5 Steps to Get You Started With a Wisconsin, Illinois, Minnesota or Florida VA Mortgage
5 Steps to Get You Started With a VA MortgageThe entire process of securing a VA Mortgage explained:1. Service Eligibility2. Obtaining your Certificate of Eligibility3. Funding Fee4. Choosing a Lender5. Looking for a houseWho is eligible to take advantage of this program, Step 1:There are four groups that you could fall into and still be eligible for a Wisconsin, Illinois,Minnesota or Florida VA loan:1. Veterans Still on Active Duty2. Discharged Veterans (Regular Military)3. Current Reserve/Guard Members4. Discharged Reserves/Guard MembersFor Veterans still on Active Duty you will need a statement of service signed and dated by yourcommanding officer on official letterhead that includes:Service members nameDate of birthSocial security number and/or service numberEnlistment dateThe fact that you are still on active dutyContain the phrase No Time Lost (if applicable), or list the time lostIf you are in the reserves or national guard, indicate if you are serving under the authority of title 10 or title32
For Discharged Veterans (Regular Military) you will need to provide a certificate of release or yourdischarge from active duty (DD214). To obtain a DD214 visit this site: http://www.archives.gov.For Current Reserve/Guard Members you will need a statement of service signed and dated by yourcommanding officer on official letterhead that includes the following:Veterans full nameSocial security numberEntry date of applicants Reserve/Guard DutyThe statement must clearly indicate that the applicant is an "active" reservist and not in a control group(inactive status)For Discharged Reserves/Guard Members you will need a report of separation and record of service,NGB Form 22 or a points statement.The points statement or other documentation will need to reflect 6 years of participation with evidence ofhonorable discharge.Certificate of Eligibility, step 2:There are several ways to obtain your certificate of eligibility including mailing in your request orautomated through us.Mailing in your Request:You can obtain your certificate directly from the VA by using VA Form 26-1880, “Request for a Certificateof Eligibility”. After filling in the required information, you will need to mail this to the VA in Winston-Salem,NC with any attached proof of service (usually a DD214 or similar Reserve status forms). The processmay take 3 or more weeks. Welcome to government snail mail. If you dont have the patience to mail yourrequest and wait, read on.Automated Request:If your entitlement is based on Active Duty service, we may be able to obtain a certificate of eligibility foryou online, in minutes. Keep in mind, there is no public option to obtain it online, only lenders have thecapability. If you are not eligible to obtain it online, we can then make our request for your certificatewithin the VA system. You will need to complete VA Form 26-1880 and give us your proof of service, butinstead of mailing it to the VA, we upload it directly and usually hear back in just a couple of days!First Time Use and Request for you Certificate of Eligibility:
If you have never requested or used your certificate, we can still go through the automated system toverify your eligibility. We may not be able to get it instantly, but with a little work from our mortgageprofessional, we may have your Certificate of Eligibility in 2 or 3 days. Be sure to have the informationnecessary to fill out form 26-1880 and have your proof of service and we will handle the rest.Evidence of Military Service:Refer to Step 1 Service Eligibility for information on obtaining your evidence of Military Service.How to apply for restoration for a previously used Certificate of Eligibility:Fully complete and sign VA Form 26-1880, attach your proof of military service and evidence of the salethat of the property that secured the VA guaranteed loan. Generally a HUD-1 or Satisfaction of Mortgageshowing the loan has been paid in full. If your loan was assumed, show evidence an eligible veteran hasagreed to assume the outstanding balance of the loan and substitute their entitlement for the sameamount originally used on the loan. Again, if you give this information to your loan officer, they should beable to obtain your updated certificate much quicker than mailing it to the VA yourself.The VA Funding fee, step 3:The Veterans Administration works off of a "guaranty", meaning that they pay the lender 25% of the loanamount should the veteran default on their mortgage. This is the main reason the VA loan program stillrequires no money down. The VA doesnt make loans, lenders do and the VA guarantees the lender thatif a VA mortgage should go into foreclosure, the VA guarantees to the lender 25%.View the current VA Funding Fee (PDF)The VA makes things pretty simple when it comes to their loans. First, there is no monthly mortgageinsurance on VA loans and secondly, the VA funding fee can be rolled into the loan so that you dont haveto bring in additional money to closing to pay for it.Who is exempt from the VA funding fee?A veteran may be exempt from the funding fee and VA Form 26-8937, Verification of VA Benefits must becompleted by your lender if one of the following apply:- Veteran receiving VA compensation for service-connected disabilities.- Veteran would be entitle to receive compensation for service-connected disabilities if they did notreceive retirement pay.- Surviving spouse of a veteran who died in service for from service-connected disability.- Has received a VA disability in the past.
If you think you are exempt or you are not sure, let us know and we can fax VA Form 26-8937 to the VAfor confirmation. The turnaround time is usually 24-48 hours before we would know for sure.Choosing a lender that will best help you reach homeownership, Step 4:There are basically 3 approaches to obtaining a VA mortgage. Each has its advantages and draw-backs.Please understand that almost all of these loans are combined into bonds that are sold to large investorsthat remain anonymous to you. The banks and servicing companies with names that everyone recognizesare collecting payments and handling escrows for a fee and passing the interest on to the bond owner.With this in mind, lets look at the possibilities.Area banks, credit unions, and branches of national banks usually have a more local feel and namerecognition. Many do not deal with VA loans due to the extra work and expense of becoming an approvedlender and keeping up with changing guidelines for originating and servicing these loans. Their loanofficers are not required to be tested or licensed (they must register in the national data base) and arelimited to the rules and regulations of their employer. Underwriting of your file is generally done in thesame building where you apply. You may or may not make your payment to the local business, butchances are that your loan has been sold into the bond market with everyone elses.Mortgage brokers are another avenue to a VA home loan. In recent years there has been an abundanceof misconduct at every step of the home buying process, from buyers and realtors to banks and bondtraders, and the mortgage broker seems to be suffering the most criticism and regulatory backlash. Mostmortgages in this country were originated by local brokers bringing buyers and lenders together andgetting paid for the service by one or both parties. Brokers and loan originators must be educated, testedand licensed in most states and tested and licensed on the national level also. Brokers do not underwriteor close loans. Every piece of information is passed on to the chosen lender for processing.Correspondent lenders are a third option. Disclosure: I am a loan originator for a correspondent lender.This type of business is hopefully a combination of the best parts of banks and brokers. Like banks,correspondents are authorized to underwrite, close and sell mortgages. Unlike a bank, we can dobusiness with many of the largest loan servicers in the country. These relationships sometimes allow usto offer a customer better terms than a branch of the same company were going to sell the loan to. Loanoriginators must meet the same education and licensing standards as a broker on the state and nationallevels. The entire process is kept within the correspondents company and the loans packaged and soldlater.Most of the people from any of these categories are honest, hardworking individuals trying to make aliving in a scary economy. Each of us must work within the boundaries of our type of business and thechanging guidelines and regulations.Now the process of choosing a lender can begin. Understand which of the above groups each person youtalk to belongs. Ask questions you know the answer to (from one of the earlier posts perhaps). Be wary ofa correspondent or banker that offers a great rate but doesnt know how the funding fee works. Or broker
that cant get your Certificate of Eligibility but wants to take a full application today!Once youve found a person with whom youre willing to share your personal financial information, gothrough the pre-qualifying or pre-approval process. Understand what your credit score is and how itsaffecting the transaction. Know what your payment would be at different rates for different mortgage sizes(funding fee included) and different tax and insurance amounts. Your mortgage professional can only giveyou limits on what you can spend each month on your housing payment. You must decide at this pointwhat youre willing to spend. Find the loan size thats comfortable, stick to it and move on to the next stepin the process of getting a home with a VA mortgage.Looking for a house and choosing a real estate agent, Step 5:First, I am not a real estate professional and can only speak from experience.The internet has changed the way we shop for most things in our lives. Sellers list their homes on ForSale By Owner web-sites hoping to avoid realtor fees. People with experience buying, owning and sellinga house or two may decide to venture into the FSBO market and attempt to purchase a home. BuyerBeware may be a good phrase to keep in mind during this type of transaction. Deals can be found, butmuch research, time and knowledge will be needed to assure a satisfactory ending. An experienced VAloan originator will be able to help you through the financial aspects of this type of transaction but shouldnot offer answers to real estate questions. These should be handled by an attorney or licensed real estateprofessional.Choosing a realtor is more than finding a person to drive you from house to house and walk you fromroom to room. You need to trust this person to represent your interests in what will be one of the mostimportant transactions of your life. Just as I’ve urged that you understand the processes of obtaining a VAloan and finding the right person to deal with your financial issues, I strongly advise that you gatherinformation to ask the right questions and get satisfactory answers before committing to an agent. I couldonly suggest the names of agents that have completed successful transactions with customers of mine asa place to start. I feel that your loan originator and realtor have different roles to play and for privacy andprofessional reasons should not appear to be one entity.I hope this has been a helpful series for those of you looking to use your VA entitlement. If you do haveadditional questions, please feel free to call or email me.Detailed program information can be found on our VA Mortgage page of our website.
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