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MA CEU Veterans Administration (VA) Loans - RE73R11
The document summarizes key aspects of VA loans, which guarantee loans made by private lenders to eligible veterans and service members. It outlines the eligibility requirements, benefits like no down payment or PMI, types of loans and properties covered, funding fees, closing costs, appraisal and processing procedures. VA loans help veterans achieve the goal of homeownership.
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MA CEU Veterans Administration (VA) Loans - RE73R11
- 1. VETERANS ADMINISTRATION (VA) LOANS RE73R11 JodyOBrien ABR,CBR,GRI
- 2.
- 3. VA Loan isnot a loan from the VA VA Loan is a guarantee for a loan made by a private lender VA Loans
- 4. • Guarantee ▫ Protectsthe lender from loss Loss usually covered by down payment or PMI
- 5. • www.benefits.Va.gov/homeloans • RegionalCenter • Videos
- 6. Benefits of aVA Loan • No down payment • Buyer informed of reasonable value • No PMI • Assumable • No prepayment penalty • New construction warranty • Assistance in financial crisis
- 7. Eligibility • Active Duty– served longer than 181 days • Honorably Discharged before 1981 – served 90 (wartime) 0r 181 days (peacetime) • Honorably Discharged after 1981 – completed 24 months of service • Gulf War on – served 90 days
- 8. Eligibility • Selective Reserveor National Guard – served 6 years • The unmarried surviving spouse of a veteran who died on active duty or as the result of a service-connected disability • The unmarried spouse of a serviceperson MIA or POW
- 9. Eligibility • Public HealthService officers • Cadets at the United States Military, Air Force, or Coast Guard Academy, midshipmen at the United States Naval Academy • Officers of National Oceanic & Atmospheric Administration
- 10. Eligibility • Certificate ofEligibility • Veteran ▫ Online at www.va.gv • Lender ▫ Online using WebLGY • List of required documents can be found online in the Eligibility FAQ
- 11. Property Types • Singlefamily • Multi-family • Condo – if complex is approved • Manufactured home – on permanent foundation • New Construction – with builder VA ID number
- 12. Loan Products • FixedRate • Adjustable Rates • Buy Downs • Growing Payment/Growing Equity
- 13. Entitlement • $36,000 • Entitlement+ down payment = 25% Value
- 14. $140,000 Condo 25% ofValue equals $35,000 Entitlement available $36,000 Qualifies for No Down payment
- 15. $350,000 Condo 25% ofValue equals $87,500 $36,000 Entitlement $51,500 Down Payment (approx.. 15%)
- 16. Entitlement • Restored whenloan is paid ▫ Sale ▫ Completion of loan • Assumed and substituted with qualifying Vet’s entitlement • One time paid but not sold property
- 17. Qualification • Residual IncomeGuidelines – ▫ the amount of net income remaining (after deduction of debts and obligations and monthly shelter expenses) to cover family living expenses such as food, health care, clothing, and gasoline.
- 18. Qualification • Residual IncomeGuidelines ▫ Minimum Residual Income very important $400 - $1000 1-5 member family ▫ In conjunction with other credit factors • Debt to Income Ratio ▫ max 41%
- 19. Funding Fee • OriginationFee • Factors ▫ Type of loan ▫ First use of entitlement or reuse ▫ Disability ▫ Active Duty or Reserve • Disability can be exempt from fee • Surviving spouse may be exempt
- 20. Funding Fee • Range.5% - 3.3% • Paid in cash or • Rolled into loan
- 21. Closing Cost • 1%origination fee • Appraisal • Credit report • Title exam and insurance • Recording fee • Prepaid taxes and insurance • Survey • VA funding fee • Flood zone determination
- 22. Closing Cost • Closingcost may be paid by ▫ Buyer / Veteran ▫ Seller • Exceptions ▫ No prepayment penalties ▫ No penalties to discharge seller’s liens charged to a buyer ▫ No RE commission to Buyer
- 23. Closing Cost Sellers mayalso pay: • gifts such as a personal property • payment of extra points to provide permanent interest rate buydowns • provision of escrowed funds to provide temporary interest rate buydowns, and • payoff of credit balances or judgments on behalf of the buyer.
- 24. Closing Cost • Sellersconcessions do not include closing cost or points • Seller’s concessions may not exceed 4% of Reasonable Value
- 25. • Example • Marketrate for a loan is 5% with 2 points • Seller agrees to pay 4 points • 2 points are Seller Concession
- 26. Appraisal • Reasonable Value and •Safe • Sanitary • Structurally Sound
- 27. Appraisal • Qualification ▫ Licensed/certifiedappraiser ▫ Five years + experience ▫ 2 letters of reference
- 28. Appraisal Ineligible Property • highvoltage electric transmission line easement • Manufactured Home NOT on a permanent foundation • Unapproved Condominium Developments
- 29. Appraisal/Inspections Ineligible Property • NewConstruction Condominiums with less than 70% UA • Mixed use zoning with less than 30 years of economic life Pest Inspection Mod – Heavy by Termite Infestation Probability All of So Shore
- 30. Processing Loans • VAApproved Lenders ▫ Supervised Lenders ▫ Non Supervised Lenders ▫ Automatic Lenders
- 31. Types of VALenders Authority Supervised Lender Nonsupervised Automatic Lender To close loans on the automatic basis No VA approval needed. Must submit application and be authorized by VA to close loans on an automatic basis. To use certain underwriters No VA approval needed. Any of the lender’s underwriters may underwrite loans processed on the automatic basis. Must submit application and obtain VA approval for each person to underwrite VA loans processed on the automatic basis. To close loans in particular states No VA approval needed. Lender may close loans in any State. No VA approval needed. Lender may close loans in any State. To use agents to process VA loans Must submit request and obtain VA recognition of each agent with whom the lender has an ongoing relationship. Must submit request and obtain VA recognition of each agent with whom the lender has an ongoing relationship.
- 32. Processing Loans • Appraisal ▫Reasonable Value ▫ May be appealed by lender, buyer or seller • Title ▫ Reviewed by VA • Lenders Must retain paperwork for two years
- 33. VA loans helpour Veterans achieve the American Dream of Home Ownership
- 34. Jody O’Brien The RE/EducationCompany Committed to Professionalism in Real Estate through Education Blog www.reeducator.wordpress.com Presentation www.slideshare.net/ReEducationCompany Social Media www.twitter.com/reeducator www.youtube.com/msreeducator www.facebook.com/reeducator www.linkedin.com/in/reeductor Thank you for Attending