Orange County VA Loan Blog | Orange County, California VA Loans - Tim Storm

Can a VA Loan PreApproval be done in 5 Minutes over the phone?

June 9, 2014 by Tim Storm

VA loan PreApproval should not be confused with a verbal “Prequalification” over the phone. The most important and first step in the home buying process is to find out the price of the home you can afford. Ultimately the price will be determined by a combination of things, including how much money will be needed for the home purchase, the borrowers credit score, income (as shown on the tax returns), debts, and the Veterans payment comfort level. And while a 5 minute call to a lender is a good start, an actual PreApproval will take more than a brief phone call.

There are some mortgage websites that allow the borrower to print out their own PreApproval letter based on information they enter into an online form. The letter is available without a loan officer or underwriter reviewing any documentation. This is scary, because in today’s underwriting environment there are hundreds of potential issues that can arise during the loan process. Things that someone outside of the mortgage industry may not even think is an issue could be a deal killer if not dealt with prior to having an accepted offer to purchase a home.

VA loan PreApproval can be a fairly quick process depending on whether there are complications with the loan. Below are a few things that could cause serious headaches for the home buyer if they were to come up after an offer is accepted.

Depositing cash into an account to be used for closing costs. While depositing cash may sound like it’s not so bad, it can actually be disaster. All funds for closing a purchase need to be documented and come from an acceptable source. Cash cannot truly be documented. It could come from anywhere and with no paper trail . It could be a loan from a friend, which would not be acceptable. It could be a credit card advance, which would also not be acceptable. If you are planning to deposit cash into your bank account, discuss this with you loan officer prior to the deposit.
Paying off an old collection account just prior to making an offer on a home. This sounds like a good idea, and the lender may even need the collection to be paid off prior to closing. But paying off an old collection will “update” an old derogatory item on your credit report, which could lead to a lower FICO score. Your lender may suggest holding off on paying the collection until the loan is officially in process and a credit report with an acceptable FICO score has been pulled. The lender can have the credit bureau do a credit supplement during escrow to verify the account is paid off.
Closing credit card accounts prior to offer acceptance. Depending on your current FICO score, closing old credit card accounts could actually lower your FICO score. This is because those old accounts show that the borrower has a history of credit, hopefully in this case “good” credit. By closing the account, it will no longer be updated in the credit report, and the borrowers score could drop due to a lack of history.
Shopping for condos that are not on the VA approved list. There are ways to find VA approved condo’s that will save time if you are working with a local Orange County VA Loan Officer.

What is Needed for VA Loan PreApproval?

A more thorough review of the Veterans documentation will be needed before an offer to purchase is made if the odd’s for a smooth transaction are to increase. The VA lender will want to see the following items:

Paystubs for the most recent 30 days. For a self employed borrower, a Year to Date Profit and Loss statement.
Federal tax returns for the most recent two year time period, including all schedules. For a self employed borrower, the lender will also need their business tax returns for the most recent two years.
W2’s, 1099’s, and or K-1’s (self employed) for the most recent two years.
Bank statements for the most recent two months, including all pages (even if the last page is blank – if the first page shows “1 of 5” then provide all pages. The lender won’t know the last page is blank unless they have it in hand).
DD214 – this will be used by the VA lender to retrieve the Certificate of Eligibility. The Certificate of Eligibility will verify that the Veteran can use the VA program to finance their home. Making sure the Veteran’s Eligibility is in place prior to an accepted offer is very important.

The lender may also ask for additional items depending on the Veterans situation. Items like a divorce decree, bankruptcy papers, or documentation to back up derogatory items on a credit report will be needed. Also, if there are deposits that are not payroll related on the bank statements, then documentation to prove the deposits are from acceptable sources will be needed. Knowing this and already clearing these types of conditions will result in a very smooth and stress free closing. And no, this can’t all be done in 5 minutes. But it can be done quickly if you’re working with a loan officer who is dedicated to the VA loan program.

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 Purchase Loans Tagged With: prequalification, va loan preapproval

How Much Money is Needed to Buy a Home with a VA Loan?

June 4, 2014 by Tim Storm

The total amount of money needed to buy a home with a VA loan depends on several factors. Most Veterans know that VA offers 100% financing. But some assume that 100% financing means they will not need any money to buy a home. While it is definitely possible to buy a home using VA financing and not need any money to close, this needs to be planned out before the initial offer to purchase the home is made. There are closing costs and prepaid expenses that need to be paid by someone, if not by the Veteran.

Costs Involved in Purchasing a Home in Orange County, CA

The funds needed to close a VA loan are comprised of two things. Closing costs, which are one time costs having to do with the purchase of the home. The Closing costs are “non-recurring”. And Prepaid Expenses, which are also known as “recurring” expenses.

The Closing Costs include lender fees, appraisal, credit report, escrow closing costs, title report fees, recording fees to the county, and notary fees. There are also other items that can turn up depending on the property. For example, if purchasing an Orange County VA approved condo then expect a “condo transfer fee”, which is typically charged by the management company for the home owners association. The total closing costs can be anywhere from 1% to 2% of the purchase price.

Prepaid expenses include interest, property taxes, and home owners insurance.

Prepaid interest will vary depending on the date of closing. For example, if the loan closes on June 10 then 20 days of “prepaid” interest is collected. The daily interest is calculated by multiplying the loan amount by the interest rate for the loan and dividing by 360. A $500,000 loan at 4.25% would have $59 per day of prepaid interest. So closing on the 10th would require $1,180 of prepaid interest to be collected (20 x $59). The good news is that the first payment on a loan closing on June 10 will not be until 50 days later, on August 1. The first payment will nearly always be at least 30 days after closing. A loan closing on June 30 would have no prepaid interest, but would have its first payment 31 days later on August 1.
Property taxes. VA loans require an “impound account“, also know as an “escrow account”, for property taxes. The number of months of taxes that is deposited into the impound account is dependent upon the closing month of the loan,which in turn determines the 1st payment date. Your Orange County VA loan officer can help calculate the number of months needed as well as the total amount. The typical property tax calculation is 1.25% of the purchase price divided by 12. For example, a $500,000 purchase price x 1.25% = $6,250. $6,250 divided by 12 = $520 per month. A VA loan closing in June would require 6 months of taxes to be collected, or $3,125.
Home Owners Insurance. A one year premium is paid at closing for the Home Owners Insurance policy. This is something the Veteran will shop for on their own, but as a quick estimate use a factor of .3% of the loan amount divided by 12. A $500,000 loan amount x .3% = $1,500. On top of the premium, three months of insurance is also deposited into the impound account. So the total estimated amount needed for the insurance is $1,875. But again, the Veteran will shop for their own insurance. .3% is just an estimate.

The prepaid’s in the examples above add up to over $6,000 on a $500,000 loan. So between closing costs and prepaid’s, expect to pay between 2% and 2.5% of the loan amount. On a $500,000 loan this means the Veteran would need between $10,000 and $12,500. But what if the Veteran wants to do a VA No No, where not only in there no down payment but also the buyer will not paying any closing costs or prepaid’s? This is where planning comes into play. Your Orange County VA mortgage lender will be able to provide a detailed estimate of the funds needed as well as help offer options for having the costs paid. The obvious solution is to negotiate to have the seller pay all the buyers closing costs and prepaid expenses. However, Orange County has been in a sellers market in 2014 which makes it difficult to get an offer accepted when the Veteran is asking for a closing costs credit. Which is why it can make more sense to look at an option where the lender issues a “credit” that will cover some or all of the closing costs and prepaid expenses. Typically there will be an upward adjustment in the interest rate, but with the benefit of not needing funds to close.

Every transaction is different. And interest rates change every day. And these are the reasons why consulting with an experienced “VA loan” mortgage originator who can provide custom loan scenarios is so important. The scenario should have a detailed breakdown of the estimated closing costs and prepaid expenses so that the Veteran is prepared before making an offer on a home.

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 Purchase Loans Tagged With: va closing costs

VA Approved Condo for Sale in San Clemente, CA

May 28, 2014 by Tim Storm

Finding VA approved condo’s for a Veteran using VA financing can be time consuming. Understanding how to properly use the VA Approved Condo search on the Veterans Administration website is important. But also important is understanding that now all attached, “condo like” homes are actually condo’s. In San Clemente, CA there several projects that look like condo’s, and more importantly are priced like condo’s. But they will not be on the VA Condo Approval site since they are actually not condos.In many cases they are “townhomes”.

The Difference Between a Condo and a Townhouse in California

Definitions for condo’s and townhomes vary from state to state. California does not actually have a legal term “townhouse”. However, it is a commonly used term to describe a style of home. Typically “townhomes” are built in a row and will share one or two walls with adjacent units. A townhouse will typically start on the ground floor. A condo owner owns only the interior walls of the condo. They do not own the land under the condo, especially since in many case there may be another condo unit below them. In other terms, a condo is a legal description that defines the common ownership of the land, buildings, and common areas. A townhouse is a physical description of the property. It’s important to note that in areas of California, especially in Orange County, it can get confusing. There are Detached condos and Attached Single Family Homes that may look just like a condo or townhome.

To know for sure if you’re looking at a condo or not, the most accurate method is to review the Legal Description of the property. Also, in Orange County, if the Assessors Parcel Number (APN) begins with a “9”, then it is a condo. If it does not start with a “9” then it is not a condo and for VA financing purposes there is no need to see if the property is “VA Approved”. Condo’s are the only type of property that need to be “VA Approved” for a VA loan.

218 Avenida Adobe, San Clemente, CA 92672

A great example of a currently for sale Attached Single Family home is 218 Avenida Adobe, San Clemente, CA. Priced at $439,999, this home is is within the Presidential Heights community of San Clemente. It is a nice and spacious 2 bedroom and 1.5 bathroom home. There is a large open living and dining area with tile in the kitchen and dining room. There is a huge patio that is only steps from the community pool. The bedrooms are both on the second level, with a balcony off the guest bedroom. Both bedrooms have “peek a boo” ocean views. The home has approximately 1,060 square feet and the Home Owners Dues are $250 per month.

Presidential Heights is a community that sits above the San Clemente Municipal Golf Course and is known as a community perfect for first time buyers because of the affordable prices and location near golf and beaches. This community is also perfect for Orange County Veterans using the a VA home loan who want to live near Camp Pendleton.

The listing agent for this property is Stevie Koller with Realty One Group. The MLS Id is OC14052018. To learn more about the property you can call for pre-recorded information at (800) 349-3898 x 122.

Website with VA Approved Condo’s in San Clemente

To see a current list of VA approved condo’s for sale in San Clemente, go www.OrangeCountyVACondos.com. The site keeps the list updated by using an IDX feed directly from the MLS.

VA Home Loan Program for Orange County Veterans

The most important step in the home buying process is the initial consultation with a loan officer. Veterans looking to use the VA loan program to buy a home in Orange County should discuss their options with an experienced VA loan office. The loan officer should be able to prepare custom VA loan scenarios detailing on the purchase price, loan amount, payment, closing costs, and amount needed to close. Knowing these numbers before making an offer will put the Veteran in a better position to achieve a VA No No, where the Veteran buys the home with no down payment and no money out of pocket for closing costs.

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 Tagged With: san clemente condo for sale, va approved condo

The Ultimate VA NO NO Home Loan for Orange County Veterans

May 23, 2014 by Tim Storm

If you could buy a home with no down payment and no money out of pocket while at the same time paying down or eliminating credit card debt, would you do it? Sometimes a potential first time home buyer will delay their home purchase until all credit card debts are paid off. This is smart. Owning a home will involve unexpected expenses and having credit card debt at the same time as an unexpected expense can result in your credit card debt spiraling out of control. For Veterans, there is a way to actually buy a home with no down payment or money out of pocket, while at the same time having their debts paid off using what I like to call the Ultimate VA No No home loan.

The “VA No No” Loan

The VA home loan program allows eligible Veterans to buy or refinance homes up to 100% of the VA loan county limits. In Orange County, CA the VA Loan limit for 100% financing is $687,500. A “VA No No” is a common term referring to a Veterans ability to have NO down payment and NO closing costs. But closing costs do exist. So who pays them if the Veteran doesn’t want to? It’s important to note that if a Veteran plans to do a VA No No, then a loan officer needs to be consulted prior to the offer being made or escrow being opened. Closing costs on VA loans do exist, so if the Veteran does not have the funds to pay them or intends not to pay them then it is important that the initial purchase offer is structured in a way so that that happens. This is not something that should come up after the offer is accepted, especially in the case of a Veteran who has debts (credit card, car etc) that he expects to payoff through the purchase of a home.

There are three basic ways to achieve the second “No” of a VA No No.

The Seller can pay the buyers closing costs. In a “buyers” market this is fairly common. However, in a “Sellers” market it is not. And right now in Orange County, in 2014, we are in a sellers market. Home inventory levels are low and there are plenty of buyers trying to buy a home. Many homes for sale have multiple offers coming in. The offers that are negotiating for the seller to pay the buyers closing costs are at a big disadvantage. So while it is possible to have a seller pay the buyers closing costs, in many cases the buyer will have an uphill battle trying to get their offer accepted.
The real estate agent can pay the buyers closing costs. This does happen sometimes. There are some “discount” real estate companies that will credit some of their sales commission back to the buyer. But in most cases, even if there is a credit coming from the agent for closing costs, it’s probably not enough to cover everything.
The lender can pay the costs. This is actually a great way to do it. Depending on rates and loan pricing, it is possible to get a “credit” for closing costs from the lender. On any given day there is a “matrix” of rates that can be offered to the buyer. The lower the rate, the higher the cost. The higher the rate, the lower the cost. And if the rate is pushed higher enough, there could be enough lender credit to cover not only the closing costs, but also credit card debts (or other debts) of the buyer.

Seller Concession in VA Financing

The VA loan program is the only type of loan that allows for debts to be paid off on the Veterans behalf as part of the home buying process. In the case of the seller paying off debts, this is considered a “Seller Concession”. VA allows a Seller Concession of 4% of the appraised value. A concession includes:

The Veterans VA Funding Fee
The Veterans “prepaid” expenses – taxes and insurance impound account and prepaid interest
Temporary interest rate buy down fees
Gifts, such as a television, appliances, etc
The Veterans debts.

An Orange County Veteran buying a home in Mission Viejo for $550,000 with $0 down, and assuming a typical first time use VA Funding Fee of 2.15% would end up with a total loan of $561,825. If we assume that typical closing costs and prepaid expenses on a home purchase are 2% of the purchase price, then by going with an interest rate of 4% (4.246% APR) at 0 points, the Veteran would need $11,000 to close and their Principal and Interest Payment (P&I, not including taxes and insurance) would be $2,682. The Veteran could instead choose to go with a rate of 4.25% (4.327% APR) because the lender is offering a 2% credit which will be enough to cover the closing costs and prepaid expenses. This achieves a VA NO NO and the P&I is $2,763. The Veteran has saved $11,000 out of pocket with the trade off having a payment that is $80 higher per month. But what if the Veteran has $5,500 in credit card debt? In this case the lender may be able to offer a rate of 4.5% (4.5% APR) with a 3% credit towards the closing costs, prepaid expenses, and credit card payoff. Since the closing costs are 2%, this would leave 1%, or $5,500 ($550,000 price * 1%) for credit card payoff. The P&I payment would be $2,846, or $80 higher than the payment at 4.25%.

For some home buyers this may make sense. And for others it may not. But knowing your options and how you want to structure your deal before you make an offer is important. Finding an Orange County VA home loan specialist who can prepare custom loan scenarios showing a detailed analysis of the payment, closing costs, and amount needed to close is critical if you want to have a smooth, hassle free transaction.

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 Purchase Loans Tagged With: va no no

Why Orange County Home Sellers Should Accept Offers from Veterans

May 16, 2014 by Tim Storm

Orange County home sellers should take offers to purchase their homes from Veterans using VA financing seriously. It can be frustrating for Veterans in Orange County when sellers seem to disregard an offer because of a fear that somehow a VA loan has a lesser chance of closing than other types of financing. Besides the fact that Veterans did serve our country and fight for our freedom, the VA loan program is a solid and easy to close loan. So why do some sellers (and maybe their real estate agents) think otherwise?

Common Myth’s About the VA Loan

The seller is required to pay closing costs for the Veteran. – Uh yeah, NO. This is not the case. The seller is NOT required to pay closing costs for the buyer. The buyer can pay their costs. Why do some real estate agents and their sellers think they must pay the buyers closing costs? Most likely because of the commonly misunderstood “non-allowable” closing costs. However, the Veteran is allowed to pay up to 1% of the loan amount in what would be considered “non-allowable” closing costs. The biggest non-allowable cost is the escrow fee. If an Orange County Veteran is buying a home for $400,000, then they can pay $4,000 towards non-allowables. And the escrow fee on a $400,000 purchase price will not be close to $4,000. So there is no problem. On top of that, in many cases the lender can issue a lender credit that will cover the Veterans closing costs. THE SELLER IS NOT PAYING THE BUYERS COSTS.
VA appraisers are conservative. – Couldn’t be further from the truth. VA appraisers are probably the most experienced group of appraisers out there. Also, it’s not like a VA appraiser is ONLY a VA appraiser. They have experience with all types of appraisals. Would you rather have an experienced appraiser appraising your home, or an inexperienced appraiser (maybe even an “apprentice”) showing up for your Conventional loan buyer. The valuation process for a VA appraisal is the same as for other types of loan programs. Recent sales comparables are adjusted based on size, condition, time of the sale, etc. If VA appraisers were going out there are cutting the value on their appraisals, then yes, that would be frustrating. But that is just not the case.
If the appraisal comes in low then the loan is dead. – Actually, that is not the case. Everything in real estate is negotiable. This “myth” is not even specific to the VA loan program. There is probably more flexibility with a VA buyer if the appraisal comes in low than with most other buyers. Think about it. VA allows for 100% financing. Just because a Veteran is not coming in the with a down payment doesn’t mean they have no money. If the value on a $500,000 purchase price comes in at $490,000, then the Veteran can either just come in with a $10,000 down payment, or negotiate with the seller for a price at $490,000 or somewhere between $500,000 and $490,000. There are situations where there are no sales comparables available to support the price a buyer is willing to pay, no matter what type of financing the buyer is using. A Conventional buyer coming in with an even 10% or 20% down may be stretching and have no additional funds if their appraisal comes in low. At least with VA there is a little more flexibility in this situation.
The VA appraiser will require repairs to the home. – Again, this should not be something that is specific to VA. While it’s true that a VA appraiser, just like an FHA appraiser, will call out safety concerns like loose wires hanging from an outlet, these types of things will be called out on any home inspection report, which just about any home buyer will want prior to closing escrow. With VA, if there are repairs that need to fixed prior to funding, the Veteran can pay for the repairs. Like other types of financing, just about everything is negotiable.
VA Loans Take Longer to Close. – VA loans can easily be closed in 30 days or less, if being processed by an Orange County lender who specializes in VA loans. That can be said for all types of financing. These days most VA buyers have already talked to a lender and have their PreApproval letter in hand. The lender already has their paystubs, W2’s, tax returns, bank statements, etc. It’s not like the lender needs to send the file into VA. VA will eventually guarantee the loan for the lender, but VA does not underwrite or review the loan. The lender does, just like any other type of loan. And just like other types of financing, the appraisal is ordered immediately upon offer acceptance. Being in escrow to buy or sell a home can be scary no matter what type of financing the buyer is using for the purchase. What’s important is making sure the lender processing the loan is experienced and stays on top of the calendar and contingency dates.

Is there Anything to be Aware of with a VA Loan?

The only unique thing about a VA loan in Orange County is the requirement for a clear termite report. Yes, VA does require a clear termite report prior to funding the loan if the property is a single family home. (This is generally not required for condos). Section 1 of the report must be cleared by the inspection company. So if the property is infested with termites and needs to be tented, then be ready for that before closing. The buyer can actually pay for the repairs since, again, everything is negotiable. Just like with any other type of financing.

So when a Veteran makes an offer on your Orange County home, take that offer seriously. They must like your home and depending on their current situation, have visions of living in your home for many years to come.

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 Purchase Loans Tagged With: va loan to purchase home

100% Cashout Refinance VA Loan

May 14, 2014 by Tim Storm

The VA home loan is one of the very few, if not only, loan programs that allows for 100% financing. But what many Orange County Veterans eligible for a VA loan don’t realize is that it also allows for refinancing to 100% loan to value. And even better, it is possible to get “cash out” up to 100% loan to value, up to the local county loan limit. This means that in Orange County, if a Veteran owns a home that is worth the VA county loan limit of $679,650 (in 2018) then he can refinance up to that loan amount. And the loan being paid off does not need to be a VA loan.

Why Would Someone Want to Refinance to 100% Loan to Value?

Refinancing is not for everyone. And pulling equity out can be dangerous, depending on the purpose of the refinance and the strength of borrowers qualifications. But there are plenty of reasons why this is a viable option for some.

Home Improvements – It’s not easy to get a construction loan these days. And even if you can get a construction loan it will typically come with restrictions on disbursements to contractors, high costs, etc. With VA, if there is any equity at all you can access it and without restrictions on its use.
Debt consolidation. For those home owners who have debts that are holding them back, being able to refinance and consolidate those debts into one loan can suddenly free up cash flow. For those looking to consolidate debt, a smart plan would be to look at using some of the monthly savings to accelerate the principal pay down on the new mortgage after building up a solid emergency reserve account.
College expenses. Kids grow up fast. And college is more expensive than ever. Using built up home equity is just another way to help pay tuition without dealing with student loans. Mortgage rates do tend to be lower than student loan rates.
Investments. For some, it may make sense to pull equity out for other investments. Hopefully, safe investments.

What to Consider when Refinancing

There are several important considerations when refinancing.

How long do you plan to remain in the home and/or loan? With any refinance you want to make sure you “break even” before you are out of the home or loan. Many times a VA refinance can be closed with the lender covering closing costs with a “lender credit”. However, unless you are a disabled Veteran qualifying for a Funding Fee waiver, then expect a full Funding Fee of 3.3% to be tacked onto the back end of the loan. If your plan is to sell the home soon, then a VA cashout refinance may not make sense.
What is your current interest rate and how much cash are you trying to pull out? Depending on current rates, it may or may not make sense to get a new 1st mortgage. For example, someone who has a 30 year fixed rate of 3.25% may not want to give that rate up, especially if they really don’t need much cash. Maybe an equity line 2nd is a better option.

Find out if a VA Refinance is Right for You

The best way to find out if a 100% VA cashout refinance is right for you is to talk to a VA loan officer who should be able to provide custom loan scenarios with details on the new loan amount, payment, closing costs (and any lender credit to offset closing costs), and amount of cash out. The loan officer should also be able to provide a Side by Side Analysis of your current loan to the new VA loan and other possible refinance solutions.

Authored by Tim Storm, a California VA Mortgage Loan Officer MLO 223456 – Please contact my office at the Home Point Financial NMLS #7706. Direct line at 949-640-3102. www.OrangeCountyVALoans.com

Filed Under: VA Cash out Refinance, VA Refinance Loans Tagged With: va cashout refi, va refinance

What is CAIVRS?

May 9, 2014 by Tim Storm

Credit Alert Verification Reporting System, commonly known as CAIVRS, is a shared database of Federal debtors. CAIVRS was developed in 1989 as a quick way for “processors of applications for Federal credit to identify people who are in default or have had claims paid on direct or guaranteed Federal loans, or are delinquent or have other debts owed to Federal agencies.” In the case of an applicant for a VA home loan, this means the lender is required to check the CAIVRS database to verify the potential borrower does not owe the Federal government money.

How Does CAIVRS Work?

The CAIVRS database has records on delinquent borrowers from several government agencies, including the Department of Housing and Urban Development (HUD) and the Department of Veterans Affairs (VA). Since a lender offering VA financing needs a “guarantee” from the VA, the lender is required to check CAIVRS. Most of the time there are no issues on the report. But if the applicant is reported to be delinquent or a claim was paid within the past three years, then the borrower will not be eligible for a new VA loan. At least not yet. There are three instances where the applicant may still be eligible.

Loan Assumptions. If the VA borrower sold a previous property, with or without a release of liability, to someone who eventually defaulted on the government loan then the new applicant may be eligible if they can prove that the loan was not in default a the time of the home sale/loan assumption.
Divorce. The applicant may be eligible if the divorce decree (or legal separation) awarded the property and responsibility for payment to the former spouse. However, if a claim was paid on a mortgage that was in default prior to the divorce then the applicant is not eligible.
Bankruptcy. If the property was included in a bankruptcy that was caused by circumstances beyond the borrowers control, like death or big medical bills, then the borrower may be eligible if certain requirements are met. This exception can be a tough one but it is possible.

How do I “Clear CAIVRS”

Clearing CAIVRS can be a waiting game. For someone who lost a home with FHA or VA financing, a claim would have been paid from FHA or VA to the lender. But many times the lender doesn’t foreclose right away or doesn’t file the claim immediately. Especially in the past few years, with the abundance of foreclosures, some claims weren’t filed until months, or even years after the applicant lost their home. 3 years after the claim is paid the applicant can get a new VA or FHA loan. So it’s important to find out when the clock started ticking on that three years. Don’t assume it is three years after you lost the home.

A fast way to clear CAIVRS is to just pay back the amount owed to FHA or VA. Sometimes it can be a small amount and it may be worth it to just pay it off so that you can move forward with a new home purchase.

If you do have a debt owed on CAIVRS then your VA loan officer can give you a copy of the report. The report will show the agency reporting the default, the case number of the defaulted debt, the type of delinquency (default, claim, foreclosure, lien or judgment), and a telephone number top call for further information or assistance.

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 Mortgage

What Is The VA Funding Fee?

May 2, 2014 by Tim Storm

The VA loan program is one of the only 100% financing home loan options available in the mortgage industry today. Available to eligible United States veterans, it allows for the purchase of a home with no down payment to purchase prices as high as $687,500 in Orange and Los Angeles Counties, CA and $1,050,000 in Contra Costa, San Francisco, Marin, Alameda, and San Mateo counties. Offering low fixed rates and no monthly mortgage insurance, the VA home loan program is truly one of a kind. But a common question does come up. What is the Funding Fee?

*California county limits for VA Loans

The VA Funding Fee is a fee that is required in order to receive a VA loan. The amount of the Funding Fee is pre-determined by VA based on a several factors, depending on whether the Veteran has used their VA eligibility previously, the amount of down payment (if there is any), and whether or not the Veteran served in the “regular” military or the Reserves. And for some, the Funding Fee is waived. It’s important to note that the Funding Fee is sent directly to VA to go towards losses on loans that go into default.

Below is the Funding Fee chart for those who served in the regular military.

Below is the Funding Fee chart for those who served in the Reserves and National Guard

When is the VA Funding Fee Waived?

Below are circumstances when the VA Funding Fee is waived.

Veterans who are getting VA compensation due to service related disabilities.

Veterans who would be receiving VA compensation due to service related disabilities if they were not already receiving retirement pay.

Loans for spouses of veterans who passed away in service or because of service related disabilities.

The Certificate of Eligibility will let the lender know whether or not a Funding Fee is to be charged.

How is the Funding Fee Paid?

The Funding Fee can be financed into the loan. For example, if a Veteran purchases a home in Orange County for $500,000 using 100% financing, the “base” VA loan would be $500,000. The Funding Fee ( assuming this the the Veterans first time using their entitlement) would be $10,750 ($500,000 * 2.15% = $10,750). If the Veteran chooses to finance the Funding Fee, as most do, then the total VA loan amount would be $510,750. The Veteran can also choose to pay the Funding Fee “out of pocket”, and in some cases the lender may even offer enough “lender credit” to pay cover the Funding Fee.

What about a VA Refinance?

The amount of Funding Fee on a refinance just depends on the type of refinance. The most common VA refinance is the IRRRL, or Interest Rate Reduction Refinance Loan. This is a VA to VA refinance with no cash out. The Funding Fee on an IRRRL is only .5%. For a refinance of a non-VA loan into a VA loan, or any “cash out” refinance, the Funding Fee is 3.3%.

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 Mortgage

Veteran Buys Home in Orange County, CA 2 Years After Short Sale

April 29, 2014 by Tim Storm

Veterans using a VA loan can buy a home in Orange County only two years after a short sale, foreclosure, or bankruptcy. Recently I helped a Veteran buy a home in Orange County for $620,000 with no down payment only two years after a short sale on their previous home, and two in a half years after a bankruptcy. There was no down payment. VA is truly the most flexible loan program available. In this blog post I’m going to break away from my typical style and explain exactly how this transaction happened, from start to finish. I am changing the name of my client, as well as any other information which would possibly give away who the buyer was in order to preserve their privacy. So the names have been changed but the pertinent details will be helpful to others in a similar situation.

Day 1. August 27, 2103. John Smith (so obviously not the real name, but that’s way its going to be today) called me after finding my website on Google while doing research on the VA loan program. He had read that it was possible to buy a home with VA financing after only a two year wait period after a short sale. He had actually talked to a few different lenders (big box banks as well as an out of state VA lender) but was having a tough time getting someone on the phone who could answer questions in a meaningful way. I was able to answer his questions with confidence and after getting enough information on his income, debts, and payment comfort level, emailed custom loan scenarios. The custom loan scenarios gave John a complete breakdown of the purchase price, loan amount, payment (including property taxes and insurance), closing costs (yes, there are closing costs on a VA loan), prepaid expenses (what are those?), and estimated amount needed to close. I always prepare multiple scenarios. I want my clients to see that there is more than one way to get a deal done. By adjusting the interest rate on one of the scenarios I was able to show how he could buy a home with not only no down payment, but also no money out of pocket. In most situations, by increasing the interest rate, the buyer can receive enough “credit” from the lender to actually cover the closing costs and/or prepaid expenses. This is important to know when the real estate market is such that it is difficult to get a seller willing to pay closing costs for the buyer, and many buyers would rather keep their money in the bank.

The initial email not only includes the loan scenarios in PDF format, but also includes a link to a Custom Screen Capture Video. By clicking on the link John was able to watch a 5 minute video presentation of me explaining the loan scenarios, line by line. The video was very detailed, clear, and precise. John suddenly felt that yes, buying a home only two years after the short sale was actually p0ssible. And he now had a clear path to how to buy his next home. The email included a list of the items that I would need to begin the PreApproval process. The list includes the following:

Federal Tax (Personal and business) returns for the most recent two years, including all schedules.
W2’s and/or 1099’s for the previous two years
Paystubs for the most recent 30 day time period
Bank statements, all pages, for the most recent two months.
Copy of DD214 (that that we can request the Certificate of Eligibility online from VA)
Copy of bankruptcy discharge papers

Day 3– August 29, 2013. John was on it. He immediately began preparing the documentation that we needed for VA Loan PreApproval. I set up a secure method for him to upload his documentation to me, a proprietary system called SafeBox. It ended up taking him a few days to get everything uploaded to me, but he was thorough, which is much appreciated these days. I was able to prepare most the the loan application based on the documentation he sent. I then called him to fill in a few blanks on the loan application that I couldn’t figure out from the documentation. (position or title at work, age of children, how long at current rental, etc). Within 24 hours of receiving his documentation I had a loan package ready to give to my loan processor, Carol Simpson. Carol has worked with me since 1996 and is extremely knowledgeable at the loan processing in’s and out’s of a VA loan. I had already run credit (712 FICO – awesome) and gotten the “Automated Approval”. Carol is a great second set of eyes to review the loan application and send out verification’s to John’s employer. In John’s case, because of the prior credit issues, we wanted to have a complete package submitted to a VA underwriter. I don’t always see a need for an underwritten preapproval, but in certain situations we will send the file in before the buyers have an accepted offer. An “Underwritten PreApproval” is good because the underwriter will review the combination of the income and credit and let us know if more information is needed. The last thing anyone wants is a deal to get declined when its “in escrow”.

Day 7 – September 2 and Carol already had enough documentation and verification’s to submit the file to underwriting. We had underwritten PreApproval only 2 days later, on September 4. John was now officially ready to begin the home search. I referred him to a real estate agent who was familiar with Veterans and knew how to get offers accepted for VA buyers. I have often heard from Veterans that the real estate agents they talk to think there is a disadvantage to VA financing, which is not true. But this is why it’s important to not only work with a lender who is very familiar with VA financing, but also a real estate agent that understands all of the advantages of VA financing.

Day 27 – After making offers on several different homes, an offer is finally accepted. This is typical in the current Orange County real estate market. Home inventory has been low and while there are plenty of buyers trying to buy. This has resulted in many “multiple offer” situations where sometimes more than 5 buyers are competing for the same house. John was able to find a home and get an offer accepted only three weeks after getting his underwritten PreApproval. Having a fully underwritten PreApproval was what helped get his offer accepted. The listing agent actually called me before accepting the offer and I was able to let them know that this was not just a loan officer “prequal”, but was a fully underwritten PreApproval. That made John’s offer very solid. Escrow was opened, with a closing date set for 30 days later on October 22, 2013.

On the first day of escrow we prepared and sent out the loan disclosures, ordered the appraisal, and reviewed the file for any updated documentation needed. Even for PreApproved loan there is always a necessity to update the documentation. More recent paystubs and bank statements were needed. Within a week we had updated documentation, along with the preliminary title report and escrow instructions. The appraisal took a few more days, during which time John had a Home Inspection done. Also, the termite inspection report was completed. Within two weeks the appraisal was in and all “Prior to Loan Document” conditions were cleared. There were a few repairs required based on the termite report, but those would just be “prior to funding” conditions.

Day 47 – Day 20 of escrow – Loan documents were prepared and emailed to the escrow company. John and his wife went to the escrow company after work and signed all the loan documents and other paperwork with a notary. Not joking here, they probably read and/or signed 150 pages of forms. After signing the escrow company then delivered (by Fedex) the loan documents to our closing department. We would be ready to close within 24 hours of receiving the signed loan documents. Ahead of schedule, we actually end up waiting for the close date before funding.

Day 57 – but only Day 30 of escrow – October 22, 2013 and John’s VA loan funds and the Deed of Trust records on the same day. The keys to the home are handed over and it’s time for the moving van to unload.

VA Loan PreApproval is Very Important

Without an underwritten VA loan PreApproval, the loan process would have been much different. John would have had a very difficult time getting an offer accepted. And he would have been on pins and needles during escrow, praying he gets loan approval. It also makes it tough to close a loan in 30 days if the buyers is starting the loan process from scratch on the first day of escrow. Which is why PreApproval should always be the first step in the home buying process.

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 Purchase Loans

VA Loan Limits for Orange County increased in 2014

January 1, 2014 by Tim Storm

The VA loan limits in Orange County for 2014 will be $687,500. The Veterans Administration recently announced the 2014 VA loan limits and many counties in California saw an increase due to the improved real estate market and higher home prices in 2013. While most of the country, including many counties in California, will continue to have their limit set at the Conforming limit of $417,000, “higher priced” counties have higher VA loan limits.

What Makes Orange County “High Priced”?

The obvious answer to the question of why Orange County qualifies for high loan limits than most of the country is because of the high average cost of a home compared to other areas. While the Median home price in Orange county is above $500,000, most of the country’s median price is under $400,000. Other counties surrounding Orange County also have higher limits, including Los Angeles ($687,500) and San Diego ($546,250). It is important to note that this limit is for 100% financing. It is still possible to get a VA loan that is above the 100% limit.

Jumbo VA Loan in Orange County

When a loan amount is above the 100% limit it is commonly known as a Jumbo VA loan. Since the VA loan limit in Orange County for 100% financing is $687,500, then an VA loan above that amount is considered to be a “Jumbo VA Loan“. If a Veteran is purchasing (or refinancing) a home in with a sales price (appraised value) above $668,750 and they intend to get maximum financing, then they will need a down payment equal to 25% of the difference between the 100% loan limit of the purchase price. For example, if a Veteran is buying a home in Irvine, CA for $787,500, or $100,000 above the VA loan limit, then the Veteran would need a down payment of $25,000. Only $25,000, or 3.17% down payment. There is no better loan program than VA when it comes to low down payment and competitive fixed interest rates.

The first step in determining whether a VA loan is right for you is to contact a local Orange County VA loan specialist. The VA loan officer should be able to prepare custom VA loan scenarios after a quick phone conversation. The scenarios will give a detailed breakdown of the purchase price, loan amount, and costs involved in the home buying process. Also, your Orange County VA loan specialist should also be able to provide a video explanation of the scenarios, which will help to understand the scenarios as well as share them with other family members or financial advisors.

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 Mortgage Tagged With: va loan limits