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VA Loan Refinancing Picks up in Orange County, CA

November 20, 2012 by Tim Storm 1 Comment

VA loan refinancing has picked up quite a bit in Orange County in 2012. And it’s not just current VA borrowers taking advantage of the VA to VA Interest Rate Reduction Refinance Loan, also known as the IRRRL. Veterans are also refinancing out of Conventional loans and into VA loans.

Why Refinance from Conventional to VA?

VA loan guidelines offer several advantages over typical Conventional loan guidelines. Lower FICO score requirements, less equity, higher debt to income ratios, and less time needed after a foreclosure or bankruptcy are all reasons why VA refinancing has been so popular in 2012. Also interest rates on a VA loan tend to be as low or sometimes lower than other types of loans. And while VA does have a Funding Fee which is financed into the loan, there is no Monthly Mortgage Insurance which is typical for other high loan to value financing.

Orange County has high loan limits for VA Financing

Orange and Los Angeles counties have high 100% financing limits for VA loans. It is possible to buy or refinance with no down payment or equity up to a $687,500 (2014 limit) loan amount. That is higher than the high balance Conforming loan limit of $625,500. Plus, it’s possible to get financing as high as $1,500,000. There is an equity requirement when the loan is over $687,500 equal to 25% of the difference between the appraised value and the 100% limit. For example, if an Orange County Veterans home appraises for $887,500 then the max VA loan would be $837,500.

How do you know if a VA loan is for you?

A VA loan is not the best loan in every situation. It’s important to compare your options. Find a local Orange County lender who specializes in VA financing. Have the lender prepare a custom Side By Side analysis comparing your current loan to a VA loan and whatever others options that are available.

Authored by Tim Storm, a California Mortgage Loan Officer MLO 223456 – Please contact my office at the Emery Financial. Direct line at 949-640-3102. www.OrangeCountyVALoans.com

Filed Under: VA Refinance Loans

Orange County VA Loan Limits Increase through end of 2012

August 19, 2012 by Tim Storm 1 Comment

The VA loan limits in Orange County, CA were already at a high level in 2012. Effective August 6, 2012, the VA loan limits for 100% financing in Orange County has been increased from $621,000 to $675,000. The Honoring America’s Veterans and Caring for Camp Lejeune Families ACT of 2012 brought several changes to the Veterans Guaranty loan program. The biggest change is that the calculation for each counties zero down limit has been reverted back to the old version (pre-2012). The new loan limits applies to all VA loans closed from August 6, 2012 through December 31, 2012.

$675,000 with No Down Payment in Orange County, CA

$675,000 buys a nice home in Orange County. This limit also applies to Los Angeles County. The property can be a single family home or a condo. If it is a condo then the condo project needs to be on the VA Approved Condo list. It is also possible to use VA financing to purchase a 2, 3, or 4 unit property as long as at least one of the units will be occupied by the Veteran.

How about a $1,000,000 Jumbo VA loan?

Technically, VA does not have a “limit”. There is a limit for 100% financing, but it is possible to purchase a home for more than the 100% financing limit by coming in with a small down payment. A down payment equal to 25% of the difference between the 100% financing limit and the purchase price is required. For example, if Johnny Johnson wants to buy a home in Irvine with VA financing for a price of $775,000, then a down payment of $25,000 is required. The base VA loan would be $750,000. ($775,000 price less $675,000 limit = $100,000. 25% of $100,000 is $25,000, which is the down payment.) That end up being 3.23% down payment on a $775,000 purchase price. With no mortgage insurance and a low fixed rate. There is no other type of financing that can touch a VA loan.

Refinance to VA loan at $675,000 with No Equity in Orange County

This new loan limit is not just for purchasing a home. It also works for a refinance. For a Veteran who bought their home several years ago and put 20% down, but now has no equity, this can be a great solution. Especially since the Conforming loan limit in Orange County is $625,500. Not only does a Conventional loan require 20% equity for a refinance (unless you are able to get Private Mortgage Insurance which is an added expense and is expensive), but VA interest rates are most likely lower than a high balance Conforming loan. And almost certainly lower than a Jumbo 30 year fixed on a Conventional loan.

The first step in determining whether a VA loan is right for you is to contact a local Orange County VA loan specialist. Your VA loan officer should be able to prepare custom loan scenarios after a quick conversation over the phone. The loan scenarios should give you a very clear and concise break down of the numbers involved in purchase or refinance to a VA loan. Even better, your loan officer should be able to prepare a custom “screen capture” video which will walk you through loan scenarios, answering questions you may have.

Filed Under: VA Mortgage, VA Refinance Loans Tagged With: 2012, Irvine, Orange County, refinance, va loan limit

Impound/Escrow Accounts are Required on VA Loans for Orange County Veterans

June 17, 2012 by Tim Storm Leave a Comment

An impound account, also known as an escrow account, is required on VA loans for the life of the loan. The purpose of the impound account is to make sure the Veteran stays current on the property taxes and home owners insurance. The last thing anyone wants is a property tax lien, which could take precedent over a VA mortgage. Most lenders in California require an impound account on any type of loan when there is less than a 10% down payment. The FHA loan program, which is another government loan program available to anyone and only requires a 3.5% down payment also requires an impound account for the life of the loan.

Is the Impound Account Interest Bearing?

In most states the Escrow Account is not interest bearing, meaning the Veteran does not earn interest on the money being held in the account on their behalf. However, in Orange County and in California it is now law that escrow accounts earn interest which is paid out to the homeowner. However, don’t expect to make a killing. The amount of interest earned will be minimal.

The Impound Account Helps VA Homeowners Budget Their Cashflow

This “forced savings” account is meant to help the Orange County Veteran budget their finances. It is not uncommon for homeowners to not budget for the semi annual tax bills or annual homeowners insurance payments. Property taxes in Orange County, CA are due on November 1 and then again on February 1. Tax payments that are not made prior to the grace periods of December 10 and April 10 become delinquent, which carries penalty fees. Also, it could turn into a tax lien. Having an escrow account prevents all this.

For homebuyers and homeowners who are interested in learning more about VA financing and all the benefits the program offers, contacting a local Orange County VA loan officer is the first step.

Authored by Tim Storm, an Orange County, CA VA Loan Officer – Please contact my office at Emery Financial for more information about an Orange County, CA home loan. 949-640-3102

www.OCFHALoans.com

tstorm (at) ochomebuyerloans.com

Filed Under: VA Mortgage

What Your Real Estate Agent Needs to Know about VA Financing | Orange County, CA

June 17, 2012 by Tim Storm 1 Comment

(Updated Feb 19, 2018) Although VA financing is a great way to purchase a home in Orange County, CA, it is still used rarely enough that Orange County real estate agents are unfamiliar and even uncomfortable with VA buyers. It is not uncommon for a VA buyer to feel like they are being pushed aside if there are multiple offers on a property. For this reason, it is important that the real estate agents who choose to work with a VA buyer are familiar with certain aspects of VA financing.

VA Financing in Orange County is Easy! Trust Me

VA financing is actually fairly easy compared to other types of financing.

Credit and FICO scoring – VA is very flexible, with most lenders allowing FICO scores as low as 620, and that is for 100% financing. Try getting a Conventional loan with even 5% down and a 640 FICO score. – and no reserves? Also, VA requires less time after a bankruptcy (2 yrs) or foreclosure (2 yrs) than a Conventional loan.
Debt to Income ratio – The guideline for a VA loan is 41%, meaning 41% of the Veterans income can go towards the mortgage payment, car payments, etc. But approvals are common with debt to income ratios over 50%. (even 60% in some circumstances). Conventional financing tends to cap out at 45%. FHA is fairly similar to VA when it comes to debt to income ratios.
Down payment – this is the biggy. In Orange County a Veteran can buy a home with no down payment up to a price of $679,650 (in 2018). FHA requires 3.5% down payment up to a loan of $679,650 (2018). On a Conventional loan under $453,100, 3% down is possible, but 5% down is more probable. When the loan amount is over $453,100 (the Orange County Conforming limit is $679,650) then a 5% down payment is required. And of course, with a Conventional loan with less than 20% down payment, mortgage insurance is required. FHA also has mortgage insurance, both up front and monthly. And FHA’s mortgage insurance premiums are fairly high. VA has no monthly mortgage insurance!
Jumbo Loan Amounts – While Conventional and FHA loans cap out at $667,650 in 2018, VA doesn’t really have a limit. But it is difficult to find a lender that will go higher than $1,500,000. Yes, the $0 down limit in Orange County is $679,650 in 2018, but if a Veteran purchases a home for more than that price, they can still get a “Jumbo VA Loan“. They have to come in with a down payment equal to 25% of the difference between the purchase price and their 100% limit.
Interest rates – VA interest rates (like FHA) tend to be lower than Conventional interest rates. But again, while FHA has mortgage insurance, VA does not. And considering that at the moment it is difficult to get an aggressive Jumbo 30 year fixed rate, VA can be a great option for a $1,000,000 30 year fixed rate for those that are eligible.

So all of this sounds great. What is the issue then? Why is there a misconception of VA financing in Orange County? I think it is a fear of the unknown. Most real estate agents have not been involved in a transaction with a VA buyer. If they have, it was a long time ago. What are the concerns?

Common Concern with VA Financing and the Answers

“I’ve heard is take a long time to close escrow”. Well, it doesn’t if the lender knows what they are doing. As with any type of financing these days, its important that the Veteran be PreApproved before they make an offer on a home. Get all their ducks in a row. But again, this is the case with any type of financing. Closing a VA loan in 30 days is not difficult. One of the hardest things to do in the processing of a loan is to document funds to close. At least with VA there’s not much money needed, if any.
“I’ve heard VA appraisers are very conservative”. Huh? Where does this come from? Most VA appraisers also do FHA and Conventional appraisals. The value analysis is no different than any other type of appraisal. A VA appraiser will look more closely for safety issues than on a Conventional appraisal. If there are broken windows, holes in the floor, or loose wires hanging from the walls, be ready for some repairs. But this is no different than FHA. And if the house really looks that bad, a Conventional appraiser could call out the same things.
“Doesn’t the seller have to pay the buyers costs”. The quick answer is “no”. In the old days (a few years ago), certain expenses, like lender fees, escrow fees, and a few other smaller fees could not be paid by the buyer. But a VA buyer is allowed to pay up to 1% of the loan amount in what would be called “non allowable fees” if there is no Origination Fee. Partly because Orange County tends to have larger loan amounts than other parts of the country, and because after changes a few years ago to the Good Faith Estimate, any Origination Fee is typically just the lender fee anyway. On most deals there is plenty of room to fit the other “non-allowable” fees in the the 1% threshold. Non-Allowable fees have effectively become a non-issue and the seller is not required to pay closing costs for the buyer.
“Is a termite inspection required”. Yes. And this is one big difference between all other types of financing. While other types of financing do not require a termite inspection, or clear termite report, VA does. This is a “regional requirement”. All Section 1 items are required to be cleared on the Report, but it should be noted that at the underwriters discretion, Section II items may also need to be cleared. And since Section II items tend to be relatively minor, it should just be made clear that “All Section I and Section II items need to be clear.” Also, it should be noted that while VA does not allow the Veteran to pay for the actual termite inspection, the Veteran IS allowed to pay for the repairs listed on the report.

Find a Lender AND a Real Estate Agent Knowledgeable with VA Financing in Orange County

Working with real estate professionals who are familiar with VA financing is important. The first step should be to contact a local Orange County VA lending specialist who can walk you through the loan process. Once Preapproved for a VA loan, you will be able to confidently begin the search or a home. While working with a Real Estate agent who is familiar with VA financing is important, a good VA lender can quickly advise your agent on the keys to VA financing.

*updated February 19, 2018

Authored by Tim Storm, a California Mortgage Loan Officer MLO 223456 – Please contact my office at the Home Point Financial. Direct line at 949-640-3102. www.OrangeCountyVALoans.com

Filed Under: VA Purchase Loans

Refinance to VA Loan from Conventional Loan in Orange County, CA

April 15, 2012 by Tim Storm 3 Comments

A VA refinance can be a great way take advantage of low interest rates in 2012, even if your Orange County property has lost most of its equity. It is possible to refinance into a VA loan from a non-VA loan up to 100% loan to value. Not only that, the VA loan limits are high. And VA 30 year fixed rates are low, even lower than most Conventional loan programs. The VA 100% financing limit in Orange County and Los Angeles County in 2012 is $621,000. But it possible to get a VA loan up to a loan amount of $1,500,000 with far less equity than a typical Jumbo lender would require.

Orange County 2012 VA Loan Limits

Near the end of every year VA will announce their new loan limits. In 2012, the loan limits for Orange County is $621,000 up to 100% of the properties value. While most lenders will only allow a refinance up to 90% of the VA limit, there are lenders who do allow a refinance to 100% of the properties value, as long as the loan is within the 100% financing limit. While there are many eligible Veterans in Orange County, many of them are aware of the benefits of the VA program when it comes to refinancing. But with the drop in property values, more Orange County Veterans, who initially bought their home with Conventional financing, are finding that they can save hundreds per month by taking advantage of their VA benefits.

For example, an Irvine homeowner who financed their home in 2008 with a $500,000 Conventional 30 year fixed loan at 5.5% would have a payment of $2,838. Let’s assume the property was worth $600,000 in 2008. Now, 4 years later, the loan balance is down to approximately $470,000 and their property is also now worth $470,000. Their lender won’t refinance them since they don’t have 20% equity, and they also are not eligible for the HARP refinance program since their loan is not Fannie Mae or Freddie Mac.As of April 2012, VA interest rates are ranging between 3.75% (4.016 APR) and 4.25% (4.492 APR). Let’s assume the homeowner chooses a VA loan at 4%, which also allows for all closing costs to be paid using a lender credit. There is a VA Funding Fee equal to 2.15% based on this Veterans first time use of the VA eligibility. They end up with a new loan of approximately $480,000 (Funding Fee was $10,000). Their principal and interest payment would drop to $2,296, a $541 monthly savings. If the Orange County VA borrower was to continue to make the save payment on their VA loan as they were making on their 5.5% Conventional loan. They would end up paying their loan off 5 year sooner, savings over $175,000 over the life of the loan. This is only possible because of the flexibility of the VA loan program.

Jumbo VA Loan in Orange County to $1,500,000

This also works for loan amounts over the 100% financing limit. It is actually possible to get a VA loan up to $1,500,000. While 100% financing is not allowed over the $621,000 limit, very little equity, especially compared to a normal Jumbo loan program, is required. To figure out the loan amount allowed, take 75% of the difference between the properties value and the Orange County 100% limit of $621,000. Add the difference back to $621,000 and that is the base VA loan amount. For example, let’s say a Newport Beach homeowner who is VA eligible owes $1,000,000 on a home that is worth $1,221,000. By taking 75% of the difference between $621,000 and $1,221,000 ($600,000 x 75% = $450,000) and adding it back to $621,000, we find the base VA loan will be $1,071,000. This means the Newport Beach Veteran can refinance his VA loan up to 87.7% of the properties value, and at a great 30 year fixed rate with no monthly mortgage insurance. There is not a Jumbo lender out there that will even touch this program. But again, the key is the borrower need to be VA eligible.

The property does need a termite inspection and and items on the termite report cleared prior to funding. VA also requires an impound account for property taxes and insurance. Besides that, there are many benefits to a the VA refinance.

Refinance to 100% loan to value with no mortgage insurance.
Combine a 1st and 2nd mortgage or equity line up to 100% loan to value.
Pull cash out up to 95% of the properties value.
Refinance a st mortgage and “subordinate” a 2nd mortgage to 115% of the properties value.
Very low 30 year fixed rates and 5 year ARM’s
Flexible qualifying – relatively high debt to income ratios

While most Orange County property owners are not eligible for VA financing, those that are should research their options when they are looking to refinance. Finding a knowledgeable Orange County VA lender is an important step in determining whether a VA refinance is a viable option. The VA lender should be able to provide a detailed custom analysis that compares your current loan to a new VA loan.

Authored by Tim Storm, an Orange County, CA FHA and VA Loan Officer – Please contact my office at Emery Financial for more information about an Orange County, CA home loan. Direct: 949-829-1846 MLO 223456

Filed Under: VA Cash out Refinance, VA Refinance Loans Tagged With: california va loan refinance, jumbo VA loan, jumbo va loan refinance, orange county va refinance