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

How the Tax Impound Account Works on VA Loans in Orange County, California

February 26, 2011 by Tim Storm

Home buyers in Orange County, CA using VA loan financing need to know how a property taxes and insurance impound account works. An impound account for property taxes and home owners insurance is required on all VA loans. Impound accounts, also known as a “escrow accounts”, are essentially a forced savings account held by the lender on the VA borrowers behalf.

The Amount Collected for Property Taxes Depends on the Month the Orange County, CA VA Loan Closes

Property taxes in California are paid twice a year, in 2 six month installments. The first half taxes are due on February 1 of each year and cover July 1 through December 31. Second half taxes are due February 1 and cover January 1 through June 30. The amount collected at closing to set up the new impound account is dependent on the First Payment date shown on the loan documents. For example, a loan closing in the month of August, lets say August 30, would have a First Payment date of October 1. According to the chart shown below, loans with a First Payment on October 1 should have 8 months taxes deposited into the impound account.

Since the purpose of the impound account is to make sure property taxes are paid in a timely manner, the lender needs to make sure there is enough money in the account when taxes are due. If we assume a loan closes on August 30 and will have an October 1 first payment, then the lender needs to make sure there is enough money in the account only 30 days after the first payment to cover the first half tax installment, due November 1. But the lender will also need to make sure enough funds will be in the account three months later to cover the second half installment. Impound accounts are regulated by law and lenders are allowed to have up to a two month “cushion” to help prevent a shortage of funds in the account.

This all sounds confusing, but is necessary in order to keep the borrower from getting a surprise when property taxes are due. (The surprise may still come in the way of “supplemental property taxes” in the first year after a purchase.)

Home Owners Insurance is also deposited to the impound account. At closing a one year premium is paid, but the equivalent of two months property taxes is also deposited into the impound account. This ensures there will, or should, be enough money in the account 1 year later to renew the insurance.

Orange County Veteran Buyers Need to Budget for the Impound Account

Orange County home buyers using FHA or VA financing need to budget for the funds required for the impound account. Both FHA and VA guidelines allow for the seller to pay for the set up of the impound account, which can be the best solution for Orange County home buyers who have saved for the down payment but not closing costs.

It is important to contact an Orange County FHA or VA lender who can prepare customized loan scenarios which will show estimates for not only the amount of funds required to buy a home, but also will give a full breakdown of the purchase price, loan amount, and payment.

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

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

Filed Under: VA Purchase Loans Tagged With: california, Orange County, tax escrow account, tax impound account, VA Loan

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

February 26, 2011 by Tim Storm

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

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

Filed Under: VA Purchase Loans Tagged With: Irvine, lake forest, Orange County, tim Storm, va lender, VA Loan

VA Home Loans versus CalVet | Which is Better for California Home Buyers

July 31, 2010 by Tim Storm

There are several differences between the VA home loan program and the Calvet home loan program. California veterans should take time to learn about both programs to determine what is best for them. There are times when the Calvet program is better and other times when the VA home loan program is better. Below are some of the differences, and why at this time the VA home loan program is better for most California veterans purchasing a home.

CalVet vs VA: Who is the Lender?

VA home loans are guaranteed by the Veterans Administration, but the actual loan is made by banks and mortgage banks. The VA’s guarantee on the loan encourages lenders to offer favorable terms to veterans, resulting in low interest rates. With the CalVet program, the state of California is the lender. California uses bond funds to lend to any virtually any Veteran who wishes to purchase a home in California.

Va vs. CalVet | Down Payment Requirements

The loan limits for 100% financing on a VA loan in Californiavary by county. For example, in Orange County and Los Angeles County, the 100% financing limit is $679,650 (2018 loan limit). California VA loan limits are very high. It is possible to go above $679,650 by coming in with a small down payment. The down payment is equal to 25% of the difference between the 100% financing limit and the purchase price.

The CalVet loan limit in California is $521,250, including the the financed Funding Fee. In some California Counties that limit is higher than VA, and in some counties it is lower. CalVet offers three basic programs: a 100% financing program, a 97% program, and a 80/20 program. There are subtle differences between these programs which need to be understood. While the 100% program allows the VA Funding Fee to be financed into the loan, just like the standard VA home loan program, the 97% program requires it be paid in escrow. This adds a considerable expense, on top of the down payment requirement.

Interest Rates for VA and CalVet home loans

Interest rates will fluctuate for the VA home loan program. This is an area where the VA program can easily beat out the CalVet program, and why the VA program has been more popular over the past few years. In 2010, VA home loan interest rates and been in the 4.5% to 5.5% range. The CalVet interest rates currently range between 5.75% and 6.2% according to information posted on their website. Because CalVet interest rates are based on Bond Funding, their interest rates do not quickly fluctuate.

Restrictions on the CalVet program

The CalVet program functions differently than the VA home loan program. With most mortgage programs, including the FHA, VA, and Conventional home loan programs, the California home buyer holds title to the home. The lenders holds the lien. Calvet uses a Contract of Sale for the financing instrument. This means CalVet actually holds title. There are advantages and disadvantages to this. It makes it difficult to refinance or get a second mortgage, whether its to take advantage of low interest rates or improve the home. An advantage is that CalVet is able to get group insurance rates for home owners insurance. In some areas where home owners insurance is difficult to get this can be beneficial. VA financing on condos in California can be tricky with either program. The condo project should be on the VA approved condo list.

When beginning the process of buying a home, it is important to find a California VA loan expert who understands the VA loan program and can quickly PreQualify and PreApprove you for a home loan. Finding someone who can answer your questions and provide customized loan scenarios is important.

Authored by Tim Storm, an Orange County, CA Loan Officer specializing in VA Loans. MLO 223456. – Please contact my office at Fairway Independent Mortgage Corporation NMLS #2289. My direct line is 714-478-3049. I will prepare custom VA loan scenarios that will be matched up to your financial goals, both long and short-term. I also prepare a Video Explanation of your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.

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

Filed Under: VA Purchase Loans Tagged With: california, calvet, first time buyer, Orange County, VA Loan

Orange County VA Home Loans After Foreclosure or Short Sale

July 8, 2010 by Tim Storm

Orange County Veterans who have had a short sale are able to purchase a home with $0 down immediately after the short sale. Veterans who have had a foreclosure need to wait two years. VA is relatively flexible in how they look at foreclosures and short sales, compared to FHA and Fannie Mae.

Short Sale versus Foreclosure

A short sale occurs when a home owner sells their home, even though they owe more than the home is worth. Their Orange County home loan lender needs to sign off on the home sale, since it is the bank who will be taking a loss on the property if it is sold. A short sale can help to preserve a home owners credit compared to going through a full fledged foreclosure. FHA typically requires 3 years after a foreclosure or short sale, unless extenuating circumstances can be proved as the reason for the short sale. Fannie Mae requires between 4 and 5 years after a foreclosure, but will lend to 80% of the properties value only two years after a short sale. But VA, at least for those that are eligible, will lend to 100% of the properties value up to the county VA loan limits. The VA Loan limits in Orange and Los Angeles counties, the $0 down loan limit is $679,650 in 2018.

Veterans Need Perfect Credit After Foreclosure or Short Sale

The only catch is that the Orange County veteran will need perfect credit since the short sale or foreclosure. Especially over the most recent 12 months. Many times, leading up to the short sale, the seller may have multiple mortgage lates, possibly 90 or 120 day lates. This can really weigh the credit report down and hurt the FICO score. This is why it is important to reestablish credit immediately after the short sale, or foreclosure, and n0t have any more lates after the sale of the home.

Quick Way to Find if you are Qualified for a VA Home Loan in Orange County, California

It is always important to get PreApproved for a VA loan prior to make an offer on a home. It is probably even more important to do after a short sale or foreclosure. Find a reputable VA loan expert in Orange County, CA, and have them prepare personalized VA loan scenarios which will give a breakdown of the purchase price, loan amount, closing costs, and amount needed to close. The VA loan officer can get the Automated Loan Approval, which is an important step in determining early on whether you can get a VA home loan to purchase a home. The key is to make sure to find someone with experience to get them job done easily and quickly,

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

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

Filed Under: VA Purchase Loans Tagged With: california, Orange County, short sale, va home loan, VA Loan

Orange County, CA VA Loan Borrowers May Still Be Eligible for Federal Tax Credit

May 16, 2010 by Tim Storm

Orange County, CA VA loan borrowers may still be eligible for the $8,000 First Time Buyer Tax Credit. For everyone else the First Time Buyer tax credit expired if they did not have an offer to purchase a home accepted by April 30, 2010. But military home buyers may still have time provided they meet certain qualifications.

Who Qualifies for the Military Extension of the Tax Credit? Must be a member of the “uniformed” services?

A member of the “uniformed” services, or
A member of the Foreign Service of the US, or
an employee of the intelligence agency
a spouse of any of the above

Are the additional qualifications if an Orange County VA Loan Borrower is interested in the Tax Credit?

Yes, they must have had:

Extended duty outside the US for 91 days, or
Extended duty outside the US for 91 days and had to relocate more than 50 miles from principal residence, and
All this happened between the dates of January 1, 2009 and April 30, 2010.

How Long is the Tax Credit Extended?

Orange County, CA VA loan borrowers have been given an extra 12 months to get an accepted offer on a home. They must have an accepted offer by April 30, 2011, and then they must close escrow by June 30, 2011.

There are a few more items to keep in mind with this extension. To clarify the qualifications, an Orange County VA loan borrower is eligible for the tax credit if they had extended duty, which could be inside or outside the US and is longer than 90 days, and had to move more than 50 miles from their primary residence.

$0 Down for Orange County VA Loan Borrowers

The VA Loan Limits vary from county to county. The VA loan program is really about the only program available for Orange County home buyersto purchase a home with $0 down. While the max price allowed for most of the United States for 100% financing on a VA loan is $417,000, Orange County is considered a “high cost” county because of the high prices of homes. Because of this, an Orange County VA loan borrower can purchase a home for $593,750 with $0 down payment. Los Angeles has the same limit, while San Diego cap’s out at $437,500. The Inland Empire max is $417,000.

The Time to Buy an Orange County Home is Now

In addition to the Federal First Time Buyer Tax Credit, there is also a $10,000 California First Time Buyer Tax Credit. So VA loan eligible borrowers could actually get $18,000 just for buying a home (and with $0 down). With home affordability at an all time high, now is a great time for Orange County VA loan eligible first time buyers to take the next step and get PreApproved for a VA loan.

Authored by Tim Storm, an Orange County, CA VA Loan Officer MLO 223456– Please contact my office at Emery Financial Group for more information about an Orange County, CA home loan. 877-786-4243 x 7.

www.OCFHALoans.com

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

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

Filed Under: VA Purchase Loans Tagged With: Orange County, tax credit for va loan borrowers, VA Loan, va loan preapproval