Our customers at US Government Home Loans
typically have many questions regarding the benefits they are entitled
to use towards purchasing a home through the VA or FHA. Loan
specialists are compiling an ongoing list of helpful answers to a wide
variety of questions that you may have concerning your pending home
purchase and your benefits as a veteran. If you have further questions,
please call our office at
1-888-526-4589.
Are conventional mortgage rates
better than VA rates?
Conventional mortgage rates aren't necessarily lower than VA rates. Once
approved for a VA loan, the veteran or active duty service person is
eligible for the best rates regardless of score or credit history. VA
rates are comparable to conventional rates where the borrower has near
perfect credit and 20% to put down, only with a VA loan the borrower can
have less than perfect credit and no money down.
Do I have to pay my closing costs
out of pocket?
In most cases the answer is no. If you are purchasing a home, the
contract can be structured to where the seller will pay up to 3% of the
loan amount towards borrower's closing costs for a conventional loan.
You can have the seller pay as much as 6% of the borrower's closing
costs for a VA loan. If you are refinancing your home loan, however, you
will be responsible for all your costs unless you have enough equity in
your home to roll the costs into your new loan.
If I have my certificate of
eligibility, am I guaranteed to get a VA loan?
You are guaranteed for a VA mortgage once qualification is complete. The
lender will make sure you are able to support the mortgage payment for
the home or sales price you have selected. The borrower must still
qualify based on his/her income, assets, and the previous 12 months
credit history. This does not mean credit score. The borrower will just
need a clean credit record for the past year.
What are the benefits of a VA loan
vs. a conventional loan?
-
You can get 100% financing with no
mortgage insurance which means your entire interest payment is tax
deductible.
-
You can get approved with less
than perfect credit and still get a great rate.
-
When you are ready to refinance a
VA loan you can do what is called a streamline refinance that
requires no income, asset, or credit verification. Not to mention,
it is much cheaper that a conventional refinance because many of the
traditional closing costs are waived.
I've had a past bankruptcy; can I
still get a VA Loan?
-
If you've had a Ch. 7 bankruptcy,
you need to wait two years after it has been discharged to be able
to qualify for the VA loan. If you've had late payments on anything
credit related after your bankruptcy has been discharged, it will be
very difficult for you to qualify.
-
If you've filed a Ch. 13
bankruptcy, you must wait one year after it has been discharged.
Remember, Ch. 13 bankruptcies can take several years to become
discharged. If you are going through a Ch. 13, just remember that
you have to wait one year after discharge to become eligible, not
one year after you file for the Ch. 13. Also, just like the Ch. 7,
any late payments during or after the bankruptcy will make it almost
impossible to qualify for a VA loan.
I was turned down for a conventional
loan. Can I possibly qualify for a VA loan?
Yes, it is still possible to qualify for a VA loan. The VA doesn't base
their approvals solely on credit like many conventional lenders. All the
VA wants to see is a clean credit record for the past 12 months, as well
as documentation that proves you can make a house payment based on your
income in relation to the loan amount you are requesting.
What is the maximum VA loan amount?
The current maximum VA loan amount is $417,000. Just remember, even if
you are eligible for a VA loan, you still have to qualify for the
requested loan amount. This means that you may not be approved for the
entire maximum loan amount even if you are VA eligible. If you want to
purchase a home that is selling for more than the maximum VA loan
amount, then you would need to come up with the additional money in the
form of a down payment.
Do I need a down payment?
One of the great benefits of using a VA loan is that you can do the loan
with no money down (up to the VA maximum loan amount of $417,000) and
many times without having to pay money out of pocket for your closing
costs, either. If the loan and sales contract are set up correctly, you
can basically get a home loan for 100% of the sales price and have the
seller cover all of your closing costs.
What is the VA funding fee?
The VA funding fee is what the VA charges to do the loan. It is not a
fee that has to be paid at closing. This fee is simply added to your
base loan amount and is paid over the life of the loan. This fee
basically takes the place of the mortgage insurance that you would
normally find on a conventional loan. Even though the VA charges this
fee, you will find that it is much, much cheaper over time than mortgage
insurance.
Will I have mortgage insurance?
One of the great benefits of the VA loan is that it enables you to
borrower up to 100% of the home's appraised value (up to $417,000) with
out having to pay mortgage insurance. The VA charges a funding fee that
is much less expensive than mortgage insurance and isn't part of your
monthly mortgage payment.
What do I need to get a VA Loan?
You will need a
certificate of eligibility to qualify. Whether you are a
first time user or you have used your eligibility in the past, you must
have your certificate. A certificate can be mailed directly to you if
you fill out this
short form to obtain a VA
Certificate of Eligibility.
What's the difference between an FHA
Loan and a Conventional Mortgage?
Most applicants are inundated with a variety of terms describing
mortgages that are available on the market. The most popular include,
Fannie Mae, Freddie Mac, and FHA.
FHA was created by the Federal
Government to provide affordable housing financing for qualified
borrowers. FHA insures the loan, limiting the lender's risk. The
borrower pays an upfront insurance premium. This money can be financed
directly in the loan amount. The borrower also pays a monthly premium.
No reserves are required.
Borrowers must provide proof of
sufficient income to show ability to pay the mortgage. FHA guidelines
are more relaxed, such as; a bankruptcy that was discharged at least 2
years ago, the use of alternative credit (utilities, cable TV, auto or
medical insurance premiums, child care, school tuition, furniture or
appliance store accounts) in lieu of traditional credit, and higher debt
to income ratios. FHA interest rates are extremely competitive with
conventional rates.
Fannie Mae loans are conventional loans
made at the risk of the lender without benefit of any government
guarantee or government insurance. A conventional loan with an LTV (loan
to value ratio) of greater than 80% requires primary mortgage insurance,
which can be paid monthly. The borrower must have 5% of his/her own
funds for the down payment and 2 months reserves on deposit. Closing
costs must be paid by the borrower.
Requirements of a conventional loan
applicant include excellent credit, job stability with sufficient
income, a sizable down payment, and low debt to income ratios. Borrowers
who meet Fannie Mae guidelines are rewarded with an interest rate only
slightly lower than an FHA interest rate.
Note:
Our Government Home Loan Specialists work exclusively with 1st Mortgage Corp. located at 920 Providence Rd, Ste. 200, Towson, MD 21286 to finalize all home loans. 1st Mortgage Corporation is registered with
the Better Business Bureau. US Government Home Loans is NOT affiliated
with any government agencies, including the VA and FHA. US Government
Home Loans has relationships with VA and FHA mortgage specialists. These
specialists are VA- and FHA-approved lenders.
Government Home Loan Specialist
If you have questions or if you want to determine if a Veteran or FHA
Home Loan is actually the best financial decision for you, you may get
advice from a Government mortgage specialist online or call
1-888-526-4589.
