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

Getting A VA loan after bankruptcy or foreclosure

July 18, 2016 by Tim Storm

Getting a VA loan after bankruptcy or foreclosure is really not that difficult for Veterans in Orange County, CA. But many Veterans do not realize how quickly the VA loan can become a viable option after a major credit event.

Foreclosure and bankruptcy are definite obstacles for many Veterans trying to buy a home, but with the VA mortgage program it is possible to maneuver around these obstacles more quickly than with other types of financing. Bankruptcy’s and foreclosures only require a two year waiting period before qualifying for a VA loan.

Waiting Period After Bankruptcy

There are two primary type of bankruptcy that an individual can file for. A Chapter 7 bankruptcy seizes an individuals assets and liquidates their value to satisfy the necessary debts. All debts are “discharged” through the bankruptcy. The VA program requires a waiting period of two years after a Veteran discharges a Chapter 7 bankruptcy. A Chapter 13 bankruptcy is a court-mandated process that restructures an individual’s debt and sets up a repayment plan. Chapter 13 repayment plans can take anywhere from three years to five years to complete. The VA loan program will allow a Veteran to qualify for VA loan after only a 12 month wait period, starting from from the date of the filing. The Veteran will need to prove that they have been making their Chapter 13 payments on time, but this is still a very opportunity for a Veteran to purchase a home. A potential borrower with Chapter 13 bankruptcy must also get permission from the bankruptcy trustee before taking on an additional monthly payment. It’s also important to note that it is possible to refinance into a VA loan and pay off the Chapter 13 with proceeds from the loan.

FICO Score Requirements for the VA Loan Program

Many VA lenders will look for a credit score of at least 620 when qualifying for a VA loan, but there are lenders who will go down to a 580 FICO score. Still, it is important to begin working on credit restoration immediately after the bankruptcy is discharged. To minimize the damage, it is very important to put a lot of effort into repairing and strengthening your credit score during their waiting period prior to qualifying. And definitely do not have any late payments after the bankruptcy is discharged.

VA Loan After Foreclosure or Short Sale

A foreclosure or short sale are also significant derogatory credit events. Most loan programs require wait periods of up to 7 years before qualifying for a loan. But VA only requires a two year wait period from the date of the foreclosure or short sale. The “clock” can start earlier than the actual recorded date of the foreclosure if the mortgage for the property was included in an already discharged bankruptcy and the Veteran can prove they moved out of the property prior to the bankruptcy discharge date.

Not all lenders underwrite the same. It is beneficial to meet with a local Orange County VA lender to ensure you are on the proper path toward future qualification. The VA loan specialist you consult with should be able to prepare custom loan scenarios that will provide you with the numbers you’ll need to know about before you start the home buying process.

Authored by Tim Storm, an Orange County VA Loan Officer specializing in VA Loan. MLO 223456. – Please contact my office at the Home Point Financial. My direct line is 949-640-3102. www.OrangeCountyVALoans.com. I will prepare custom VA loan scenarios which will be matched up to your financial goals, both long and short term. I also prepare a Video Explanation of the your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.

Filed Under: VA Mortgage, VA Purchase Loans Tagged With: bankruptcy, foreclosure, VA Loan

CalVet Home Loan versus VA Home Loan | Which is Better?

May 16, 2016 by Tim Storm

California Veterans can choose between the CalVet home loan or the VA home loan. Both programs offer Zero Down Financing. But which program is better? It depends on several factors. The type of property you are purchasing, the purchase price of the home, and your long term plans with the home. A home loan is a major decision and it is important to select the right loan program for your situation. For California Veterans, the two primary programs are the Calvet and VA home loan programs. While both programs are very similar, there are important differences to consider before selecting the best program for you.

Eligibility for a CalVet Home Loan versus a VA Home Loan:

Both programs require a period of active duty service of at least 90 days as well as a discharge status other than dishonorable. CalVet is only available to veterans and active duty military living in California, while VA is available nationwide.

CalVet Home Loan:

When using the CalVet program, the desired home is purchased by CalVet and then sold to the veteran using a contract of sale. CalVet holds legal title, while equitable title is given to the veteran occupying the property. This process still gives veterans several ownership rights including property tax and mortgage interest deductions. Since CalVet holds the legal title, they can obtain a lower group rate for homeowner’s insurance. With CalVet holding legal title to your property, it can make it difficult to refinance or obtain a second mortgage in the future. CalVet does not refinance their loans, so if a Veteran wishes to takes advantage of lower rates or pull cash out based on increased equity, they will need to refinance out of the CalVet loan. The CalVet loan program is very flexible when it comes to purchasing manufactured homes, and is the better option if the manufactured home is on leased land.

VA Home Loan:

With a VA loan, the veteran receives full ownership rights and legal title to the property, just like most other types of home loan programs. VA also allows for more flexibility in terms of occupying the property. With a VA loan the veteran must initially occupy the property, but after a few years they are able to live elsewhere and rent out the property. Compared to CalVet, which requires the purchased property to be the primary residence until the loan is fully repaid. Also, VA loans are much easier to refinance. VA offers the Interest Rate Reduction Refinance Loan (IRRRL), which allows the Veteran to refinance their loan to lower their interest rate and payment without doing a new appraisal and without supplying income documentation. Also, while the VA loan program does allow for financing of manufactured homes there are not many lenders who will fund a VA loan on a manufactured home, especially if it is on leased land.

County VA Loan Limits and Loan Entitlements:

The size of the loan you need will likely influence which program better suits your needs based on which county you live in. In Orange and Los Angeles counties the current VA loan limit is $625,500 whereas in Riverside County the current loan limit is $417,000. It is even possible to get a Jumbo VA loan that is above the county $0 down loan limit by coming in with a down payment. VA loans in the $800,000 to $1,000,000 range are not unusual.

Understanding your options are very important. Make sure to research both VA and CalVet to make sure you are choosing the right loan program for your needs.

Filed Under: VA Purchase Loans Tagged With: calvet, orange county va loan, VA Loan, va versus calvet

Is An Earnest Money Deposit Needed for VA Financing?

January 22, 2016 by Tim Storm

Is an Earnest Money Deposit needed with VA Financing? This is a question that comes up quite a bit with Veterans using VA financing to purchase a home in Orange County, CA. Since no down payment is needed for a home purchase up to a price of $625,500, some would wonder why a deposit is even needed. Especially in a situation where the loan will be a VA No No. With a VA No No, not only is there no down payment, but the closing costs and prepaid expenses are also paid, either by the seller, the real estate agent, or the lender through a lender credit. The answer is “Yes”, an Earnest Money Deposit is necessary. To understand why it is important to understand the true purpose of the Earnest Money Deposit, or EMD for short.

Purpose of the Earnest Money Deposit

By providing an Earnest Money Deposit as part of the initial offer you are showing the seller how serious you are. The EMD is held in an escrow account, not by the seller or real estate agent. Imagine if you owned a home and had three offers to purchase your home for $500,000. The first offer comes in with a $15,000, or 3% of the purchase price. The second offer comes in with an EMD of $7,500. The third offer comes in with a $1,000 EMD. As the seller you would most likely feel that the two offers with an EMD of $15,000 and $7,500 are more serious, and may have a better chance of closing than the offer with only a $1,000 EMD. Unfortunately, the offer with a $1,000 EMD may not even receive a counter offer. In order to let the seller know you are serious, the buyer will need to include an Earnest Money Deposit. The amount needed will vary from transaction to transaction. The real estate agent will most likely be able to give advice on the amount needed.

Is the Earnest Money Deposit Refundable?

The Earnest Money Deposit is money that is held in escrow and will go towards the funds needed by the buyer to close escrow. Even with a VA loan with no down payment, there may be some funds needed to close. Let’s assume an Orange County Veteran is purchasing a VA approved condo in Mission Viejo for $600,000 with no down payment. Their EMD is $10,000. All closing costs and most of the prepaid expenses are covered by a lender credit, leaving just $2,000 needed from the Veteran to close escrow. Since they already have $10,000 deposited to the escrow company, they will received a REFUND of $8,000 when they close escrow on their new home.

Is the Earnest Money Deposit at Risk of Being Forfeited?

There is always a risk of the EMD being forfeited, especially of the contract is poorly written. By using an experienced real estate agent who is familiar with working with Veterans using VA financing, contingencies can be written into the contract that will protect the Veteran deposit from being forfeited. A contingency for inspections, loan approval, and the appraisal will all help to protect the EMD. The VA Addendum, which is included with the sales contract, will help to protect the Veterans deposit in the event that the VA appraisal comes in low.

Knowing and understanding how the EMD works is important for any home buyer. For Veterans, it just add’s to the importance in working with experienced real estate professionals who are very familiar with the Jumbo VA loan program in Orange County, where home prices and VA loan limits are higher than most parts of the country.

Filed Under: VA Purchase Loans Tagged With: earnest money deposit, emd, VA Loan

VA Loan Program is not just for first time home buyers

August 27, 2013 by Tim Storm

Many Orange County, CA veterans think that the VA loan program is only for first time home buyers. Or is for low income home buyers. In Orange County especially, that is not even close to the truth. In the OC, where the 100% financing limit for a VA loan is $668,750 in 2013 *, there are many second and third time users of the VA program. *2014 limit is $687,500

VA offers Veterans a great way to finance a home. Along with no down payment, there are several other advantages to VA financing.

VA allows for higher debt to income ratios than most other types of financing
VA more flexible guidelines when it comes to credit. Issues like bankruptcy, short sales, and foreclosure are more quickly forgiven with VA financing than other types of financing.
There is no monthly mortgage insurance on the VA loan program, even though the down payment requirements are low to $0. Other programs, like the FHA program, require the borrower to pay a fairly high mortgage insurance payment each month. This saves veterans money every month versus other loan programs.
VA does allow for financing above the counties $0 loan limit. This is known as a Jumbo VA loan. The Orange County 100% limit is $668,750 in 2013. *2014 limit is $687,500

How to get Prequalified for a VA Loan in Orange County, CA

Getting prequalified for a VA loan is fairly easy. The most important step is to find an Orange County loan officer who specializes in VA loans. Probably more than any other type of loan program, working with a loan officer who is very familiar with VA guidelines can save time and stress. The loan officer should be able to provide custom loan scenarios. And meeting the loan officer is also possible when you choose someone who is local to you.

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: first time buyer, orange county home buyer, VA Loan

Who Pays Closing Costs on VA Loan in Orange County, CA

May 15, 2013 by Tim Storm 2 Comments

A common myth with VA loans in Orange County is that the seller is required to pay some or all of the closing costs on behalf of the Veteran buying the home. This is not true. As a matter of fact the seller is not “required” to pay anything for the Veteran. Sadly, this misconception is held by many Orange County real estate agents and can make it difficult for a Veteran to get their offer to buy a home accepted in a multiple offer competitive bidding situation.

What about “Non allowable” Costs?

The reason for the confusion in regards to closing costs stems from the fact that there are costs which the Veteran cannot pay. Certain lender fees, escrow closing fees, and the termite inspection fee cannot be paid by the Veteran. Does this mean the seller has to pay them? No, they do not. As a matter of fact there are situations where the Veteran is allowed to pay these “non allowables”.

When can the Veteran Pay “Non Allowable” Costs?

According to VA guidelines the Veteran can pay a 1% Origination Fee. However many VA lenders do not charge an Origination Fee. In the case that the lender does not charge an Origination Fee, or at least the full 1% Origination Fee, then the Veteran is allowed to pay up to 1% of the loan amount in what would have been “non allowable” costs.

Orange County, which tends to have higher priced homes than other parts of California, has seen wide usage of the VA loan program. An Orange County Veteran can buy a home for a price as high as $668,750 (2013 Orange County VA loan limit) with no down payment. Let’s say that a Veteran buys a home for $500,000 with no down payment. A lender who doesn’t charge an origination fee would allow for the buyer to pay $5,000 towards what would have been “non allowable” closing costs. (1% x $500,000). In most cases the non allowable closing costs will be less than 1% of the loan amount, at least in Orange County where home prices are high.

What if the Veteran Doesn’t Want to Pay Closing Costs?

There are often times situations where the Veteran doesn’t want to pay closing costs and the seller doesn’t want to either. If there are multiple offers on a home it can be difficult for Veteran home buyer to have a seller pay closing costs if competing offers are not asking for costs to be paid. This is where knowing the options available is important. Most lenders have the ability to adjust the rate up slightly and then cover some or all of the closing costs. So yes, a VA NO NO (no down payment and no closing costs) is possible even when the seller and Veteran pay nothing towards closing costs. You just need to be working with a local Orange County VA lender who understands and can provide you with several loan scenarios to choose from.

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: closing costs, non allowable closing costs, VA Loan