va versus calvet | Orange County, California VA Loans

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.

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.

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

January 29, 2015 by Tim Storm

Which loan program is better for Orange County, CA Veterans – CalVet or VA? It depends on the Veteran and the situation. It also depends on what is happening with interest rates. But in most cases the standard VA loan program will be the best option for a Veteran in Orange County, CA.

Important Differences Between the CalVet and VA Loan Programs

Max Loan Limit for 100% Financing. The 100% VA Loan financing limit in Orange County for a standard VA loan is $625,500 in 2015. And there is are income limitations for VA. Also, it is possible to go even higher than the $0 down limit with VA. This is called a Jumbo VA Loan. Many VA lenders will lend up to $1,500,000. CalVet will currently lender to $611,901 in “non-target” areas, and the Veteran must have income that is less than $108,360 for a 2 person household, or $126,420 for a 3 + person household. The fact that VA has no limitations just makes it easier to work with.
Interest rates. CalVet has a few different interest rate offerings, depending on the “Mortgage Bond” the loan is based on. The QVMB program interest rate is 3.75% with a 4.09% APR. The QVMB has a max loan of $521,250. The QMB has a rate of 4.25% with an APR of 4.6%. The QMB is the program with income restrictions but the loan limit of $611,901. As of this writing, standard VA 30 year fixed rates for loans under $417,000 are 3.25% with a 3.291 APR. For VA loans over $417,001 up to $625,500, interest rates are 3.5% with a 3.651% APR. *Rates effective January 28, 2015. Subject to change.
VA Loan fees are typically lower than fees charged on the CalVet loan program. Also, many VA lenders will be able to offer a rate/fee option that would include a lender credit for all closing closing costs. CalVet charges a 1% Origination Fee on all loans. There will be much more flexibility with a VA loan in helping the Veteran purchase a home with no money out of pocket.
Refinancing if interest rates drop. The CalVet loan does not have a refinance program for situations where interest rates drop. On the other hand, the VA program has what is by far the easiest refinance program. It is called the Interest Rate Reduction Refinance Loan, or IRRRL. With the IRRRL, there is no appraisal or income documentation required from the VA loan borrower to complete the refinance. A CalVet borrower would need to refinance completely out of the CalVet loan and into a VA loan in order to take advantage of lower interest rates. However, that is a tough way to go because since the CalVet borrower doesn’t currently have a VA loan, they would need to do a full refinance, with appraisal, termite inspection and clearance, income documentation, and VA Funding Fee. It would have been easier to just go VA in the first place.
Loan versus contract of sale. CalVet will actually hold legal title for the Veteran because CalVet us a Land Contract, or “Contract of Sale”. Basically, CalVet purchases the property and then sells it to the Veteran using a Land Contract. CalVet holds title, while the Veteran holds “equitable title”. With VA, the Veteran receives title immediately upon purchasing the home, which is like other standard types of financing.

How To Know Which Loan Type if Best for You

The best way to know which program is best for you is to contact an Orange County Military Lending Specialist, who can prepare custom loan scenarios based on your long and short term financial goals. Financing a home is the biggest investment most people will ever make, so making sure you’re research includes all your option can save thousands of dollars over the life of the loan.

Authored by Tim Storm, an Orange County VA Loan Officer specializing in VA Loan. MLO 223456. – Please contact my office at the Emery 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.