an enlisted servicemember). For a National Guard or … (0 comments)

VA Loan Questions: Can I Use a VA Loan To Landscape My Property? - 02/23/12 06:45 AM
A reader asks, “I have never used my VA Loan. Can I use my VA benefits to landscape my yard to include installing a fence? If so how do I apply for the loan?”
VA home loans have a list of approved uses spelled out in the VA Lender’s Handbook. These uses include purchase, refinancing, and rehabbing residential properties intended to be the primary residence of the VA loan applicant.
While VA loan requirements do permit a borrower to simultaneously purchase and repair or rehab a home, it does not allow the borrower to apply for a new purchase VA home … (0 comments)

VA Loan Rules on Rental Income - 02/22/12 07:36 AM
A reader asked us recently,
“I got a loan modification on my house 2 years ago, it is a conventional loan and I am the only one on the loan, my husband job is too far to commute and we have had to rent for the past 4 years.”
“We now are in a better position to buy, my question is if I received a loan modification and I can now rent that house due to job location/income unavailable to that house, will I not be able to use a VA loan to purchase a owner occupied residence for my own … (1 comments)

VA Loan Minimum Property Requirements: A Reader Question - 02/22/12 07:16 AM
A reader asks:
“I recently made an offer on a house but I was told that it might not meet VA MPR’s. I know the house is a mess because the owner left everything in the house but there is no paint peeling and structurally the house is in good shape.”
“Other than a small hole in the wood paneling in the basement approximately 1ft x 6 inches no ceiling in the basement and a small leak in the bathroom and it being a mess the house is in good shape. What does the VA appraiser normally look for? I would … (0 comments)

VA Loans, Bankruptcy and Foreclosure - 02/21/12 06:47 AM
We’ve had a lot of reader questions lately on bankruptcy and foreclosures as they related to VA insured home loans.
Since these issues are a concern for many of our readers, we thought it would be a good idea to post some of the general rules regarding bankruptcy and foreclosure. On page 35 of the Manchester, New Hampshire VA Regional Loan Center guide, The VA Loan Program For Real Estate Professionals you’ll find the following general guidelines:
“Bankruptcy
Chapter 13 – VA requires a 12 month satisfactory payment history for the plan and approval by the courts.
Chapter 7 – If … (0 comments)

Reader Question: VA Loan Short Sales - 02/21/12 06:06 AM
Homeowners sometimes encounter difficult financial times and in some cases are forced to sell their homes in order to avoid loan default and/or foreclosure. In some cases borrowers–including VA home loan borrowers–choose an option called a short sale.
According to the Department of Veterans Affairs official site, “VA urges all veterans who are encountering problems making their mortgage payments to speak with their servicers as soon as possible to explore options to avoid foreclosure…Depending on a veteran’s specific situation, servicers may offer any of the following options to avoid foreclosure:
Repayment Plan – The borrower makes regular installment each month plus … (0 comments)

VA Loan Reader Questions: VA Refinancing On Multiple Properties - 02/20/12 05:46 AM
Recently a reader asked, “Can a veteran combine two pieces of property, one being a full time residence and the other a second home in a refinance?”
VA loan rules for Interest Rate Reduction Refinancing Loans state clearly, “An IRRRL cannot be used to take equity out of the property or pay off debts, other than the VA loan being refinanced (emphasis ours). Loan proceeds may only be applied to paying off the existing VA loan and to the costs of obtaining or closing the IRRRL.”
That rule would preclude using a VA IRRRL for two properties at once. While it … (0 comments)

VA Loan Reader Question: Conventional-To-VA Refinancing - 02/17/12 05:38 AM
A reader got in touch with us recently about VA loan refinancing. He writes, “Looking to refinance a conventional loan with a VA. I have no phone land line. Pre-paid cell phone only. Can only take short calls.”
This puts a potential borrower in a tricky spot; doing business on a VA loan–or any type of major credit application–requires extensive contact with the lender. A borrower should be prepared to do business in person and take calls from the lender regarding the credit application, employment and income verification and other issues.
If you have limited ways to be contacted during business … (1 comments)

Restricted Uses for VA Home Loans - 02/16/12 09:53 AM
VA home loans are intended as a benefit for military service. The Department of Veterans Affairs has designed the program to be used to help qualified military members purchase residences, and includes a set of eligible and ineligible uses for a VA insured home loan.
Eligible uses for a VA mortgage loan include purchasing, refinancing, repairing or rehabbing a home intended to be used as the borrower’s primary residence. But what does the VA consider to be an ineligible use for a VA home loan?
According to Chapter Three, Section Two of the VA Lender’s Handbook, VA loans can’t be used … (3 comments)

VA Loans and Down Payment Rules - 02/16/12 09:37 AM
One of the most attractive features of a VA home loan is the no-money-down option.
The VA Lender’s Handbook states, “No downpayment is required by VA unless the purchase price exceeds the reasonable value of the property, or the loan is a Graduated Payment Mortgage (GPM).”
When the purchase price exceeds the value of the home, the VA requires a down payment because it will not insure a loan amount higher than the appraised value of the home as determined by a VA-assigned appraiser. The down payment is basically the difference between the reasonable value of the property and the amount … (1 comments)

Veterans Specifically Named in Historic Housing Settlement Between Government, Major Lenders - 02/15/12 10:20 AM
A recent Department of Housing and Urban Development press release announced a massive settlement between the federal government and the nation’s largest home loan servicers.
“…(The) federal government and 49 state attorneys general have reached a landmark $25 billion agreement with the nation’s five largest mortgage servicers to address mortgage loan servicing and foreclosure abuses. The agreement provides substantial financial relief to homeowners and establishes significant new homeowner protections for the future.”
In our previous blog post we mentioned that this settlement mentions veterans specifically. How does this landmark agreement affect VA borrowers and veteran home owners?
According to the press … (0 comments)

Historic Settlement Affects Veteran Homeowners, VA Borrowers - 02/15/12 10:02 AM
The Department of Housing and Urban Development recently announced a historic $25 billion settlement between the federal government and five major lenders over loan servicing and foreclosure abuses.
According to a HUD press release, this arrangement offers “substantial financial relief to homeowners and establishes significant new homeowner protections for the future”.
The settlement, which involves Bank of America Corporation, JPMorgan Chase & Co., Wells Fargo & Company, Citigroup Inc., and Ally Financial Inc. (formerly known as GMAC) is the result of investigations by the Department of Justice, HUD and the HUD Office of the Inspector General, plus state attorneys general and … (2 comments)

VA Loans and Refinancing Rules - 02/14/12 09:11 AM
A reader asks, “I currently have a conventional fixed rate loan on a house I originally purchased using a VA loan (ARM). I paid off that loan when I refinance it to a fixed rate loan with another lender. Now I would like to refinance to a lower fixed rate using a VA loan. I am still eligible for a COE but do not know how to proceed to use it to refinance to a VA loan. How can/should I obtain a VA loan to refi my home?”
VA refinancing from conventional to VA mortgages is addressed in the Veterans Benefits … (1 comments)

The First Step Toward a VA Home Loan - 02/13/12 09:56 AM
Borrowers who want a new purchase VA home loan have one very important step they must take before they can move ahead with their VA loan application, loan approval and other parts of the VA mortgage process. Borrowers must establish eligibility for a VA home loan and have that eligibility on file with the lender.
The VA lender’s guide has a section titled, “What Is Eligibility?” It explains, “Eligibility means the veteran meets the basic criteria of appropriate length and character of service to utilize the home loan benefit.”
These standards are different for VA borrowers depending on when they joined … (0 comments)

VA Loan Eligibility: The Basics - 02/10/12 03:11 AM
One of the most frequently asked questions about VA home loans is, “Am I eligible for a VA insured home loan?”
VA mortgages are for former and current members of the U.S. armed forces who qualify under the VA rules for time in service and, where applicable, the nature of the veteran’s discharge from military service.
VA loan eligibility is also given to qualified surviving spouses of military members who died during or as a result of military service.
But the rules for VA home loan eligibility vary based on a number of factors, including the dates of service. For example, … (0 comments)

VA Loan Limits - 02/09/12 08:24 AM
A reader left a comment about VA home loan limits recently, which included a question about VA maximum loans.
“I would like to buy a house in San Bernardino County CA, but the VA loan limit for that county is $450,000. The houses that I’m looking for and can afford are in the range of $600,000 to $750,000. Why should I or any other vet be penalized because of the county he lives in and wants to relocate in. If this is not discrimination, what is it? There are many affluent areas in SB county as there is in any other … (0 comments)

VA Loans, Appraisals, and Minimum Property Requirements - 02/08/12 09:11 AM
The VA appraisal is a major part of the loan approval process. When a buyer chooses a property he or she wants to purchase with a VA-guaranteed mortgage loan, a VA appraiser must review the home to make sure it meets the VA minimum property requirements.
We get frequent questions about these requirements, also known as VA MPRs. Some of the most common involve the placement of smoke detectors, requirements for electrical, water and sewage systems, plus “why didn’t the home pass inspection?” queries.
Borrowers should know that VA MPRs are written for general conditions and specific issues, but the VA … (0 comments)

VA Cash-Out Refinancing Basics - 02/08/12 08:54 AM
There are two basic types of VA refinancing loans borrowers can choose–one with no cash back to the borrower, and refinancing that does feature cash out.
Borrowers are interested in VA cash-out refinancing for a variety of reasons. Some want money back to pay bills, do home repairs, or other purposes. According to the VA loan rules, “Loan proceeds beyond the amount needed to pay off the lien(s) may be taken as cash by the borrower for any purpose acceptable to the lender.”
When considering any cash-out refinancing loan guaranteed by the VA, it’s important to remember that the word “refinancing” … (0 comments)

Including VA Loan Closing Costs Into an IRRRL - 02/07/12 10:14 AM
When applying for a VA Interest Rate Reduction Refinancing Loan, some borrowers are interested in including closing costs into the loan amount.
Borrowers should be aware that while any add-ons to the loan that increase the monthly payment by more than 20% will require the loan to become a credit-qualifying VA loan, closing costs can be added to the loan amount.
But which closing costs are permitted?
According to the Department of Veterans Affairs in Chapter 6 of the VA Lender’s Handbook;
“The following fees and charges may be included in an IRRRL:
• the VA funding fee, and • any … (1 comments)

VA Loan Reader Question: Foreclosure - 02/06/12 11:50 AM
A reader recently asked,
“Our home is supposed to go into foreclosure due to the fact the mortgage was too high with the 1st and 2nd mortgage and my daughter losing her job, and husband medical history, we had to help out with the grand-kids. Can we buy another home using a VA loan with a lower rate and downsizing?”
The reader also adds, “…The only thing on our credit report is we are behind on our mortgage due to these problems and we know with our income of over 100,000 we are more than able to afford a home, … (0 comments)

VA Announcement on VA Loan Limits - 02/03/12 09:32 AM
A VA announcement dated January 25, 2012 was recently posted on the VA official site at VA.gov. VA Circular 26-12-1 states, “This circular announces that the 2012 county loan limits have been posted.”
No real news there, but the circular goes on to address a question on the minds of VA loan applicants who were watching the VA loan limits from 2011 to 2012.
Some borrowers are asking, “What happened to the VA loan limits?” VA Circular 26-12-1 provides the answer for those who perceive lower VA county loan limits in 2012 than in 2011 for some areas.
“In general, limits … (2 comments)

VA Loan Reader Question: Joint Loans With Non-Veterans - 02/02/12 08:49 AM
A reader asks. “I am a veteran with my DD214 and Certificate of Eligibility and would like to know if I can be on the same mortgage with my spouse and my mother?”
When it comes to VA home loans, the spouse may be included in the loan. This requires the spouse to submit to the same qualification process as the veteran borrower, including income and employment verification, credit check, etc.
Any qualified third party included in the VA loan application who is not a veteran or the veteran’s spouse is able to co-borrow, but the VA will not insure that … (1 comments)

VA Loans, Appraisals, and Repairs - 02/02/12 08:49 AM
A reader asked us recently about VA loan rules covering inspections.
“I am looking at purchasing a short sale, the property has some structural damage. I have consulted with a structural engineer and am prepared to make the repairs. My question is this: I will be doing a VA loan, will these repairs need (to be) fixed to pass the va inspection?”
The reader also adds, “…If this is needed to pass the inspection, when does the VA inspection take place, near closing?”
VA rules require an appraisal prior to loan approval. The appraisal establishes the reasonable value of the property, … (1 comments)

VA Rules On Flood Zone Determination Fees - 02/01/12 10:40 AM
After reading a previous blog post about VA loan rules on flood zone determination, a reader asks, “Maybe it’s me, but aren’t these sentences contradictory?
‘Borrowers can also be charged for the actual cost of flood zone determination where required. This is usually applicable when it is necessary to discover whether the home is in a Special Flood Hazard Area.‘
(and)
‘A fee may not be charged for a flood zone determination made by the lender or a VA appraiser.’
At first glance this might appear to be contradictory information, but the spirit of the VA loan rules here is … (0 comments)

Reusing VA Home Loan Eligibility - 02/01/12 10:37 AM
VA home loans require a borrower to establish eligibility for the VA loan benefit before the loan application process can begin. A borrower applies for a VA Certificate of Eligibility, and once received either by mail or electronically the borrower and lender can work together on the VA mortgage loan.
Some borrowers use their VA loan eligibility and later decide they would like to apply for another VA home loan. This would seem to be the case for one reader, who asks:
“How do I find out if I can use my VA loan again?”
According to the VA official site, … (0 comments)

 

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