VA LOAN LIMITS FOR COUNTIES WITH HIGH-PRICED HOMES

In most counties, the VA loan limit for a home purchase is $417,000. This doesn't mean that you can't purchase a home more expensive than $417,000 (likely with a down payment in excess of the applicable county loan limit), but $417,000 is the maximum guaranty amount allotted by the VA. 

However, there are certain counties where the average home price, even for a small home, is well above $417,000. Rather than force a veteran to move or be unable to use their VA benefit, there are able to be some adjustments and exceptions. In these high-priced counties, the VA makes a county-by-county exception for its VA loan limits. This amount is subject to change from year to year.

Below are the VA county loan limits for qualifying counties in California. There are also altered loan limits for counties in Alaska, Colorado, Connecticut, Washington DC, Florida, Guam, Hawaii, Idaho, Massachusetts, Maryland, North Carolina, Hew Hampshire, New Jersey, Pennsylvania, Rhode Island, Tennessee, Virginia, the Virgin Islands, Washington, West Virginia, and Wyoming. If you live in any of these states and would like to see if your county is included in a raised VA loan limit, and for what amount, give one of our VA specialist loan professionals here at Patriot Home Mortgage-Pacific Group a call today and we can answer any questions you may have. 

COUNTIES IN CA WITH VA LOAN LIMITS AND LIMIT AMOUNT (2015)

ALAMEDA  $625,000

CONTRA COSTA  $625,000

EL DORADO   $474,950

LOS ANGELES   $625,500

MARIN   $625,500

MONTEREY   $502,550

NAPA   $615,250

ORANGE   $625,500

PLACER   $474,950

SACRAMENTO   $474,950

SAN BENITO   $625,500

SAN DIEGO   $562,350

SAN FRANCISCO   $625,500

SAN LUIS OBISPO   $561,200

SAN MATEO   $625,500

SANTA BARBARA   $625,500

SANTA CLARA   $625,500

SANTA CRUZ   $625,500

SONOMA   $520,950

VENTURA   $603,750

YOLO   $474,950

 

HOME SHOPPING TIPS FOR VETERANS

If you're like the majority of military veterans looking to buy or refinance a home, you will want to use your VA loan benefit.  Its main purpose is to purchase or refinance an existing home, but it can also be used to buy a condo or build a home, so long as they meet  the right criteria.

It is best to work with a real estate agent who is familiar with VA loan guidelines and who works with a mortgage company, like Patriot Home Mortgage-Pacific Group, who specializes in VA loans, refinances, and pre-approvals.  This will greatly reduce or eliminate any misunderstandings when it comes time to make an offer or apply for a loan.

Here are some other tips to keep in mind when you start shopping for a home or consider making changes to your existing home:

*A VA loan can be used to refinance your current VA-guaranteed loan, or other form of direct loan (Conventional, FHA, etc),  in order to lower the current interest rate, with the possibility of also taking out cash with the refinance. 

*You may use a VA loan to repair, improve or alter a residence you currently own (for example, to make it accessible in the case of disability)

*As long as a home passes the VA appraisal (meaning it doesn't need significant improvements in order to be habitable), you may use a VA loan to simultaneously purchase and make improvements on a home.

*You may use a VA loan to make energy-efficient improvements, in accordance with specified conditions.

*A residence on a farm or acreage may be purchased so long as it is to be owned and occupied by the veteran; however, the property cannot be a working farm or a property that otherwise produces income 

*A VA loan can be used under certain circumstances to purchase a manufactured home, so long as it is attached to a permanent foundation and resides on a lot or land owned by the veteran (no rental spaces)

*A VA loan can be used to purchase a condo that will be a veteran's primary residence (and can, in fact, be used to purchase up to four single-family units within a condo development if approved by the VA)

A VA loan may NOT be used to purchase any type of vacation  home or income property, though you may obtain a direct loan for either of these and still carry the VA loan on your primary residence. 

I hope by keeping these tips in mind, you'll start your remodeling or home shopping in the right place, by choosing a property or improvement that will allow you to maximize your VA loan.

 

WHAT IS A VA APPRAISAL?

A VA appraisal is a necessary part of obtaining a VA loan. While it sounds like a home inspection, it's different. The purpose of the appraisal is to determine the fair market value of the property, as well as ensure its safe condition. This is the reason why VA loans are usually unable to be given to "fixer upper" homes that are otherwise not livable. An appraisal will be ordered as soon as you enter into a purchase agreement for the property in order to reduce or avoid delays in closing that may come as a result of the appraisal findings.

WHAT DOES IT COST?

The fee for a VA appraisal ranges from $300-575, usually dependent on the state and/or area. The independent appraiser is not affiliated with any particular lender, and may not charge more than the amount charged to a civilian client for a comparative service. 

WHAT IF MY APPRAISAL REQUIRES IMPROVEMENTS TO THE PROPERTY?

It doesn't mean you can't still buy the property. Any repairs noted must be completed before closing on the loan. A lender may allow you to escrow for a repair when possible, or negotiating with the seller to cover repair costs may be another option. You'll likely be happier with your home purchase knowing the necessary repairs are made before you move in.

WHAT IF MY HOME FAILS THE VA APPRAISAL?

If your home needs more than minimal repairs it is not considered "move-in ready." This means it likely has major issues with health and safety concerns such as lack of heat, outdated electrical, roof damage, or pest or termite problems. These pose not only a threat to the homes inhabitants, but to the security of the loan and value of the property, therefore they cannot qualify for a guaranteed VA loan.

WHAT IF THE APPRAISAL IS LOWER THAN THE HOME'S LISTING PRICE?

If this is the case, you have a few options: 1. You can make up the difference with your own money. 2. You can ask for a reconsideration of value based on similar properties. 3. You can take a higher interest rate on the loan and request the lender credit you back to offset the difference. Or 4. You can ask the seller to cover the difference between the appraised value and the asking price.

The VA appraisal exists to help you purchase a home that will safely shelter you and your family for years to come, and to ensure that the VA loan remains viable and the best option for Veteran home buyers. 

THE DIFFERENCE BETWEEN LOAN PRE-QUALIFICATION AND PRE-APPROVAL

 

You'd never dream of stepping into a boxing ring without your gloves, right?  Then you won't want to enter the competitive house-buying market without some protection, either! The equivalent of a pair of good, sturdy boxing gloves in real estate is the loan pre-qualification or pre-approval.

What is the difference?

PRE-QUALIFICATION:

This is the most basic form of approval  you can get. It takes about 20-30 minutes to complete the process and is based only on information given by you, the borrower. No credit is pulled, no documents are required.  It gives a lender an idea of how much an individual may be eligible to borrow, and they in turn grant a certificate stating such. It does not guarantee, however, that the borrower will *actually* be able to borrow the full amount, but it will help them to know what homes are in or out of their budget, and demonstrate to the sellers their commitment to buying.

PRE-APPROVAL:

This is a longer, more detailed process in which (among other things) the borrower submits an application, proof of income and other assets, and has their credit checked. The application is submitted to loan underwriting for approval. This will give the borrower a more definite number as to the amount they are qualified to borrow. In many cases, especially in multiple bid offers, it can be a golden ticket to make sure that home of your dreams becomes the home of your reality.

Here at Patriot Home Mortgage-Pacific Group, we can both pre-qualify and pre-approve you, preparing you to step into the home buying process with your gloves on! We will walk you through the process step by step, as well as provide education about the home buying process and how to put your best financial foot forward.

We'd love to talk with you about the home loan process. Give us a call today!

NATIONAL GUARD AND RESERVISTS AND THE VA LOAN

Did you know that military Reservists and National Guard members are entitled to the same VA loan benefits as those in regular military service, with only slight exceptions? This means they can refinance up to 100% of their existing home, buy a home with no down payment, carry no monthly mortgage insurance, and enjoy less strict credit requirements--all with a loan issued by a private mortgage company but guaranteed by the federal government. 

If, as a Reservist or Guard member, you meet the following criteria, you will likely qualify for a VA loan:

*Six years of service in the Selected Reserve or National Guard AND

  • Were discharged honorably, OR
  • Were placed on the retired list, OR
  • Were transferred to the Standby Reserve or an element of the Ready Reserve other than the Selected Reserve after service characterized as honorable, OR
  • Continue to serve in the Selected Reserve

The main difference for National Guard and Reservist members looking to obtain a VA loan is in the amount of funding fee, which is the cost associated with obtaining a VA loan that helps ensure the loan continues to require no down payment or monthly mortgage insurance. This cost will fluctuate according to the amount you wish (if any) to contribute to your down payment, ranging from 2.4% for $0 down to 1.5% for 10% or more down, and increasing if the loan is being used a second time. 

If you or your spouse are in the National Guard or Reserve and you would like to see if you qualify for a VA loan or refinance, give one of VA-specialist mortgage consultants here at Patriot Home Mortgage-Pacific Group a call. We love helping Guard and Reserve veterans! For all you have done for our country, you deserve the exclusive benefits that come with a VA loan!

Veterans and ARM Loans

One of the "evil villains" of the real estate crash of the mid-2000's was the ARM loan. ARM stands for adjustable rate mortgage, meaning its interest rate changes annually in relation to the 1-year Treasury Index plus margin percentage points added by the lender--and your payment could go up or down. 

They grew in popularity during the boom because the interest rate nearly always started at a lower interest rate than a fixed mortgage and made the initial payments less; therefore people were buying more house than they could afford--either banking on the hope that they would be making more money down the line, or not understanding that their payments would be rising, some sharply and out of reach, when the ARM readjusted. It was a perfect storm of uninformed home buyers, overzealous mortgage companies, government incentives, and a plentiful selection of shiny new homes.

However, ARM loans aren't all bad. For an informed consumer, including a veteran, they can be just the match you are looking for. The VA regulates ARM loans to where the interest rate cannot increase more than 1% per year and up to a maximum increase of 5%. For example, if your initial interest rate is 5%, your rate can go up as high as 10% if it increases by 1% over the next 5 years. It could also go down if the rate decreases. Lender's margin points differ from lender to lender, generally between 1-3%, and will also also affect your overall interest rate, so you're at an advantage to use a mortgage broker like those at Patriot Home Mortgage-Pacific Group who can compare the lender margin points of 40 different lenders and find you the best one. 

In most cases, a Hybrid ARM loan is the best option for home buyers staying in their home for three years. The initial interest rate of a Hybrid ARM cannot be adjusted for a minimum of 3 years. At that point, a home owner can sell their home before the interest rate changes or refinance to a traditional VA loan if they've decided to stay. This allows, in most cases, a lower mortgage payment for 36 months and a chance to pay off debts and keep credit in excellent shape to qualify for the lowest interest rate, should  you decide to refinance. 

If you want to know more VA loans, ARM loans, or Hybrid ARM loans, give us a call and we'll discuss your options!

ABOUT VA HOME LOANS

Looking for a quick explanation of the VA Loan? What is it? Who is it for? Here it is:

HOME LOANS

The VA helps Service members, Veterans, and eligible surviving spouses become homeowners. They will provide a home loan guaranty benefit and other housing-related programs to help you buy, build, repair, or adapt a home for your own personal occupancy. They can also provide assistance to help you maintain a home purchased with a VA loan should you find yourself in a financial crisis. 

VA Home Loans are not provided from tax dollars, but by private lenders--usually banks and mortgage companies. The VA then guarantees a portion of the loan, which allows the lender to provide you with more favorable terms. The VA-provided guaranty helps protect those private lenders from loss if the borrower fails to repay.

WHAT CAN I USE MY VA LOAN FOR?

A VA loan can be used to :

  • Buy or build a home that meets VA loan requirements
  • Buy a single residential condominium unit
  • Refinance an existing home loan (for example, from a traditional loan to a VA loan)
  • Repair, alter, or improve a Veteran's existing residence which they occupy, including making it accessible for Veteran's with disabilities.
  • Buy a manufactured home and/or lot attached to a permanent foundation
  • Install energy-efficient improvements, such as a solar heating and cooling system.

A VA loan can be taken out in the whole amount one qualifies for, or in portion.

There is more to a VA loan, and you can find out more if you continue to search our blog posts--or give us a call and let us see what we can do to help. If you're a Service member, a Veteran, or a surviving spouse, this program is in place to help you. Let it help!

MORTGAGE HELP AVAILABLE FOR VETERANS

Are you a veteran who is upside down in your mortgage? Have a sub-prime or non-VA-guaranteed loan? Can't afford your payment? Facing possible short sale or foreclosure and need advice or guidance?

There is help!

If you need to speak with a VA loan technician, there is a special servicing center set up just to help you. Visit www.benefits.va.gov/homeloans/ or call toll free 1-877-827-3702 to speak to a loan technician. If you do not have a VA-guaranteed home loan, the VA will not be able to intervene with a mortgage company on your behalf, so it is imperative that you contact your servicer as quickly as possible; however they will be able to help you with any options available to you.

One of the ways you might be able to be helped--whether or not you are in immediate trouble--is a refinance of your non-VA guaranteed home loan into a VA-guaranteed one. Thanks to the Veterans' Benefits Improvement Act of 2008, veterans who wish to refinance subprime or conventional mortgages may now do so for up to 100% of the property value. That can make a huge difference now and well into the future, not only in your payment amount and interest rate, but over the life of the loan as the VA offers its guarantees, protections, and more favorable terms.

So, don't throw in the towel yet. You served or are serving your country well, and they want to help. Take advantage of it!

For  more information about refinancing and to see if you qualify, give one of our veteran specialists at Patriot Home Mortgage-Pacific Group a call today!

 

 

PERIODS OF ELIGIBILITY FOR VA LOANS

 

Do you think you've served too recently to qualify for a VA loan? Or too long ago? Or for too short a period of time? You'd be surprised just how far reaching the period of eligibility is to qualify for a VA loan!

WORLD WAR II

1. Active duty service after Sept. 15, 1940 and prior to July 26, 1947

2. Discharge under other than dishonorable conditions; and

3. At least 90 days total service unless discharged early for a service-related disability. 

POST-WORLD WAR II

1. Active duty service after July 25, 1947, and prior to June 27, 1950;

2. Discharge under than dishonorable conditions; and

3. 181 days continuous active duty service unless discharged early for a service-related disability.

KOREAN WAR

1. Active duty after June 26, 1950, and prior to Feb. 1, 1955;

2. Discharge under than dishonorable conditions; and

3. At least 90 days total service unless discharged early for a service-related disability. 

POST-KOREAN WAR PERIOD

1. Active duty after Jan. 31, 1955, and prior to Aug. 5, 1964;

2. Discharge under than dishonorable conditions; and

3. 181 days continuous active duty service unless discharged early for a service-related disability.

VIETNAM WAR

1. Active duty after Aug. 4, 1964, and prior to May 8, 1975;

2. Discharge under than dishonorable conditions; and

3. 90 days total service, unless discharged darly for service-related disability. For Veterans who served in the Republic of Vietnam, start date is Feb. 28, 1961.

POST-VIETNAM WAR PERIOD

1. Active duty after May 7, 1975, and prior to Aug. 2, 1990;

2. Active duty for 181 continuous days, all of which occurred after May 7, 1975; and

3. Discharge under conditions other than dishonorable or early discharge for service-related disability.

4. 24-Month Rule*

*If sevice fell between Sept. 8, 1980--or Oct. 16, 1981 for officers--and Aug. 1, 1990, Veterans must complete 24 months of continuous active duty or the full period (181 or more days) for which they were called or ordered to active duty, and be discharged under conditions under than dishonorable. Exceptions are permitted if the Veteran completed at least 181 days of active duty service but was discharged earlier than 24 months for a.) hardship b.) convenience of the government c.) reduction in force d.) certain medical conditions e.) service-related disability. 

Reservists and National Guard members are eligible if they were activated after Aug. 1, 1990, and completed the full period for which they were called to active duty, served at least 90 days, and were discharged under other than dishonorable conditions. 

ACTIVE DUTY PERSONNEL

Until the Gulf War era is ended, persons currently on active duty are eligible after serving 90 continuous days.

ELIGIBILITY FOR RESERVES AND/OR NON-ACTIVATED GUARD MEMBERS

Members of the Reserves and National Guard who aren't otherwise eligible for loan guaranty benefits ARE eligible upon completing 6 years of service in the Reserves or Guard (unless released earlier due to a service-related disability). Applicant must have received and honorable discharge unless in an inactive status awaiting final discharge, or still serving in the Reserves or Guard. 

TIPS FOR PREPARING FOR YOUR VA LOAN APPLICATION AND APPROVAL

So, you're ready to start looking for a home? Or maybe you've already found one you want to put an offer in on? Preparation will help you apply for your VA loan as smoothly as possible and make sure you get it closed as quickly as possible. Here are some tips to consider:

1. REVIEW YOUR CREDIT REPORT 

This should be something you do as part of your annual financial planning, but now more than ever, you  need to know what lenders will find when they pull your credit. 

Choose your favorite online source for a free or low-fee credit report (annualcreditreport.com is a good, free one). Whichever site you choose, make sure they are pulling from all three main credit bureaus: Experian, Equifax, and TransUnion. Once you have your report in hand, search for mistakes or anything you find "fishy" (for example, a payment they report as late that you know you made on time, or an account you know you didn't establish)  then gather your documented evidence and call the credit rbureaus as quickly as possible to get the errors removed. This is something that is much easier to do before applying for your loan and not in the middle of it. 

2. GET YOUR CERTIFICATE OF ELIGIBILITY

You don't have to have your Certificate of Eligibility (COE)  to start the VA loan process but obtaining yours so you have proof of your entitlement will be extremely helpful. 

We can assist you in ordering online on your behalf. Or, if you want to go it alone, log onto vip.vba.va.gov , create a profile, and complete the step-by-step instructions for ordering. 

For more on what a Certificate of Eligibility is and why you need it, see our previous post on the subject. 

3. GATHER YOUR DOCUMENTS

This paperwork includes 

  • Two most recent filed federal income tax returns
  • Two most recent W2 forms
  • Most recent pay check stubs covering 30 days
  • Bank statements as requested, including even blank pages.
  • Any history of child support payments (which can be counted as income if you receive it and into your debt-to-income ratio if you pay it). 
  • Proof of any other sources of income (home-based businesses, winnings, inheritance)

A lender will use the income shown on your paycheck and compare it with your year-to-date earnings, as well as order copies of your last two tax years from the IRS to compare to the ones you provided. 

Although there is no money down required for VA loans, there will be closing costs. A seller may pay for them on your behalf as part of a selling incentive package, but likely you'll have to pay and a VA lender will need to verify you have enough money to cover them.  There are also things like the earnest money deposit, and home appraisal and home inspection fee that may be refunded at the closing table but may have to be paid for up front. 

4. KNOW YOUR RIGHTS

If a lender is claiming you're ineligible because you've already taken out all or part of your VA eligibility, or even defaulted on a VA loan--know your rights! Once you have earned the VA home loan benefit, it's yours for life, and can be used over and over again within guidelines.

5. CONSIDER THE POWER OF PRE-APPROVAL

A VA home shopper with a pre-approval letter in hand has more leverage with home sellers and real estate agents than someone without it. It is proof of how much home you can potentially afford and demonstrates that you're a serious contender. It isn't a guarantee that you'll get the home, but it is something you should certainly consider having.  We can help get you pre-approved today. Give us a call!

6. BUDGET, BUDGET, BUDGET!

Especially if you've been pre-approved, your budget has to keep steady so as not to change your financial situation. No new credit cards, no  new cars or other motorized 'toys', no new loans, no late payments on anything, no changing jobs.  Don't close any existing accounts. Any activity on your credit during the loan processing could cause a red flag that stops the loan from moving forward or kills it entirely. 

Also, when considering the price of a home to purchase, there's no need to shop the top of your budget, even one in a pre-approval. Remember home ownership comes  with a grip of new financial responsibilities from maintenance costs (inside and out), insurance, property tax, and maybe even buying some new furniture. VA loans do their best to safeguard you against becoming "house poor" by buying too high,  but budgeting your mortgage payment so as not to exceed 1/3 of your income will make sure you can truly afford to live in your new home and keep living your life.

7. MAKE SURE YOU PICK THE RIGHT KIND OF HOME

The VA will only lend money for pre-approved homes that pass home inspection. New construction (building from scratch) will be tricky, so consider finding a builder you like and get in on the home in progress in time to customize it to your liking. Condos will have to be on the VA's list of approved condominiums. RV and manufactured home purchases will have to include the purchase of the land (no rental fees) and be on a permanent foundation. Foreclosed homes and short sales that have sat vacant for a time that are in need of serious repair or renovation will be a problem. Make sure whatever home you pick is likely to make it through the VA appraisal and home inspection process. A great real estate agent can make all the difference in making the right choice. 

While this is a great starting point for preparing for your loan application, our VA-specialist agents can assist you with further preparation, including reviewing and adjusting your Debt to Income Ratio (DTI), occupancy rules, filling in employment gaps that often come with military life, and how to handle credit 'dings.' We are to help you get as prepared as possible! Contact us today!