CalVet Loan or VA Loan | Which is Better for Orange County Veterans

The CalVet loan program or the standard VA loan; which is better? It all depends on when the question is being asked and where you plan to buy a home. There are several distinct advantages the standard VA loan program has as of right now, September 2011, over the CalVet loan program. The biggest factor pushing most Veterans and active duty military personnel into the standard VA loan program is interest rate. But there are differences in loan limits which can sometimes favor the CalVet program depending on the California county the Veteran is purchasing in.

Low Interest Rates Favor the VA Loan Program

2011 has been a banner year for low interest rates. In September 2011, interest rates even hit all time lows. VA 30 year fixed rates are averaging 3.75% (3.98% APR)APR to 4.25% (4.48% APR) this year. VA interest rates have been consistently low for the last several years. CalVet loan program interest rates range from 5.5% (5.9% APR) to 5.95% (6.36% APR), which is a full 1.75% spread over the standard VA loan progam interest rates. To show what that interest rate spread does to the payment, lets compare a $300,000 loan. At 4%, the payment is $1,432. At 5.5%, the payment is $1,703. That is a $271 monthly payment difference, in favor of the standard VA loan program.

VA Loan Limit in Orange County is $700,000 | CalVet is $521,250

The VA loan limit for 2011 in Orange County, CA is $700,000, meaning a Veteran can purchase a home with Zero Down in Orange County (and Los Angeles) up to a $700,000 purchase price. A Veteran can even go with a higher priced home by bringing in a small down payment. The CalVet loan program caps out at $521,250. So for Orange County homebuyers looking at properties above a $521,250 price, who are undeterred by the higher interest rate a CalVet loan has, would still go VA because of the high loan amounts allowed.

VA vs CalVet | Homeowners Insurance

One advantage CalVet does over VA is a comprehensive homeowners insurance policy, which includes guaranteed replacement for your home, even in natural disaster situations like an earthquake or flood. Private insurance companies will charge extra for this type of coverage, and “guaranteed replacement” in California is very difficult to come by.

CalVet Does not offer a Refinance Program

CalVet requires that you apply for the loan before taking title to the property. Translated, this means it is only for a purchase, not a refinance. In contrast, VA offers the IRRRL program, or Interest Rate Reduction Refinance Loan. With this program you can lower your rate (if rates drop) without needing a full appraisal and without needing to qualify. It is a very “streamlined” process. However, it is only for current VA loan borrowers. For those Veterans who wish to refinance into a VA loan from a Conventional or FHA loan, they would need an appraisal and full income documentation. But the good news is they could refinance up to 100% of the properties value.

CalVet offers home Improvement loans up to $150,000 at competitive rates, which is a nice feature. VA does not currently have a home improvement loan program. However, another option is to use the FHA 203K Rehab loan program, which can later be refinanced into a VA loan.

VA Loan Versus CalVet Loan | Which is Better?

It depends. For most Orange County Veterans, the standard VA loan program is the way to go. Lower interest rates and higher loan amounts are two benefits that are hard to ignore. But it is important to keep abreast of changes. Who knows. VA could lower the 100% financing limit in 2012. Or interest rates, which change daily, could go up for the VA program. It is important to consult with an Orange County, CA VA loan expert who can prepare custom loan scenarios based on a Veteran’s qualifications. The VA loan expert can then help the Veteran get a VA Loan PreApproval.

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

www.OCFHALoans.com

Contact us for your Orange County VA Mortgage:

Call our office today and see how we can help you and your family.

tstorm (at) ochomebuyerloans.com

Are There VA Jumbo Loans Available in Orange County, CA?

If you’re looking at buying the Orange County home of your dreams then a Jumbo VA mortgage loan may be the best option for your financing.  

In most VA loan scenarios, the VA guarantees up to 25% of the total amount of the loan up to the VA loan limit in your county – which, in much of the US, is $453,100 in Orange County, CA the 100% financing limit is $679,650. (2018 loan limit)   That is a high limit and will surely purchase a beautiful home, but what if you can afford more?

But what happens when the value of the loan exceeds the Orange County $679,650 loan limit for 100% Financing?

This is where the Orange County, CA VA jumbo loan becomes a great option.

As an example, let’s say that you would like to live in Newport Beach, where home prices are easily higher than $1,000,000. You find the perfect house for you and your family, and it’s selling for $1,079,650, which is $400,000 over the Orange County 100% VA financing limit. You decide that you would like to use your hard-earned veteran benefits to take out a VA mortgage!

The U.S. Department of Veterans Affairs mandates that on jumbo loans above the 100% financing county loan limit, the borrower put down 25% of the difference between the cost of the loan and the applicable county VA loan limit.

Continuing on with our VA jumbo loan example from above, 25% of $400,000, $100,000 would be required as a down payment.

Not bad at all! In this example you’re buying your $1,100,000 Newport Beach home for only $100,000 down in addition to the required closing costs. Better yet, you are getting a low 30 year fixed rate. Your rate will be at least 1% lower than a non-VA borrower would get for a $1,000,000 loan.

The real value of VA jumbo loans is apparent when you compare it to the standard down payment requirement of a conventional or in this case, a Portfolio Jumbo loan mortgage, which is typically 20% down minimum.  And again, VA offers a low 30 year fixed rate. Try finding a low 30 year fixed rate on a Portfolio Jumbo loan program.

This means that for the example of a $1,079,650 Orange County house, a conventional loan down payment would be $215,930 (at the minimum) while a VA loan down payment would only be $100,000. That’s less than half of the down payment required for the conventional loan in this scenario!

Please keep in mind while house shopping that VA county loan limits vary widely throughout the country and will be higher in areas with especially high property values. Once again, the Orange County VA county loan limit is $679,650, but it’s smart to check with your local VA mortgage agent prior to looking at houses. Many parts of California max out at $453,100 in 2018.

For example, as of 2018 the VA county loan limit for Marin County is $679,650! San Francisco County also has a loan limit of $679,650.

To check the Southern California VA loan limits, click on the blue link. To check what the VA county loan limits are for each county in the United States, you can visit the U.S. Department of Veterans Affairs at their loan limit website. For counties that are not listed on the website, the official California VA loan limit is automatically set at $453,100 in 2018.

Why is there such as large difference in county loan limits throughout the nation? In short, because the various housing markets across the country vary greatly.

In San Francisco a small single-family house may sell for $1,000,000, while in other places you might be able to find a similar house for $100,000!

Wherever you are, if you are in need of a substantial home loan, a VA jumbo loan is certainly worth checking out.

Authored by Tim Storm, an Orange County, CA FHA and VA Loan Officer – Please contact my office at Home Point Financial  for more information about an Orange County, CA home loan. 949-640-3102.  MLO 223456

 

tstorm (at) ochomebuyerloans.com

*updated January 3, 2018

How to Lookup VA Lending Approved Condo Projects in Orange County

Orange County has a lot of condo projects, but not all projects are approved for a VA home loan. So how does an Orange County, CA VA loan eligible home buyer and the real estate agent they are working with, figure out if a particular condo project is approved? It’s actually relatively easy.

The first step is to visit the VA Condo Approval website. I have included a quick video below which will walk you through the steps for finding approved condo projects in the Orange County cities you are interested in.

Website with List of VA Approved Condos in Orange County, CA

There is a new website which actually keeps a current list of VA approved condos for sale in Orange County, CA. The site, www.OrangeCountyVACondos.com uses a feed from MLS to keep the list, along with photos and information on the properties, updated.

Authored by Tim Storm, an Orange County, CA VA Loan Officer MLO 223456 – Please contact my office at Home Point Financial (NMLS  7706) for more information about an Orange County, CA home loan.  Direct: 949-640-3102.

Contact us for your Orange County VA Mortgage:

Call our office today and see how we can help you and your family.

949-640-3102 | tstorm (at) ochomebuyerloans.com

 

VA Loan in Orange County | Test Case | Lake Forest, CA

Lake Forest, Orange County VA Loan VA loan financing is going strong in Orange County cities like Lake Forest. With the 2011 VA loan limit for 100% financing in Orange County at $700,000, Veterans in Orange County, CA are able purchase very nice homes with no down payment.  Below is an example of a recent closing in Lake Forest where an Orange County first time home buyer bought a house using a VA loan with no down payment.

Zero Down VA Loan on $620,000 Lake Forest, CA Home

Not all first time buyers are looking for a $250,000 condo. In Orange County, first time home buyers are quite often very well qualified, high salaried, couples or individuals. In this case, Charlie and Suzanne Gunner (names have been changed to protect the privacy of the home buyers) were shopping for a home in the south Orange County cities of Mission Viejo, Lake Forest, Ladera Ranch, and Rancho Santa Margarita. There credit was excellent, with FICO scores of 731 and 745. They also had over $25,000 in the bank, along with a 401K.  The Gunner’s had talked to a few Orange County lenders who suggested that FHA financing was the best way for them to go. They were told that VA financing, even though they were eligible since Charlie had served in the Marine’s during Desert Storm, was too difficult and took too long to close. But then they found a local Orange County VA loan expert who was able to lay out a comparison of an FHA loan versus a VA loan for them.

FHA Loan Versus VA Loan

For those Orange County home buyers who are eligible, a VA loan has many advantages over FHA financing, which will save the VA borrower thousands of dollars over the life of the loan.

  • VA will finance up to $700,000 in Orange County with no down payment. FHA will finance up to $729,750 in Orange County, but requires a 3.5% down payment. On the Gunner’s $620,000 home, they needed $0 to buy their home, not counting closing costs. With FHA, they would have needed $21,700 for the down payment. Since they only had $25,000 liquid in the bank, the FHA loan would have cleaned them out, and they would have needed to have the seller pay all of their closing costs. With VA, if they were in a competitive offer/counter offer situation, they would be able to pay their own closing costs and still have money left over.
  • VA has a Funding Fee of 2.15% for first time user VA borrowers. On a $620,000 base loan, this equates to a $13,30 VA Funding Fee, which is added to the loan. So the total VA loan amount is $13,330. FHA actually comes out a little better here. FHA has an Upfront Mortgage Insurance Premium equal to 1% of the loan amount. After factoring the down payment requirement, the FHA UFMIP would be $5,983. While there is some savings, both the Funding Fee and the UFMIP are not paid out of pocket, they are financed into the loan. The result is minimal. Also, for Orange County VA Loan eligible home buyers who have a minimum 10% VA disability (you’ll know if you have it), the Funding Fee is waived. No Funding Fee.
  • FHA has a Monthly Mortgage Insurance added to the payment. The MMI is equal to .9% of the loan amount, divided by 12. On a $620,000 purchase price, the MMI would be approximately $465 per month. VA loans do not have any type of Monthly Mortgage Insurance. This resulted in a savings for the Gunner’s of $465 per month. $5,580 per year, or $61,000 over the 11 years that the FHA loan would have the MMI.

Typical Concerns about VA Financing in Orange County

The Gunner’s were still a little concerned about whether they could buy a home with a VA loan. They had been told that sellers didn’t like VA financing and the Listing Agents tended to shy away from VA financing. Also, there was concern that the VA appraisal process would be more rigorous that on an FHA or Conventionally financed loan. But that is not the case. FHA and VA appraisals are very similar. The primary focus of an appraisal is to make sure the property is worth what the home buyer is paying for it. On Government loans, the appraiser will look a little more closely at safety issues, such as loose wires, peeling lead paint, broken windows, water damage, etc. But most home buyers, especially a first time home buyer, should be concerned about those issues as well. They typically will come up on the Home Inspection report, which is recommended for all home buyers. Also, VA requires a termite inspection report, with all items cleared. Again, this is something that most homebuyers should want anyway.

VA Loan PreApproval

Once the Gunner’s were comfortable with the fact that a VA loan was in their best interest, they moved forward with getting PreApproved. The process was quick, but thorough. They needed to provide two years tax returns and W2’s, one months paystubs, two months bank statements, copies of their drivers license and social security cards, as well as Charlie’s DD214. The Orange County VA lender was able to quickly retrieve the VA Certificate of Eligibility, run credit, and get the initial “Automated” loan approval. The Gunner’s annual gross income of $130,000 easily qualified them for a purchase price of $670,000, even with the $600 car payment they had.

The lender also had an in house VA Underwriter review the file, providing an underwritten loan approval. The whole process only took a few days. But now, the Gunner’s were ready to get serious about finding a home.

Time to Buy an Orange County Home

The Gunner’s also found a great Orange County Real Estate agent familiar with VA financing. Within weeks they had viewed several homes before finding a great home in Lake Forest, offered at $630,000. After a week of counter offers, they went into contract to purchase the home for $620,000 with the seller paying $10,000 in closing costs. The VA loan closed in 30 days. Closing was very smooth, primarily because the Gunner’s had done their research and had been PreApproved before making an offer on a home. The Gunner’s are now happily in their beautiful Lake Forest home. They are doing a few minor upgrades, which they are able to do because of the money they saved by choosing a VA loan.

Authored by Tim Storm, an Orange County, CA  VA Loan Officer – Please contact my office at Home Point Financial for more information about an Orange County, CA home loan.  949-640-3102. MLO 223456

www.CaliforniaVALoanExpert.com

Contact us for your Orange County VA Mortgage:

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

tstorm (at) ochomebuyerloans.com