Tell us a little bit about your company and the services you offer
We are a full service mortgage brokerage with relationships with about 15
different lending sources. I am a Certified Mortgage Planning Specialist so I take a financial planning approach to structuring real estate financing safely and in line with the rest of a clients long and short term financial goals.
Knowing the most efficient way to structure real estate financing is one of my strong suits. Because lending guidelines are dramatically different from bank to bank we help clients find a lender that will take their circumstances. We broker all types of mortgage financing for purchases, refinances, reverse mortgages, HELOCs or 2nd mortgages, Conventional, FHA and VA. I am also a Certified Liabilities Advisor so I can help a client get out of debt faster.
Is there something that most veterans might not know about VA financing that they should know?
Most veterans are aware that the VA will guarantee a loan with no down payment. They might not know that once a VA loan has been paid off, they can use their VA entitlement over and over again. But if they allow someone to assume their VA loan in a sale, they can't get another VA loan until the old one has been paid off.
Their VA entitlement never expires. If you have never used it, no matter how old you are, you still can. Another benefit is there is no Private Mortgage Insurance (PMI) with VA financing. That is a huge savings over an FHA or conventional loan. In Los Angeles and Orange Counties, the maximum loan limit with no money down is $687,500 but the veteran can put down 25% of the of the difference if the purchase price is over $687,500 and the maximum VA loan is actually $1,000,000.
Can you briefly explain some of the main differences between taking out a VA loan versus other general types of home loans?
The government limits the amount of closing costs the veteran can pay and some costs have to be paid by the seller. A VA guaranteed loan doesn't have the same risk-based pricing conventional financing has. With a conventional loan, if your middle credit score drops below certain thresholds, the lender will charge the borrower more in points or origination fees. VA loans are much more lenient with credit and will take lower credit scores.
With a conventional or FHA loan, the borrower is required to have a down payment. A VA loan not only requires no down payment, you can structure the transaction so that based on the purchase price, you could get the seller the pay ALL the veterans closing costs as well. It is called a VA No No. Imagine buying a home with no money out of your pocket!
What are the biggest benefits of VA loans that a veteran who wants to buy a home should consider?
No money down, reduced closing costs, the possibility of getting the seller to pay ALL your costs, competitive 30 yr fixed rates, no PMI required, use your entitlement more than once and there are energy efficient programs that can be added to a VA loan creating credits for the veteran as well.
And the appraiser will call out and deferred maintenance or health and safety problems with the property and they will have to be fixed prior to the close of escrow by the seller. The government wants to make sure the veteran buys a home that is in good repair.
Are there any cons or drawbacks that come with getting a VA loan?
There is an outdated negative bias with some sellers and their agents. It used to be, years ago, that if you sold your home to a VA or FHA buyer, the seller had to pay discount points for the buyers benefit.
It could be 2 or 3 points, each one representing 1% of the sale price, that the seller would have to pay. That is no longer the case. And it took forever to close a VA loan escrow, sometimes 60-75 days.
So sometimes you are at a disadvantage if competing with a conventional offer that will purchase the home "as-is" with no repairs, no additional closing costs to pay by the seller for the buyer and the mistaken impression that it will take longer and be way more expensive that a conventional sale.
Do you have any advice for veterans in Southern California looking to buy their first home?
There are mortgage brokers that specialize in VA loans and work almost exclusively with veterans. They know everything the veteran needs to know about how to work with your Realtor to structure the offer properly, educate the listing agent about VA financing and overcome any objections. Just because a lender does VA loans doesn't mean they have much experience with them. Ask your loan officer how many they have done in the last 12 months.
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