VA does NOT create loans. They only back or guarantee a portion of these loans so that mortgage bankers and banks can provide eligible people with up to 100% financing on purchases. Veterans and those who serve our country receive a Certificate of Eligibility which allows them to apply for a VA loan with no down payment. The important thing to know is that MOST MORTGAGE LENDERS make VA loans, not just the ones you see on TV! These TV lenders spend a lot of money on advertisements just meant to entice veterans to apply with them as they often pose as being in business specifically to help our VETS. HERE’S A FACT: Most of ALL lenders offer EXACTLY the same VA loan programs, and many, including my company, offer those same programs at LOWER RATES than these AD TV lenders! Remember, these companies spend a fortune on ads… and they make a pretty dime on their loans to help subsidize those ads! Are they really helping our vets the way they claim?
ADVANTAGES and DISADVANTAGES of a VA LOAN: There are more often BENEFITS for vets interested in using their eligibility. The beauty of the VA loan is that the veteran can apply for 100% financing and receive a loan that has no mortgage insurance. VA loan rates are also generally lower than conventional loan rates! In Los Angeles County, a veteran can buy up to $ 1.5 million with ZERO down payment! In addition, on a VA loan, there are no debt to fixed income ratios that the veteran must limit himself to… to be eligible. I have executed many loans through the online program that all lenders use debt to income ratios as high as 68% go through the system meaning a veteran can get a higher loan than with a loan conventional, where the debt ratio must be less than 50%.
On the flip side, the only major CON to a VA loan is what is called a VA FINANCING FEE. These fees are one-time fees that can be funded by the loan or paid for in cash. Generally speaking, the ONLY way the Veteran is exempt from paying these fees is by receiving some sort of VA disability award. Otherwise, for a first-time VA buyer, the VA FINANCE FEE is 2.3% of the base loan amount and added to that loan amount). For example, on a purchase price and a base loan amount of $ 500,000, the VA finance charge added to that base loan amount would be $ 11,500. For a second veteran use that is not exempt, the FINANCE fee is 3.6%, or $ 18,000. If a non-exempt veteran wants to refinance to lower their rate, there is an Interest Rate Reduced Refinance Loan (IRRRL) program that caps the financing fee at ½% and allows for a very simple streamlining process. without requalification.
Finally, clients have been referred to me because another lender suggested using a VA loan when it was not appropriate. In this case, the client was NOT exempt from finance charges and wanted to refinance a home that they had a conventional loan on. With a lot of equity in ownership, it has been suggested that the vet use his VA eligibility. While the rate was just a little lower than a conventional loan, the VA finance charge was going to be $ 8,000! Why on earth would a loan officer suggest this route when the vet could easily qualify for another conventional loan with no mortgage insurance and no finance fees. The end result was that we gave him the right remedy, a conventional loan! You can still take care of your vets by NOT giving them a GO LOAN when it’s not warranted!
For answers to any questions regarding VA loans or any other type of loan, please contact Curt Kravitz. He has been taking care of our VETERANS and all other customers for 35 years! You can reach him at 661-705-2500 or at [email protected]
In addition to this, you need to know more about it.