santa ana | Orange County, California VA Loans

VA Home Loans Remain Unchanged for Orange County Borrowers

February 10, 2010 by Tim Storm

While other loan programs continue to go though multiple guideline changes, the VA loan program has been mostly unchanged for Orange County VA home loan borrowers. FHA and Fannie Mae have recently tightened their guidelines. VA has not.

FHA and Fannie Mae Tighten Condo Financing Guidelines

FHA and Fannie Mae recently tightened their guidelines for financing on condominiums. FHA, which has an extensive approved condo list in Orange County, recently started requiring that projects on the list be “recertified”, a costly and time consuming process. Also, projects that were not previously on the list will need to go through a full review and approval process, which will take even more time and more cost. Plus, there is no guaranty that a project will be financeable. Even Fannie Mae is requiring a much more thorough look at condo projects. Each lender has their own approved condo list for Conventional loans, making lending on condo’s very tricky. VA is the only program that continues to have a valid project approval list. This is a big advantage for Orange County VA home home buyers interested in a condo. If they specifically look at VA approved condo projects, they will have an advantage over FHA and Fannie Mae home buyers. The key is to know how to find Orange County condo projects on the VA approved list.

Fannie Mae Lowers the Debt to Income Ratios

In December 2009 Fannie Mae decreased the debt to income ratios used to qualify borrowers. Although the “guideline” ratios rae still 28/36, it was possible to get a home buyer approved with a debt ratio of 60% in some cases. Now, Fannie Mae will not allow ratios over 45%, unless there are strong compensating factors. In ases with strong compensating factors, they will allow a ratio of 50%. This dramatically effected the amount borrowers can qualify for. VA guidelines remain unchanged, with some borrowers getting approval with debt ratios as high as 60%.

FHA Increases the Upfront Mortgage Insurance Premium

FHA increased the Upfront Mortgage Insurance Premium to 2.25%. The UFMIP is similar to the VA Funding Fee, which on a typical transaction is 2.15%. The great thing about VA loans is there is no a Monthly Mortgage Insurance, which FHA has. Fannie Mae also requires Mortggae Insurance if the down payment is less than 20% of the property value. There is talk that FHA may increase the Monthly Mortgage Insurance beyond the current .55%. (versus VA, which is 0%).

So while all of these changes have taken place, the VA loan program has held steady. Orange County mortgage rates on VA loans are also very low, as are interest rates for most programs. Compared to Fannie Mae, VA is actually very competitive. Fannie Mae has “pricing hits” that begin when the loan to value is over 60% and when the FICO is less than 740. The pricing hits can really add up if the FICO score drops under 660, or if the property is a condo over 75% loan to value. If the loan is a cash out refinance, be prepared to pay extra for a high rate. VA does not have pricing hits and will even allow a VA cash out refinance to 90% of the properties value. Imagine the following scenario: cash out to refinance on a condo for a borrower with a 660 FICO score at 80% loan to value. (Fannie Mae won’t even go over 80% on a cash out refi, and FHA won’t allow over 85%.)

The first step an Orange County VA eligible home buyer needs to take is to talk to an Orange County VA lender who can answer questions and prequalify you for a loan before you begin looking at homes.

Authored by Tim Storm, an Orange County, CA 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: california, first time buyer, Orange County, santa ana, tim Storm, Tustin, VA Loan, VA Mortgage

How to Buy a Home in Orange County with $0 Out Pocket with a VA Loan

February 7, 2010 by Tim Storm

It is possible to purchase a property in Orange County with no money out of pocket if your eligible for a VA loan. Commonly referred to as a VA NO NO, with a little negotiating, it can be done.

What is a VA NO NO?

VA refers to the Veterans Administration, which offers 100% financing for eligible veterans and active duty military personnel. The first “NO” refers to the fact that no down payment is required on a VA loan up to the loan limits for each region. In Orange County, the VA loan Limit for 100% financing is $593,750. The second “NO” refers to negotiating to have the seller pay all the Veterans closing costs. Closing costs, depending on the purchase price, can easily be between 2% and 3% of the purchase price. During the offer/counteroffer stage of a transaction, the buyer needs to negotiate to have the seller pay the estimated amount needed to close and the Veteran can end up purchasing a home with no money out of pocket.

$8,000 First Time Buyer Tax Credit

If an Orange County VA eligible First Time Home Buyer plays their cards right, they can purchase a home with no out of pocket funds and the government will pay you $8,000 to do it. To qualify for the Tax Credit, a property must be in contract by April 30, 2010, and then escrow closed by June 30, 2010. The tax credit is equal to 10% of the purchase price, or $8,000, which ever is less. In Orange County, home buyers would be hard pressed to find a property for less than $80,000, so 99% of Orange County First Time Home Buyers should get the full amount.

The first thing to do is check with an Orange County VA Expert Loan Officer who can put together multiple loan scenarios based on your goals and qualifications. Orange County VA loan PreApproval is very important, especially prior to making an offer.

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: california, first time buyer tax credit, First Time home buyer, Orange County, santa ana, Tustin, VA Loan, VA Loans, VA Mortgage

Orange County Home Buyers Eligible for VA Financing Have Big Advantage Purchasing Condo’s

January 12, 2010 by Tim Storm

In 2010, VA loan eligible home buyers have a big advantage buying Orange County condo’s if the project is on the VA approved list. They have an advantage over other buyers because of the recent changes for FHA and Conventional Fannie Mae guidelines as they relate to Condominium Approved projects.

FHA Recently Changed their Condo Project Approval Guidelines

The recent FHA changes to their condo project approval guidelines will have an immediate affect on Orange County buyers who are looking to purchase a condo. FHA had a list of approved projects, but recently made significant changes to the list, essentially wiping the list out. Now, projects that were previously approved will need to be “recertified”, which, at least for now, will take some time since nearly 100% of the projects on the list will need to be recertified. The certification process will take time, and is not a sure thing. At the same time, Fannie Mae has also tightened their condo lending guidelines. Conventional Fannie Mae financing is already difficult to get unless the buyer has at least a 20% down payment. On a condo, 25% down is preferred. With only 20% down on a Fannie Mae loan, a condo buyer would need excellent credit and would have an interest rate increase for having such a “small” down payment.

VA Has Not Changed their Condo Lending Guidelines and Still Has a Condo Approval List that is Valid

This is where the qualified VA buyer steps in. If the condo project is on the VA Condo Approval List, no “extra” approval is necessary, and no “recertification” is required. Up until recently, VA accepted FHA approved projects for financing. On November 30, 2009, the VA released Circular 26-09-19 which states that they will no longer accept HUD (FHA) Approved projects, but if the projects have already made it on the VA list under the old FHA/HUD condo approval guidelines, then the project will remain on the VA list. This is key.

The first thing an Orange County VA home buyer should do is get PreQualfiied and then PreApproved for a VA loan. An Orange County Direct VA Lender can help them get their Certificate of Eligibility, but the buyer will also need to provide paystubs for the most recent 30 days, tax returns and W2’s for the most recent 2 years, and bank statements for the most recent 2 months. With the $8,000 First Time Home Buyer Tax Credit rapidly coming to an end, now is the time to act.

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: first time buyer, Orange County, santa ana, Tustin, va condo list, VA Loan, VA Mortgage

VA Loan Cashout Refi for Orange County Borrowers

December 13, 2009 by Tim Storm 11 Comments

Orange County homeowners with a VA loan are finding there are big advantages to the VA Cashout refinance program. This program actually does not require the loan being refinanced to be a VA loan, as long as the borrower is eligible for a VA loan. The biggest advantage of this program over most other cashout refinance programs is that the borrower can borrow money up to 90% of the properties value, while a Conventional loan allows cashout up to 80% loan to value, and FHA allows cashout up to 85% loan to value.

What is the Difference between a VA IRRRL and a VA Cashout Refi for Orange County Borrowers?

Orange County borrowers need to keep in mind a few of the differences between the popular IRRRL, or VA Interest Rate Reduction Refinance Loan, and a VA Cashout refinance. The IRRRL program is strictly a “Rate and Term” refinance, and the current loan needs to be a VA loan. Also, income is not verified, and in most situations, there is no appraisal. (Although there have been some changes to the appraisal requirements and some lenders are tightening up this program.) The VA considers any refinance that is not an IRRRL to be a cashout refinance. This means that if an Orange County VA eligible borrower wishes to refinance from a Conventional (Fannie Mae or Freddie Mac) loan, then even if they will not pull cash out, VA still considers it a cashout refinance and it must be underwritten as such.

VA Loans Are Flexible with FICO Scoring

Another big advantage for a VA cashout refinance versus a Conventional cashout refinance is the relative flexibility towards FICO scoring. For VA eligible borrowers with FICO scores under 700, if may make more sense to go with a VA loan even you only plan to pull cash out to 80% loan to value. Fannie Mae and Freddie Mac have instituted pricing “addons” which increase the fees and rate for cashout refinances when the FICO scores drop below 740. If your score FICO drops below 700, the pricing hits really start to add up. With VA, the pricing hits for low FICO’s are minimal.

VA Guidelines Regarding a Cashout Refinance

The actual VA guidelines allow for cashout to 100% loan to value, but finding a lender who will allow this will be difficult. Lenders tend to stay with the 90% rule, although there is some flexibility if the borrower is not actually getting cashout and the loan to value is over 90%. This is something that should be reviewed by an experienced Orange County VA loan officer prior to paying for an appraisal.

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 Cash out Refinance, VA Refinance Loans Tagged With: Orange County, santa ana, tim Storm, Tustin, VA Cash out Refinance, VA Loans, VA Mortgage, va refinance

Orange County, CA First Time Buyer Uses VA Loan for $0 Down Purchase

October 23, 2009 by Tim Storm

VA is one of the only programs currently available that offers 100% financing for Orange County home buyers. Last month, Michelle Tucker, a single VA eligible homebuyer, took advantage of her VA eligibility and purchased her first home in Santa Ana, CA for $375,000. She had no down payment, and the seller paid all of her closing costs.

What is a VA No No?

Michelle bought her home using what is commonly referred to as a VA No No. The “No No” stands for “No Down payment” and “No closing costs”. The seller paid all recurring and non-recurring closing costs for Michelle. Michelle did pay for the appraisal, which was $425 and needed to be paid at the beginning of the process. But other than that, she was able to purchase her home without depleting her reserves.

Michelle began the homebuying process back in May, 2009. After renting for the over 10 years and feeling like property values would never be affordable in Orange County, the real estate downturn hit. Homes that were once valued at close to $600,000 were suddenly worth less than $400,000. Also, creating the perfect storm, interest rates have been very low for most of 2009, and the First Time Buyer tax credit of $8,000 even made it better. First thing Michelle did was contact an experienced, Orange County Direct VA Lender. Her Orange County VA loan officer was able to explain how the program works and prepare several VA loan scenarios based on her qualifications. He even helped to retrieve her Certificate of Eligibility.

PreApproval for VA Loan

As part of the VA PreApproval process, she provided 2 years tax returns and W2’s, paystubs for the most recent month, 2 months bank statements, and copies of her drivers license and social security card. She also provided her DD214. A loan application was completed and credit report run. With FICO scores ranging from 661 to 679, she was good to go. PreApproval only took a few days to complete, and with no costs. Once PreApproved she was introduced to a Orange County Realtor who was familiar with VA financing and also very familiar with the Santa Ana, Tustin, and Orange market areas Michelle was most interested in.

Finding a Home in Orange County is Not Easy

Michelle quickly found that with the drop in home prices also came a flood of renters looking to buy their first home. Also competing for the properties she was looking at were “all cash” investors. While frustrating, she persevered. In June she made offers on 6 homes. In July she made offers on another 8 homes with still no results. Finally, after taking a few weeks off from the home search, she got an accepted offer in August. $375,000 purchase price with the seller paying all of her closing costs, including her “prepaid” expenses such as interest, insurance, and taxes. Escrow was set for a 45 days close. On September 28, 2009, the loan funded and the Deed was recorded. The property was hers.

While purchasing a home can be a frustrating experience at times, working with experienced real estate professionals can help to make it as smooth as possible.

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: california, first time buyer, santa ana, Tustin, VA Loans, VA Mortgage