Ce va seminar rev. 12.11.11

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Ce va seminar rev. 12.11.11

  1. 1. The VA Home Loan Benefit 2011 - 2012 For the Real Estate Licensee .
  2. 2. What do you expect from this VA Home Loan CE Course?
  3. 3. The VA Home Loan Benefit. What it is?… When?...... Who?......How?....Why?
  4. 4. History of theVA Home Loan Guaranty.
  5. 5. Issues in Hawaii with the VA Home Loan•Loan limits were much lower than the median sales price ofhomes, thus forcing veterans to use alternative financing.•VA used to require sellers to pay points and non-allowable closingcosts. (Now seller doesn’t have to pay anything, buyer just can’t payfor non-allowable closing costs.)•VA used to set interest rates, thus making it less competitive thanconventional loans. (No longer the case, the market sets interestrates.)•VA assigns the appraiser, used to be a disadvantage but nowconventional loans require a Appraisal Management Company.
  6. 6. VA EligibilityWho is eligible for a VA loan?
  7. 7. A veteran is eligible for VA home loan benefits if he or she served on activeduty in the Army, Navy, Air Force, Marine Corps, or Coast Guard afterSeptember 15, 1940, and was discharged under conditions other thandishonorable after either90 days or more, any part of which occurred during wartime, or181 continuous days or more (peacetime).2 Year Requirement: A greater length of service is required for veteranswhoenlisted (and service began) after September 7, 1980, orentered service as an officer after October 16, 1981.These veterans must have completed either24 continuous months of active duty, orthe full period for which called or ordered to active duty, but not less than90 days (any part during wartime) or 181 continuous days (peacetime).
  8. 8. Selected Reserves or National GuardIf you are not otherwise eligible and you have completed a total of 6years in the Selected Reserves or National Guard (member of anactive unit, attended required weekend drills and 2-week activeduty for training) andWere discharged with an honorable discharge, orWere placed on the retired list, orWere transferred to the Standby Reserve or an element of the ReadyReserve other than the Selected Reserve after service characterizedas honorable service, orContinue to serve in the Selected ReservesIndividuals who completed less than 6 years may be eligible ifdischarged for a service-connected disability.
  9. 9. You May also be determined eligible if you:Are an unremarried spouse of a veteran who died while in service orfrom a service connected disability, orAre a spouse of a serviceperson missing in action or a prisoner ofwarNote: Also, a surviving spouse who remarries on or after attainingage 57, and on or after December 16, 2003, may be eligible for thehome loan benefit. However, a surviving spouse who remarriedbefore December 16, 2003, and on or after attaining age 57, mustapply no later than December 15, 2004, to establish home loaneligibility. VA must deny applications from surviving spouses whoremarried before December 6, 2003 that are received afterDecember 15, 2004.
  10. 10. Request forCertificateof Eligibility
  11. 11. Rules for VA Home Loans Who can finance 100% •A veteran alone •A veteran and spouse •A veteran and another veteran (bothoccupying the property as their primary residence)
  12. 12. Rules for VA Home Loans •Must be owner occupiedThe veteran or their spouse must occupy the property as theirprimary residence for a minimum of 1 year.
  13. 13. Rules for VA Home Loans •Home must be in good condition •No tear downs•Fixer uppers need to be completed prior to closing
  14. 14. Rules for VA Home Loans•Home must be completely permittedAll improvements must be permitted
  15. 15. Rules for VA Home Loans•Condo’s and CPR’s must be VA approved. Go tohttps://vip.vba.va.gov/portal/VBAH/VBAHome/condopudsearch To search for approved VA condos.
  16. 16. Rules for VA Home Loans •Leasehold Estates•The total lease term must exceed the mortgage term by 14 years, and the mortgage term must not exceed the fixed rent period of the lease.•Hawaiian Homes is part of the Native American Act and those loans must be done directly through VA. Contact Gaylene Matsuura 808- 433-0483 at the Veterans Administration
  17. 17. VA Loan BenefitsWhat are the benefits of a VA loan?
  18. 18. No Down Payment is required. Up to a totalloan amount of $695,750.00 includingfinanced funding fee on purchasetransactions, in Honolulu County, all othercounties in Hawaii $625,500.00The veteran can finance 100% with Noprivate mortgage insurance (PMI)conventional loans require mortgageinsurance on loans over 80% of theappraised value
  19. 19. Closing CostThe Veteran is allowed to borrow the funds needed for closingcosts associated with the process and closing of themortgage. The Veteran must also be able to qualify with thepayment for this loan also. The Veteran cannot borrow moniesfor a down payment however.The Veteran can receive gift or grant monies for the entireamount to cover closing costs.The seller can pay all or part of the closing costs associated withthe process and closing of the mortgage plus 4% in sellerconcessions.
  20. 20. The Veteran pays a one time fee to the VeteransAdministration called a Funding Fee. This fee isusually financed into the loan. When financed, theloan amount can exceed the sales price of theproperty. The Funding Fee varies depending onprevious usage, amount of down payment (if any)and eligibility status.No pre-payment penaltyAbility to streamline refinance from a VA to a VA
  21. 21. Veterans allow to refinance Conventional, subprime, oradjustable rate mortgages up to 90% of appraised value upto $695,750.00 including VA Funding Fee in HonoluluCounty, all other counties in Hawaii $625,500.00Veteran is allowed to add to the loan amount up to$6000.00 for energy efficient upgrades. (purchase orrefinance)VA Jumbo Loan 25% down on the difference between$695,750.00 (Honolulu County, all other counties in Hawaii$625,500.00 ) $417,000.00 (mainland) and sales price upto $1,500,000.00
  22. 22. VA MythsWhat have you been told about VA Loans?
  23. 23. I can only use my VA benefit for my first home.Not true! Once the current VA loan is paid off, another VA loan canbe originated. The VA Funding Fee will be higher if there is no downpayment but another home can be purchased with no money down!The Seller wont accept my offer because he/she has to pay thepoints.Not true! Even though the Seller in a VA transaction is allowed to payfor all costs associated with the sale, there is no longer arequirement that the Seller must pay any points for the Veteransmortgage loan.I can only buy a house up to $240,000.00 and still use my VAbenefit.Not true! In fact, due to recent legislation, you can now borrow up to$695,750.00 in Honolulu County, all other counties in Hawaii$625,500.00 with no down payment (including any financed VAFunding Fee) as long as you have full eligibility.
  24. 24. My Spouses income cant be used to help qualify for the home wewant.Not true! A spouses income can be used as long as it is stable andlikely to continue. (like any other loan)I cannot let someone assume my VA mortgage because they are nota veteran.Not true! Anyone can assume a VA loan as long as they areconsidered credit worthy and qualify for the payments. The onlycatch is that if a Non-Vet assumes a VA loan, a portion of theVeterans eligibility will remain tied to the loan until it is paid off. Ifanother Veteran assumes a VA loan, the new Vets eligibility (aslong as its sufficient) will be substituted for the original Vetseligibility. Therefore, the originalVets eligibility is restored and they can purchase another homewith a VA guaranteed loan.
  25. 25. I must pay the Funding Fee even though I have a VA Disability.Not true! If the Veteran has a qualified VA Disability they areexempt from paying the Funding Fee.I have a partial down payment and Im told I must still pay the entireFunding Fee.Not true! If the Veteran can put down at least 5% of the PurchasePrice/Appraised Value, then the Funding Fee is reduced. Thiswould also apply if you are a subsequent user of the VA Benefit or aReservist or National Guardsman.I dont have a full two years of service so Im told that Im noteligible.Not true! There are a number of events where the two yearrequirement is not needed.
  26. 26. VA Funding FeeWhat is the VA funding fee?
  27. 27. Purchase LoansOn November 21, 2011, the President signed H.R. 674. Section 265 of thelaw raises funding fees to the pre-November 18, 2011 levels. The fees specified inSection 265 are valid through September 30, 2016. Type of Veteran Down Payment First Time Use Subsequent Use for loans from Regular Military None 2.15% 3.3% 5% or more (up 1.5% 1.5% to 10%) 10% or more 1.25% 1.25% Reserves/ None 2.4% 3.3% National Guard 5% or more (up 1.75% 1.75% to 10%) 10% or more 1.5% 1.5%
  28. 28. VA Funding Fee vs. PMI $500,000.00 home 720 FICO Score lower scores are worstConventional 5% down VA $0 DownFinancing $475,000.00 Financing $510,750.00P&I $2549.90 P&I $2741.82PMI 518.00 PMI 0.00Total $3067.90 Total $2741.82$25,000.00 Down
  29. 29. Cash-Out Refinancing Loans VA to VA refinance pulling out equityAny other product to VA refinance regardless if pulling out equity Type of Veteran Percentage for Percentage for First Time Use Subsequent Use Regular Military 2.15% 3.3% Reserves/ 2.4% 3.3% National Guard
  30. 30. Other Types of Loans Type of Loan Percentage for either Type of Veteran Whether First Time or Subsequent UseInterest Rate Reduction Loans .50% (Streamline refinance) Manufactured Home Loans 1.00% Loan Assumptions .50%
  31. 31. BAH(Basic Allowance for Housing) Entitlement Just how valuable is it?
  32. 32. BAH Example for married Veteran with One Dependent using 2011 BAH Table Rank Year In Rank Bah per BAH per Year BAH for years Month in Rank E-2 2 $1941.00 $ (San Diego) E-3 2 $1941.00 (San Diego) E-4 4 $2016.00 (Honolulu) E-5 4 $1329.00 (Millington) E-6 4 $2385.00 (Honolulu) E-7 (Yuma) 4 $1311.00 E-8 5 $2793.00 (Honolulu) 25 Years Total BAH $ Received
  33. 33. BAH Example for married Veteran with One Dependent using 2011 BAH Table Rank Year In Rank Bah per BAH per Year BAH for years Month in Rank E-2 2 $1941.00 $23,292.00 (San Diego) E-3 2 $1941.00 (San Diego) E-4 4 $2016.00 (Honolulu) E-5 4 $1329.00 (Millington) E-6 4 $2385.00 (Honolulu) E-7 (Yuma) 4 $1311.00 E-8 5 $2793.00 (Honolulu) 25 Years Total BAH $ Received
  34. 34. BAH Example for married Veteran with One Dependent using 2011 BAH Table Rank Year In Rank Bah per BAH per Year BAH for years Month in Rank E-2 2 $1941.00 $23,292.00 $46,584.00 (San Diego) E-3 2 $1941.00 (San Diego) E-4 4 $2016.00 (Honolulu) E-5 4 $1329.00 (Millington) E-6 4 $2385.00 (Honolulu) E-7 (Yuma) 4 $1311.00 E-8 5 $2793.00 (Honolulu) 25 Years Total BAH $ Received
  35. 35. BAH Example for married Veteran with One Dependent using 2011 BAH Table Rank Year In Rank Bah per BAH per Year BAH for years Month in Rank E-2 2 $1941.00 $23,292.00 $46,584.00 (San Diego) E-3 2 $1941.00 $23,292.00 (San Diego) E-4 4 $2016.00 (Honolulu) E-5 4 $1329.00 (Millington) E-6 4 $2385.00 (Honolulu) E-7 (Yuma) 4 $1311.00 E-8 5 $2793.00 (Honolulu) 25 Years Total BAH $ Received
  36. 36. BAH Example for married Veteran with One Dependent using 2011 BAH Table Rank Year In Rank Bah per BAH per Year BAH for years Month in Rank E-2 2 $1941.00 $23,292.00 $46,584.00 (San Diego) E-3 2 $1941.00 $23,292.00 $46,584.00 (San Diego) E-4 4 $2016.00 (Honolulu) E-5 4 $1329.00 (Millington) E-6 4 $2385.00 (Honolulu) E-7 (Yuma) 4 $1311.00 E-8 5 $2793.00 (Honolulu) 25 Years Total BAH $ Received
  37. 37. BAH Example for married Veteran with One Dependent using 2011 BAH Table Rank Year In Rank Bah per BAH per Year BAH for years Month in Rank E-2 2 $1941.00 $23,292.00 $46,584.00 (San Diego) E-3 2 $1941.00 $23,292.00 $46,584.00 (San Diego) E-4 4 $2016.00 $24,192.00 (Honolulu) E-5 4 $1329.00 (Millington) E-6 4 $2385.00 (Honolulu) E-7 (Yuma) 4 $1311.00 E-8 5 $2793.00 (Honolulu) 25 Years Total BAH $ Received
  38. 38. BAH Example for married Veteran with One Dependent using 2011 BAH Table Rank Year In Rank Bah per BAH per Year BAH for years Month in Rank E-2 2 $1941.00 $23,292.00 $46,584.00 (San Diego) E-3 2 $1941.00 $23,292.00 $46,584.00 (San Diego) E-4 4 $2016.00 $24,192.00 $96,768.00 (Honolulu) E-5 4 $1329.00 (Millington) E-6 4 $2385.00 (Honolulu) E-7 (Yuma) 4 $1311.00 E-8 5 $2793.00 (Honolulu) 25 Years Total BAH $ Received
  39. 39. BAH Example for married Veteran with One Dependent using 2011 BAH Table Rank Year In Rank Bah per BAH per Year BAH for years Month in Rank E-2 2 $1941.00 $23,292.00 $46,584.00 (San Diego) E-3 2 $1941.00 $23,292.00 $46,584.00 (San Diego) E-4 4 $2016.00 $24,192.00 $96,768.00 (Honolulu) E-5 4 $1329.00 $15,948.00 (Millington) E-6 4 $2385.00 (Honolulu) E-7 (Yuma) 4 $1311.00 E-8 5 $2793.00 (Honolulu) 25 Years Total BAH $ Received
  40. 40. BAH Example for married Veteran with One Dependent using 2011 BAH Table Rank Year In Rank Bah per BAH per Year BAH for years Month in Rank E-2 2 $1941.00 $23,292.00 $46,584.00 (San Diego) E-3 2 $1941.00 $23,292.00 $46,584.00 (San Diego) E-4 4 $2016.00 $24,192.00 $96,768.00 (Honolulu) E-5 4 $1329.00 $15,948.00 $63,792.00 (Millington) E-6 4 $2385.00 (Honolulu) E-7 (Yuma) 4 $1311.00 E-8 5 $2793.00 (Honolulu) 25 Years Total BAH $ Received
  41. 41. BAH Example for married Veteran with One Dependent using 2011 BAH Table Rank Year In Rank Bah per BAH per Year BAH for years Month in Rank E-2 2 $1941.00 $23,292.00 $46,584.00 (San Diego) E-3 2 $1941.00 $23,292.00 $46,584.00 (San Diego) E-4 4 $2016.00 $24,192.00 $96,768.00 (Honolulu) E-5 4 $1329.00 $15,948.00 $63,792.00 (Millington) E-6 4 $2385.00 $28,620.00 (Honolulu) E-7 (Yuma) 4 $1311.00 E-8 5 $2793.00 (Honolulu) 25 Years Total BAH $ Received
  42. 42. BAH Example for married Veteran with One Dependent using 2011 BAH Table Rank Year In Rank Bah per BAH per Year BAH for years Month in Rank E-2 2 $1941.00 $23,292.00 $46,584.00 (San Diego) E-3 2 $1941.00 $23,292.00 $46,584.00 (San Diego) E-4 4 $2016.00 $24,192.00 $96,768.00 (Honolulu) E-5 4 $1329.00 $15,948.00 $63,792.00 (Millington) E-6 4 $2385.00 $28,620.00 $114,480.00 (Honolulu) E-7 (Yuma) 4 $1311.00 E-8 5 $2793.00 (Honolulu) 25 Years Total BAH $ Received
  43. 43. BAH Example for married Veteran with One Dependent using 2011 BAH Table Rank Year In Rank Bah per BAH per Year BAH for years Month in Rank E-2 2 $1941.00 $23,292.00 $46,584.00 (San Diego) E-3 2 $1941.00 $23,292.00 $46,584.00 (San Diego) E-4 4 $2016.00 $24,192.00 $96,768.00 (Honolulu) E-5 4 $1329.00 $15,948.00 $63,792.00 (Millington) E-6 4 $2385.00 $28,620.00 $114,480.00 (Honolulu) E-7 (Yuma) 4 $1311.00 $15,732.00 E-8 5 $2793.00 (Honolulu) 25 Years Total BAH $ Received
  44. 44. BAH Example for married Veteran with One Dependent using 2011 BAH Table Rank Year In Rank Bah per BAH per Year BAH for years Month in Rank E-2 2 $1941.00 $23,292.00 $46,584.00 (San Diego) E-3 2 $1941.00 $23,292.00 $46,584.00 (San Diego) E-4 4 $2016.00 $24,192.00 $96,768.00 (Honolulu) E-5 4 $1329.00 $15,948.00 $63,792.00 (Millington) E-6 4 $2385.00 $28,620.00 $114,480.00 (Honolulu) E-7 (Yuma) 4 $1311.00 $15,732.00 $62,928.00 E-8 5 $2793.00 (Honolulu) 25 Years Total BAH $ Received
  45. 45. BAH Example for married Veteran with One Dependent using 2011 BAH Table Rank Year In Rank Bah per BAH per Year BAH for years Month in Rank E-2 2 $1941.00 $23,292.00 $46,584.00 (San Diego) E-3 2 $1941.00 $23,292.00 $46,584.00 (San Diego) E-4 4 $2016.00 $24,192.00 $96,768.00 (Honolulu) E-5 4 $1329.00 $15,948.00 $63,792.00 (Millington) E-6 4 $2385.00 $28,620.00 $114,480.00 (Honolulu) E-7 (Yuma) 4 $1311.00 $15,732.00 $62,928.00 E-8 5 $2793.00 $33,516.00 (Honolulu) 25 Years Total BAH $ Received
  46. 46. BAH Example for married Veteran with One Dependent using 2011 BAH Table Rank Year In Rank Bah per BAH per Year BAH for years Month in Rank E-2 2 $1941.00 $23,292.00 $46,584.00 (San Diego) E-3 2 $1941.00 $23,292.00 $46,584.00 (San Diego) E-4 4 $2016.00 $24,192.00 $96,768.00 (Honolulu) E-5 4 $1329.00 $15,948.00 $63,792.00 (Millington) E-6 4 $2385.00 $28,620.00 $114,480.00 (Honolulu) E-7 (Yuma) 4 $1311.00 $15,732.00 $62,928.00 E-8 5 $2793.00 $33,516.00 $167,580.00 (Honolulu) 25 Years Total BAH $ Received
  47. 47. BAH Example for married Veteran with One Dependent using 2011 BAH Table Rank Year In Rank Bah per BAH per Year BAH for years Month in Rank E-2 2 $1941.00 $23,292.00 $46,584.00 (San Diego) E-3 2 $1941.00 $23,292.00 $46,584.00 (San Diego) E-4 4 $2016.00 $24,192.00 $96,768.00 (Honolulu) E-5 4 $1329.00 $15,948.00 $63,792.00 (Millington) E-6 4 $2385.00 $28,620.00 $114,480.00 (Honolulu) E-7 (Yuma) 4 $1311.00 $15,732.00 $62,928.00 E-8 5 $2793.00 $33,516.00 $167,580.00 (Honolulu) 25 Years Total BAH $598,716.00 Received
  48. 48. Total BAH spent over 25 years *$598,716.00.00 Tax free! That equates to *$748,000.00 taxable dollars. The question the licensee needs to asis…..What is the active duty person going to do with their BAH? *It is recommended you consult with a professional Tax Preparer
  49. 49. Why don’t most Active Duty personnel buywhen they are here in Hawaii?
  50. 50. FEAR?False, Evidence, Appearing, Real
  51. 51. 2 Reasons why veterans don’t buy.
  52. 52. Reason (1) Prices of Homes inHawaii are too High.
  53. 53. Median Sales PricesIn 1994 the median sales price was $360,000.00In 2007 the median sales price was $643,500.00
  54. 54. Reason (2)They are only going to be here 3 years.
  55. 55. The Licensee needs to ask….How long are they going to be at the next duty station….. and the next…. and the next.
  56. 56. When then are they going to buy?
  57. 57. If my Dad would of bought in 1985 the median sales price was $158,600.00 In 1994 the median sales price was $360,000.00 In 2007 the median sales price was $643,500.00 Above information is based on statistical information provided in printout from the Honolulu Board of Realtors.
  58. 58. The following is an example only. Pleaseseek tax advice from a CPA or tax advisor.
  59. 59. Example for a E-5 Base Pay is $2247.30Non-taxable BAS, BAH and COLA is $3025.46 Taxable Yearly income $26967.76Owner occupant home owner monthly interest of $1800 per month =$21600.00Net Taxable income before other deductions $5367.76 *How much taxes do you pay on $5367.76? *It is recommended you consult a professional Tax Preparer.
  60. 60. Steps to a successful VA Loan Closing
  61. 61. Step 1: Select a loan officer that they likeand trust that also has a tremendousknowledge of their VA Home Loan benefit.Make sure they are a Hawaii Licensed loanofficer. Go tohttp://www.nmlsconsumeraccess.org/ tosearch by last name and state.
  62. 62. Step 2: Get preapproved. (There is a big differencebetween preapproval and prequalified) Here is a list of items theywill need to get preapproved.A signed completed Request for Certificate of Eligibility (if you do not currently haveone) DD-214 and/or Points total for Reservist/GuardW-2’ s for the past 2 yearsPay stubs (LES) for 1 month2 months Bank statements, retirement statements, IRA’s, CD’s, etc….2 years tax returnsBankruptcy Documents (if applicable)Divorce Decree (if paying child support)
  63. 63. Step 3: A lender should input all theirinformation, pull a credit report from allthree credit bureaus, run VA’s loananalysis to ensure they budget for theamount requesting and then run anautomated approval. (If they do not get aautomated approval most lenders havethe ability to do a manual approval on acase by case basis)
  64. 64. Step 4: Once the veteran has an approvalthen they choose a Realtor (one who has atremendous knowledge in VA loans) tohelp them find a property, once theyfound a property, help them write up anoffer.
  65. 65. Selecting property remember the rules…•No tear downs.•Fixers uppers need to be fixed prior toclosing.•Condos must be on the VA approval list•Leasehold: Loan term plus 14 years (30 years mortgage = Fixed for 44 years)
  66. 66. Sellers Concessions Suggestion for paragraph C-67 “Seller to credit Buyer $XXXX.XX towards all allowableand non-allowable closing cost. Any excess to be applied at Buyers discretion per VA guidelines.”
  67. 67. Step 5: Once you get an offer accepted ona property Buyer needs to do their officialloan application with the property on it.
  68. 68. Step 6: Buyers’ file is turned into the processor,who verifies that everything was inputtedcorrectly, makes a list of outstanding conditionson their loan. The processor also sends anelectronic file to VA to open a case number andassign an appraiser. The processor also sends aelectronic file to the escrow company so thatthey may order the documents needed totransfer ownership from the Seller over to theBuyer.
  69. 69. Step 7: Once the appraiser gets theirreport back to VA. VA or the lender willreview it and assign a NOV (notice ofvalue), which the lender uses as theappraised value.
  70. 70. Notice of Value (NOV) The NOV is the VA version of an appraisal review.It will state the value of the property and any conditionsthat need to be completed before VA will guarantee the loan.
  71. 71. Step 8: Once the lender receives the NOV(it must be at or higher than sales price)and everything else on the condition list iscompleted, the underwriter reviews thecomplete file and gives Final LoanApproval, the lender will order all closingdocuments.
  72. 72. Step 9: The lender will setup a time anddate to sign documents, a few businessdays later they will fund the loan and twobusiness day after that the transactionrecords.
  73. 73. Once there is an accepted offer on theproperty, all the rest of the steps can takeplace in about 45 days.
  74. 74. Questions and Answers
  75. 75. I have a question for you.Was this worth your time?
  76. 76. Thank you for coming!

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