VA Home Loans
The VA Home Loan helps Active Duty, Veterans and eligible surviving spouses become homeowners. These are great benefits and Rally Point Mortgage is dedicated to make this as smooth as possible in either a Home Purchase or Refinance. These benefits can be used to purchase, build, repair, refinance or adapt a home for your own personal occupancy all with no money down and no mortgage insurance.
The VA does not provide the funds or make lending decisions. However, the VA provides our wholesale lending partners a guaranty, sort of like an insurance policy, of 25% of the max loan amount, enabling our lenders to provide you with more favorable terms compared to Conventional mortgages. You can purchase a home with 0 money down, 100% financing, no mortgage insurance, and most likely….. little to no out of pocket costs(each situation is different as there are variable factors that will influence this).
Keep in mind that we are providing you with general information and that we have not covered every contingency or scenario. Please call or email us with your questions. You also have the option of fillinging out a Quote Form and we will reach out to you. We are always available 7 days a week to answer your questions.
- No Down payment as long as the sales price doesn’t exceed the appraised value
- No private mortgage insurance
- Closing costs may be paid by the seller
- VA has provided limits on the amount service members can be charged for closing costs
- No early pay off penalty fees
- Assistance provided if you get into financial difficulty
- Do not need to be a first time home buyer
- Can be used again
- Is assumable—subject to lender or VA approval of assumer’s credit.
- Flexibility of negotiating interest rates with the lender
- Can be used to refinance a non-VA loan into a VA loan.
- Take Cash out for paying off debts, funding school, making home improvements, cash for whatever reason. Usually limited to 95% Loan to Value(LTV), but can be 100% if used to pay off a lien on the home. Has to be reviewed
- VA will guaranty up to 100% of the value of your home
- Used to lower your existing VA home loans current interest rate, shorten your term(30 to15 years) or convert an adjustable rate mortgage (ARM) into a fixed rate mortgage
- No appraisal or credit underwriting required by the VA when applying for a IRRRL. *Note* some investors will have different requirements
- IRRRL may be done with no out of pocket costs by including all costs in the new loan or by providing an interest rate with credits that enable our lender to pay for all costs.
- No Cash back allowed on these transactions
- You will reuse the entitlement you originally used on the same property. Must be a VA to VA Refinance
- A Certificate of Eligibility (COE) is not required. We can go onto the VA system and verify your previous use or you can simply provide us your copy if you have one.
- No loan other than the existing VA loan may be paid from the proceeds of an IRRRL. If you have a 2ndmortgage, the holder must agree to subordinate their loan, so that the new VA loan holds first lien position
- You do not have to occupy the home for an IRRRL Home Loan. You only have to certify that you occupied the home previously
VA does not set a cap on how much you can borrow to finance your home. However, there are limits on the amount of liability VA can assume, which usually affects the amount of money an institution will lend you. The loan limits are the amount a qualified Veteran with full entitlement may be able to borrow without making a down payment. These loan limits vary by county, since the value of a house depends in part on its location.
The basic entitlement available to each eligible Veteran is $36,000; however your full entitlement is quite simply calculated by a factor of 25% times the max VA loan limit by county. The typical full entitlement is $106,025, which reflects 25% of the standard national conforming loan limit of $424,100. Lenders will generally loan up to four times a Veteran’s available entitlement without a down payment, provided the Veteran is income and credit qualified and the property appraises for the asking price. You will see that most counties have the conforming loan limit of $424,100. As you refer to this chart, you will see that the max loan limit for Pierce, King and Snohomish Counties is $592,250 so the maximum entitlement available is $592,250 x 25% = $148,062 See Loan Limits for more information about the limits in your county.
We have from time to time have assisted VA qualified buyers in using their entitlement a 2nd time, even though they are currently holding another VA mortgage. This occurs typically when you decide to rent out your home in your previous duty station that is under a VA home loan and decide to purchase another home using your remaining VA entitlement benefits in the Fort Lewis
Please click here for a summary of examples of how you can use your VA home loan benefit a 2nd time while your first VA home loan is still in place. Please call me if you have any questions about this as I am always available to answer your questions.
To qualify for a VA home loan, you must have reasonably good credit and sufficient income for your desired home price range, and a Certificate of Eligibility(COE) We have wholesale lenders who will provide service members/veterans a VA home loan with a minimum mid credit score of 600, however unless there is an unusual scenario, we prefer to assist you in improving your credit to at least to 640 or above where pricing is more favorable We are not here to just see that we can get you into a home, but we want to put you into a situation where you are leveraging your purchase wisely.
If you would like to verify credit on your own, you can do so at the federally designated website, www.annualcreditreport.com for free. This website is also an excellent resource for advice on how to dispute or request verification of derogatory credit and has excellent information on credit improvement strategies. You can check your credit with all 3 national credit bureaus and for a fee of $7.95 for each one; you can check your scores with each bureau also.
As mentioned above, you will need a valid Certificate of Eligibility (COE) to be eligible for a VA-guaranteed home loan. I can get this quite conveniently for you electronically through the VA Web LGY system and it only takes seconds, so I can take care of this for you. The eligibility requirements to obtain a COE are listed on this link for Servicemembers and Veterans, spouses, and other eligible beneficiaries. Your length of service or service commitment and/or duty status may determine your eligibility for specific home loan benefits.
If you would prefer to establish your eligibility on your own, you can certainly do so. You can do this by registering on the VA eBenefits site at www.ebenefits.va.gov. You than can request your COE electronically. You can also request your COE by mail by downloading and completing a VA Form 26-1880 from the internet at the following web site: www.va.gov/vaforms and include this with your DD-214 and send this to the VA Eligibility Center:
Atlanta Regional Loan Center, Attn: COE (262), PO BOX 100034, Decatur, GA 30031. Tel# 1-888-768-2131
The VA upfront funding fee is what enables the VA Home Loan Guaranty benefit to work. All veterans must pay the funding fee as part of the loan process (except for disabled rated active duty/ veterans or a qualified surviving spouse).
This funding fee reduces the loans costs to taxpayers as this program requires no down payment and no mortgage insurance. This funding fee is a percentage of the loan amount which varies based on the type of loan and your military category. If you are using your VA benefits for the first time and are required to pay the funding fee (you have no disability rating), you will see that the fee is 2.15% for active duty/veterans for 100% financing as reflected on the funding fee chart. The funding fee chart provides you percentage of fee based upon your service category and differences if you make a down payment. You can finance the funding fee into your home loan or pay for it in cash. The funding fee must be paid for at closing.
As mentioned before, sufficient income is part of the qualifying parameters and this is one area that requires preparation in order to avoid frustrations at the time you would like to purchase. If you are anticipating your next PCS move and plan on purchasing a home at your next duty station, keep in mind, before purchasing that brand new vehicle(that’s just too good of a deal), the impact it might have on a debt to income calculations and your overall credit score.
My best advice is if you are planning on purchasing a home, avoid big ticket purchase items like a car and work out a plan to eliminate as much existing debt as you can. If you do not have credit, please work on establishing credit, but pay off your balances or keep the balances at least 30% or less of the max credit limit allowable on your credit cards.
Lenders look at 2 debt to income parameters, the housing debt ratio (housing costs/gross income) and the total debt ratio (housing+all other monthly minimum payments, to include child spt/gross income). Our lenders primarily look at the total debt to income ratio, which if “manually” underwritten must be at 41% or below if there are no other compensating factors.
We submit all of our files through Fannie mae/Freddie mac automated underwriting, and if we receive a “refer/eligible” finding, it will be “manually” underwritten as mentioned before by a VA designated underwriter.
This means that there might be something in the file that elevates the risk to investors and so total debt to income usually must be at 41% or below. However, we have had scenarios where we have had manual approval with debt ratios in the mid mid 40’s and each situation has to be evaluated on its own merit and circumstances.
The total allowable debt to income ratios on automated “approve/eligible” findings can be even as high as 58% with strong compensating factors(lots of reserves, strong income/credit, etc). However, for planning purposes, it’s a much better strategy to focus on keeping your total debt as low as possible, making on time payments and to certainly know what your current credit looks like so there are no surprises when you decide to purchase your home. Check your credit early and periodically, so you stay in control and have time to make corrections so that you are ready to purchase a home
Remember, above everything else, is what you feel most comfortable with in home price ranges based upon your budget goals. Even if you are approved at higher priced homes, does not necessarily mean that’s what you should be looking for.
You can estimate your current debt to income levels as compared to various home price points based upon current VA home loan interest rates.(or conventional, FHA) If you would like to do your own estimating, you can start with going to a website like mortgage news daily to look at the FHA 30 year fixed rate pricing(similar to VA interest rates) section at http://www.mortgagenewsdaily.com/mortgage_rates/ . 95% of the time, our veterans prefer the VA 30 year fixed rate loan and if you want to look at other products, please call me at 253-921-2934 as it will just take a few minutes to get you situated. If you want to bypass all of the simple math…..well that’s what I am here for!
Even though the prevailing rates on mortgage newss daily is generally slightly higher than what we have access to, it will still be close enough for you to come up with some good estimates.
Take the interest rate provided at the mortgage news daily website and go into the mortgage calculator here to calculate your monthly principal and interest (P&I) payment on the “mortgage” tab of the calculator.
To estimate your property taxes in any city in Pierce County, please click on this link. You also have to estimate your hazard insurance rates, and as a general rule you can use a rate of .4% of the home value as a good estimate. So for a home valued at $250,000 at .4% coverage, you are looking at a premium of $1000 annually, for a monthly insurance payment of $83.33.
Take all of your minimum monthly payments on your recurring debt that will continue for more than 6 months and add this to the Principal and Interest (P&I) payment you calculated on a chosen house value, and add also you monthly tax and insurance estimates you made above. The total house payment is most often referred to as the “PITI” payment…that is Principal, Interest, Taxes and Insurance.
Now you start calculating debt ratios based on the various house prices you are looking at (all recurring min payments+PITI/gross income=debt ratio. So let’s say I have a car payment of $250, installment loan of $175, total of all credit card payment of $275 and my wife and I want to start looking at homes, so we start with a home priced at $250,000.
Using the VA prevailing mortgage rates at bank rate on Feb 10, 2014 for a 30 year fixed rate was 4.02%(assumed excellent credit), so for a $250,000 home( loan amount is $255,375 with VA funding fee included of 2.15%), the principal and interest payment is $1,222.14. According to the average property tax in Pierce County WA, we are looking at an annual estimate of taxes on a $250,000 as $2550 for a monthly escrow payment of $212.50. Keep in mind, if you chose a home in locations like University Place, WA, your tax rate will be higher. Using a hazard insurance factor of .4% on a home valued at $250,000, will give you annual hazard insurance estimate of $1,000 for a monthly escrow payout of $83.33. Your total PITI payment is than, $1,222.14+212.50+83.33= $1,517.97. Your total debt is $1,517.97+$250(car payment)+$175(installment loan)+$275(all credit card payments)= $1,967.97
Income calculations for service members have similar elements and if you are getting a LES, I will review this with you to make sure all income is identified properly. To continue with our debt to income calculation, let’s assume I am the sole source of household income as an E7 with over 10 years of service with dependents.(2014 tables) Base pay is $3,709.8, BAH is $1695 and BAS is 357.55. Since BAH and BAS is non taxed, it is acceptable by the VA to gross up this income by a factor of 15%(can change if tax bracket is higher) Our income calculations would then be as follows:
Base income $3,709.8 + $1,949.25(1695×1.15%)+$411.18(357.55×1.15%)= $6,070.23(total gross income)
So now we are able to estimate what our total debt to income ratio would look like for a home purchase at $250,000. We calculate as follows, $1,967.97(total debt)/$6,070.23(total gross income)= 32.42%. So in this case, if this couple found a home that was in the $270,000 price range, it certainly is feasible that they could purchase this as they are well within required ranges of debt to income ratios of 41% for a manually underwritten loan. I recommend being conservative in your estimates, so even though automated findings will allow ratios in the 50’s, it’s always a good rule of thumb to keep your ratios at 41% or below for planning purposes if you anticipate there is no increase in household income coming within the next year following the purchase.
However, many times the spouse of the service member is anticipating employment within a few months of arrival at a new duty station. In cases like this, it’s very feasible to be approved in the low to mid 50’s and certainly acceptable to purchase a home that will be well within budget with two incomes.
Residual income guidelines are used to determine whether the service members/veteran’s monthly discretionary income is sufficient to meet living expenses after all housing and recurring monthly expenses have been met. All dependent members of the household, regardless whether they are children or adult, should be included when determining residual income requirements. If you are not sure, please call me and I will help you with this.
Even with approve/Eligible or Accept findings, loans still must meet residual income guidelines
- Federal Tax, State Tax, Social Security and Medicare
- Revolving and installment debt
- Child Support and alimony obligations
- Child Care or job expenses
- Home maintenance at .14 cents per square foot
Cannot use grossed up income in residual income calculations
If DTI>41% borrower must have additional 20% residual income available
If for any reason, your family falls outside of the parameters of the numbers shown below, we shall review, because there can be some adjustments based upon your particular
Over 5—Add $75 for each additional member of the family of seven
FAMILY SIZE MIN RESIDUAL INCOME REQUIRED
Over 5—Add $80 to each additional member up to a family of seven
- Purchase an existing home, a condominium unit in a VA-approved project
- Build a Home
- Simultaneously purchase and improve a home
- Improve a home by installing energy-related features or making energy efficient improvements
- Manufactured home and/or lot
- Multi-family property up to 4 units. The veteran must occupy on of these units as their primary residence
- Traditional fixed payment loans (30,25,15)..constant principal and interest payments. However, taxes/insurance fluctuate over time as these can increase/decrease
- Graduated Payment Mortgage (GPM)..Consists of low initial payments that gradually rise to a projected level payment in the sixth year(down payment required if you use this option)
- Hybrid Adjustable Rate Mortgage (HARM)..These products combine the features of a fixed rate loan that later convert to a traditional adjustable fix rate mortgage. The primary offering with our VA lenders is a 5/1 Hybrid program, which means it stays fixed for the first 5 years and then adjusts annually thereafter. Families who plan on selling their home within the first 5 years might consider this. Initial interest rates are also lower than 30 year fixed rates.
- Traditional Adjustable Rate Mortgage (ARM)..Annual adjustments. Not too popular as these pose even greater risks for service members and veterans. Lowest starting rates.
CLOSING COSTS AND PREPAID ITEMS MAY NOT BE INCLUDED IN THE LOAN, EXCEPT FOR REFINANCING LOANS.
- VA Appraisal Fee
- Recording Fees & Recording taxes, other charges incident to recordation
- Credit Report
- The portion of Property Taxes, assessments, and similar items for the current year chargeable to the borrower and the initial deposit(lump-sum payment) for the tax and insurance amount
- Hazard insurance
- Survey, if required by lender or veteran
- Title examination and /or title insurance, or related fees associated with Title
- Mortgage Electronic Registration System(MERS)-Per Circular 26-05-04(designed to verify ownership and servicing rights)
- Any mail service like Fed Express/Express mail when saved per diem interest cost to the veteran is exceeded by the cost of the mail service
- Reasonable loan discount fee(reduces interest rate and can be paid for by seller)
- VA Funding Fee
All other charges listed below fall under a flat allowable fee of 1% of the loan amount
- Loan closing or settlement fees
- Escrow Fees or Charges
- Preparation/Processing or Settlement fees
- Lenders inpections, except in construction loan cases
- Lender’s appraisals
- Attorney services other than for Title work
- Postage and other mailing charges, stationary, telephone calls, and any other overhead
- Amortization schedules, pass books, and membership or entrance fees
- Notary Fees
- Commitment fees or marketing fees of any secondary purchaser of the mortgage and preparation and recording of assignment of the mortgage to the purchaser
- Trustee’s fees or charges
- Application fees
- Any fees charged by a mortgage broker, finders or other 3rd parties whether affiliated with the mortgage or not
- Any other fees, charges, commissions, or expenses except those listed above
If supervision of construction progress is conducted and/or there are advances to the veteran in excess of 50% of the loan during construction, alteration, improvement, or repair, the veteran may be charged up to 2% of the loan amount. This charge is in addition to a one percent fee charge allowed to cover other fees mentioned above
In construction, alteration, improvement or repair loans, including supplemental loans where charges are not permissible under provisions of the schedule, the lender may charge and the veteran may pay a flat sum not exceeding 1% of the loan amount. This charge can also be in addition to the one percent origination fee.
- OBTAIN PRE-APPROVAL—VERIFY CREDIT AND INCOME
- FIND A REAL ESTATE AGENT—WE HAVE A TEAM WHO ARE MILITARY SPECIALIST
- CHOOSE A HOME
- EXECUTE A PURCHASE AND SALE AGREEMENT
- SELECT A HOME INSPECTOR
- COMPLETE LOAN APPLICATION PROCESS—SUBMIT INCOME DOCUMENTS(usually collected at pre approval process)
- DOCUMENTS SUBMITTED TO UNDERWRITING
- OBTAIN LOAN APPROVAL
- ATTEND CLOSING
- MOVE INTO YOUR NEW HOME!
- Your first step, and you should start this process before you even select a home!
- You will have your credit verified with all 3 credit bureaus
- Your income will be verified by providing copies of your last 2 years w2’s and your most recent paystubs showing income for the past 30 days with year to date income
- A pre approval is NOT a guaranty you will be approved for a loan.
Just because you are pre-approved for a large amount, does’nt mean you should purchase a property for that much. Think about ALL cost that go into a bigger home in addition to your other monthly obligations.
You should choose an agent who lives and works in the area you are considering purchasing in. He or she will be more knowledgeable about the local neighborhoods. Obviously you want to make sure the agent is currently licensed. It’s a good idea to look at the agents/teams website and consider their listed skills, success stories and services. Referrals from a reliable source is also another great way to find potential candidates.
Remember that you are selecting someone who you will be comfortable with, so it’s just as important as to whom they are as it is what their experience is. You can even do well with a “rookie” agent, if they have a great coach/team in support of their efforts, and the new agent is a hardworking, intelligent and communicative in the process of assisting you.
Since you are either a service member or veteran, it’s also important to see if they are certified as a Military Housing Specialist. If an agent is truly interested in better serving the military community, they will have this credential in order to be more effective in assisting VA Home Buyers.
AGENTS WILL DO SOME OF THE FOLLOWING:
- Agents with local knowledge will be able to suggest neighborhoods that fit your criteria
- The agent will create a personalized multiple listing service(MLS) search based on your specific property and location criteria
- If an agent passes you off to an assistant, be cautious.
- Agents will search properties for sale that fit your criteria and set up showings with the sellers. They will also go on walk through of the properties with you
- An agent may recommend a house that does not look great on the outside, but may pleasantly surprise you when you look inside. Might just be a great “value” find
- Agents will assist you in negotiations of the terms and price of your offer with the seller ‘agent.
- Your agent will communicate with you so that she or he knows exactly what you are willing to pay for a specific property
- Your agent has a legal obligation to represent your best interests in all aspects of negotiations with the seller
- Your agent will be able to recommend good home inspectors, title and escrow companies.(title and escrow by practice is usually chosen by the seller)
- Your agent should be in attendance for the appraisal, inspection, final walk through(just before closing) and closing.
- A good agent will also be available to you after the closing in case you have questions or issues that need to be resolved.
- Before you contact an agent, decide what you need/want as compared to what you can actually afford(review debt to income discussion above)
- What Type of Property are you Looking for?
1) Single Family Residence(Most autonomy)
2) Duplex(You live in one, rent out the other
3) Multi-Plex(You live in one, rent out the other 2/3 units)
4) Townhouse (no neighbors above or below you..you own land, easy upkeep)
5) Condominium(like apartment living, you own interior space, easy upkeep)
- TRADITIONAL > You purchase the property and the proceeds are used to pay off seller’s existing mortgage(most common…close in 30 days or less)
- SHORT SALE > You purchase the property for less than the seller’s balance is on the existing lien on the property. (*long process, sometimes more than 3 months)
- FORECLOSURE > You purchase property that is owned by the bank or servicer(REO). Can take about 1 week longer to close
- Bring a camera and take lots of notes…stay organized
- Bring a small rubber ball…check for level floors
- Look at the surrounding area….any unusual features?
- Look at the home more than once in daylight conditions
- How does the area around your home look at night?
- If you find house you really like, put in an offer!
The purchase agreement or purchase and sale agreement is a contract that delineates the terms and conditions of the home purchase. You will not see any loan information in here. The buyer will sign first to indicate an offer has been made on the property. The seller will either accept, counter, or decline the offer.
Deciding how much to offer is where you will need the advice of your real estate agent representative (buyer’s agent). Is the seller having a motivation for leaving? Do they need to make a quick move? It they are trying to move quickly, perhaps they would be willing to accept a lower offer.
If you do submit an offer significantly lower than the listing price, you should be prepared for a counter offer, especially if it is 15% or less than the original list asking price (considered a “low ball” offer). If you are submitting a low offer, make sure you can back this up with some research to support it. Make a case for the lower offer by showing some comparables.
- PROPERTY ADDRESS
- PURCHASE PRICE
- BUYER AND SELLER’S IDENTITY
- BUYER’S DOWN PAYMENT(USUALLY NOT ON A VA HOME PURCHASE)
- SELLER’S PAID CLOSING COSTS…EXPRESSED AS A % OR AMOUNT
- PERSONAL PROPERTY INCLUDED/EXCLUDED FROM THE SALE
- EARNEST MONEY DEPOSIT…SHOWS GOOD FAITH INTENTION
- OFFER EXPIRATION DATE & CLOSING DATE
- VA ESCAPE CLAUSE—MEANS YOU ARE NOT OBLIGATED TO MAKE UP THE DIFFERENCE IF THE APPRAISAL COMES IN LOWER THAN PURCHASE PRICE. YOU HAVE THE OPTION TO WALK AWAY FROM THE SALE WITHOUT PENALTY
- LIST OF CONTINGENCIES CAN INCLUDE:
- Forfeiture of earnest money if buyer walks out of the transaction
- Finance clause allowing buyer to walk away if they are not approved for financing
- Buyer can have home inspected. If the report is not satisfactory, the buyer may walk away within a specified timeframe.
- Buyer can complete a walk through to ensure the property is in the same condition as when the offer was made
- The offer can be made contingent on the sale of the buyer’s current property
The home inspection is done by a professional who will visually inspect the home to identify major defects. This is not a guaranty that the home will be defect free, but will serve as a vital step in identifying any issues that are were not initially identified. You will want to get one and have a contingency in the purchase and sale agreement that will allow you to back out of the transaction if there are any major defects in the property. If problems are found, the buyer (you) can ask the seller to repair the issues, or for funds to complete the repairs.
Find a reputable inspector by referrals or by searching online for reviews. Your real estate agent can also provide you with some recommendations. You can check the inspector’s qualifications and experience before making any hiring decisions. It’s worth the extra time to do a little research before making a hiring decision.
Once you find a possible candidate, ask the inspector for a sample inspection report. Is the sample report provided thorough and comprehensive? An average report ranges from 20-50 pages and includes photos.
- Reviews condition of property
- Explains and shows buyer any issues with the property
- Notes problems, safety issues, what needs to be replaced or repaired, and items to watch out for in the future.
- A general inspection may not identify, asbestos, radon, mold, mildew, stucco, rodents, pest control or lead paint. There are separate, specialized tests that can be completed
- RED FLAG! If an inspector refuses to allow you to be present at the inspection! You or your real estate agent should be present for the inspection or at least part of it to talk with the inspector
- I can take your application over the phone, in person, or you can APPLY HERE
- Need Pay stubs covering last 30 days of income.. civilian employment, Must include YTD totals
- LES, most recent for active duty service members
- Copy of photo ID’s(drivers license) and SSN cards or Military ID, all borrowers
- 2 years of most recent tax returns including w2’s
- 2 most recent checking/savings bank account statements…all pages
- Most recent asset account statements, all pages, 401k, savings, pension, stocks, IRA, etc
- Need Certificate of Eligibility. I can get this for you
- Disabled Rated Veterans…copy of your VA disiblity award letter dated within the last 12 months…eliminates VA funding Fee.
- Active Duty…need statement of service from unit or base(I can provide sample for unit to model after)
- Copy of Divorce Decree and Child Support Addendums
- Will retrieve credit report for you.
- Purchase and Sale Contract will be provided by your real estate agent
- Keep original documents of all copies you provide to me
- I will review the current rate/pricing with you and will recommend either we lock your rate at the time of application or “float” your rate until we get closer to closing. I do study market trends and can advise you here.
- I will show you various options with the current days rates/pricing so you can decide what combination of interest rates and closing costs(sellers usually pay most if not all closing costs) are best suited for you. This is called, “anti-steering” and allows you to choose what’s best for you. There is always an option of no out of pocket closing costs, one with a lower rate with closing costs and usually another option somewhere in between.
- The lower the interest rate chosen (below market value), the greater the adjusted origination charges. This can be beneficial to borrowers who plan to keep their property for a long period of time.
- You can reduce the adjusted origination charge with credits for an interest rate chosen. As broker, our credit pricing might even appear to be below market as compared to other larger financial institutions because of the wholesale delivery model.
- Locking your rate is a written agreement with our lender and you to commit to holding a specific interest rate for a specified period of time. We have various lock options which can range anywhere from a 7 day lock(best pricing) to a 90 day lock(higher cost).
- Our pricing is very transparent and our compensation is established so that it can never be influenced based upon your selected program or interest rate. Our compensation is paid to us by our lender, not through borrower (your) fees. Higher interest rates provide greater rebates that can be used to cover your closing costs(if seller’s contribution falls short)
- If the lock is about to expire before loan closing, we can extend the lock at a fee for a set period of days based upon the projected closing date. We try to avoid this by establishing our initial lock with some cushion. If our lock expires, we can relock, but the terms might not be the same
- I provide fee worksheets with the various rate options that will make the options easy to understand and help you to provide a basis for making a very informed decision.
- Must be given to you within 3 days of receipt of application
- The GFE provides the terms of your loan and estimates your closing costs. Once provided, there are limits on the amount certain closing costs can change without me providing you a new GFE. You can be assured that once I provide you a GFE, there is very rarely any substantial changes made that would require a re-disclosure. The most common circumstance of re-disclosure is when we lock your rate, if it was not done at application.
- Getting a GFE does not bind you to the issuing lender
- You can NEVER be charged for an appraisal until our chosen wholesale lender issues their disclosures to you(GFE, Truth in Lending). Most of the time, these will be sent to you by email and you will have the option of electronically signing them(recommended….fastest)
- The Purpose of the Appraisal is to determine the current market value of the property
- An independent, trained and objective professional who is certified will determine the value of your chosen property. They are not VA employees and they are approved by a board
- The VA uses the findings of the appraisal to determine the maximum amount you can borrow. If the purchase price exceeds the value, then the purchase price will need to be adjusted.
- The VA will not loan more than the appraised value of the property.
- This is not an inspection…and it’s still recommended
- The appraisal is also a safeguard for the purchaser in that the property has to be determined to be safe, sound and sanitary. If there are issues that need to be resolved, the seller will have to make improvement/repairs and the VA appraisal will have to go out and re-inspect the property to insure corrections have been made.
- The appraisal must be completed as part of the submission package to the underwriter, which is usually the last item we need for a complete submission package.
7. SUBMIT DOCUMENTS FOR UNDERWRITING
Your total loan package is now ready for submission to an VA underwriter for review and approval or denial. Loans are not submitted to an underwriter unless we have performed our own due diligence on a file and we are reasonably certain of loan approval. Very, very rarely are loans not approved that have made it into underwriter submission.
Here is the good part about being a mortgage broker! If for some reason, we do get a denial, we have the option of having another lender doing a quick review of the file and will inform us whether we should submit this to them or not. If this occurs, we can get an approval within a day or two with another lender who has different tolerance levels and might approve the loan! This is why going to a mortgage broker like us can save you so much time, and our realtor partners love this aspect of working with us.
If for any reason one of our wholesale lenders issues a denial, they are required by the Equal Credit Opportunity Act to give a statement with the specific reason for denial.
However the good news… once submitted to our underwriters, we usually get our approvals with Conditions. Conditions means that the underwriter is requesting follow up documentation from us, which is always a very normal part of the underwriting/approval process.
8. LOAN APPROVAL
Once all conditions are cleared by the underwriter, we are given a clear to close declaration by the underwriter and we inform all parties that we are ordering your closing documents that will be sent to escrow. We provide you, the realtors and the sellers the estimated closing date for coordination.
You should also be selecting a homeowners insurance company, so that we can get an insurance binder sent to us to satisfy closing conditions.
PREPARE FOR CLOSING
- Escrow will call you for your closing date and coordinate a time that is best for you to come in to sign documents
- If office hours preclude you from closing, a after-hours mobile notary will be made available for you at your convenience to sign at your home or a place of your choosing
- If you have any closing costs to pay(on VA loans…rare), they will inform you of the amount and whether you are paying by electronic wire or cashiers check
- Make sure you bring valid proof of identification with you to closing
- I will send you an estimated HUD-1 statement that you can compare with your GFE
- Insurance Binder from your chosen home owners insurance carrier will have been sent to me as part of the closing package
- I will be at your closing and will be able to answer any questions that might come up
FINAL WALK THROUGH OF PROPERTY
- The purpose of the final walk through is to make sure the property is in the condition specified in the purchase agreement. You and your realtor should be doing this together.
- This is usually performed within 24 hours of closing.
- Make sure all items included in the contract are in place and any repairs agreed upon have been completed
- Turn on all light fixtures, appliances, fans, heaters and air conditioning
- Make sure home is clean and all debris has been removed
- Run the water in all of the sinks, tubs and toilets
- Inspect ceilings, walls and Doors
- Open all windows an doors.
9. ATTEND CLOSING
- Expect to sign lots of documents. Ask questions of me or the signer if you are not sure of anything
- If you notice any differences to the HUD-1 settlement statement compared to your GFE, please bring this up
- You can have a Power of Attorney (POA) act in your behalf. This document appoints another individual to legally act on your behalf. A POA can sign the loan documents if you are unable to attend closing. Common with VA borrowers.