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Thread: Talk to me about VA Loans!

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    #1

    Talk to me about VA Loans!

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    Hi Ladies! [and a few gents!]

    I'm trying to do some reading and learning about VA Loans tonight. Is there anything important for us to know? Anything you wish someone would have told you??

    Thanks!
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    #2
    We're meeting with someone next week. He does tons of VA loans up here, we're not even sure we want to buy but are going to look into it. Mostly I've heard that it's almost impossible to have 2 at one time. If you don't have a down payment you'll also pay more in fees and VA loan funding. You can sometimes do better and pay less with a conventional loan so shop around.
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    #3
    The one thing I did not realize is that there can be NO issues at all with the house. And some of the things that they found I would have never guessed to look for.
    Our roof is sound, and in good condition, but there are too many layers of shingles for the VA, so we could not use a VA loan.
    We did a fannie mae homepath loan and it put us in a better position than the VA loan would have though.
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    #4
    there are a few cons to using the VA guarantee- but first let me explain how the VA works: the VA "loan" is not actually a loan, but a guarantee by the VA to cover part of the loan if you default.
    it is a myth that VA loans have lower interest rates, you still need to qualify for a loan thru a bank, and will need at least a 670 or so to get a loan at a decent interest rate-
    your credit score will dictate your interest rate- a lower score will result in a higher interest rate. a higher score a lower rate.

    if you buy a home as an AD member and it is your first time using the VA you will pay 2.15% funding fee ( this is based on the loan amount)
    you can either pay for this at the time you close or have thes rolled into the loan, if it does not exceed your approved loan amount.
    if you decide to roll it into the loan this amount is added to the back end of your loan, if your buying a home at market value, this added fee will make you instantly underwater the day you close.
    here is what it looks like in numbers:
    loan value 150,000
    VA funding fee: 3225.00
    total loan at closing: 153,225.00
    your break even point for the added amount is 4 years- meaning it will take 4 years to pay off the 3225.00 before you even start paying on the actual loan amount.

    with any loan there may be closing costs- for a VA loan these cannot be rolled into the loan, right now industry wide it is normal for sellers to pay 3-4% for closing costs. in many cases this is covering all the closing costs and prepaids, but now with the market changing, in the next few months you will see some of that drop or go away.
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    #5
    Most of what Guns Girl said is correct but:

    The VA covers 25% of the loan if a buyer defaults which is why lenders offer a lower interest rate and most lenders will accept a 620 credit score. Wells Fargo goes as low as 600 for the score.

    Also, with any loan except a VA loan, ypu will be required to pay PMI (Private Mortgage Insurance) until 20%of the initial mortgage is paid off. That will well exceed the VA Funding fee. I advise my clients to pay the funding fee at closing so they don't finance it but some people aren't able to do that.

    All this said, the VA loan is still the best loan available. The only time it is a bad idea, is if you have a lender that does 2 or 3 VA loans a year and has no clue what they are doing. I have heard a lot of horror stories and general misinformation. But, being in a military town, the lenders that I work with are awesome and have a very streamlined process and knowledge of VA loans.
    Married to MacGirl, chasesbabygurl, An Everyday Love and *Larz* 12-20-2009
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    #6
    Is a VA Loan Cheaper Than Other Loan Options? | Real Estate Blog

    I just found this buy one of my lenders has a great document he provides that dispells the myths about Va loans like "I would buy a house, but I know you can only use it once." NOT TRUE! If I can find some more info I will post it and if you have any specific questions, feel free to ask me.
    Married to MacGirl, chasesbabygurl, An Everyday Love and *Larz* 12-20-2009
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    #7
    Oh, another benefit of VA loans is that they are assumable (as long as approved by the lender) which means if you buy a house now and get a rate around 3.25 (depends on your credit but most VA laons are locking at 3.5% and less) and interest rates are 7.5% when it is time to sell, your home can stand out against competition because they could take over your rate instead of getting the 7% rate.

    I LOVE homes and all thing real estate. I will probably respond to this thread a few more times as I think of other things
    Married to MacGirl, chasesbabygurl, An Everyday Love and *Larz* 12-20-2009
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    #8
    I'm going to be stalking this thread, as DH and I are looking into buying a home next year.
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    #9
    I am not sure if I would want anyone assume my VA loan. I would talk to a lender about it first. In some situations if you let someone assume your VA loan then you would not be able to get another one. SO I would talk to a lender before I ever decide to let someone assume my loan.
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    #10
    When we tried to use VA several years ago we found there is an income limit (or at least that is what was told to us by the VA). Our home was under the $417K cap for the home purchase, but it seems there is a household income limit (again, as we were told and shown).

    At the time, the VA Loan would've been the highest interest rate for us. And we have also since done a refi and VA is still the higher option. We did not (and still don't) have to do PMI and we didn't have a VA Loan. We also had to prove the house we bought 10 years prior was no longer still in our name, because you can't have more than one VA loan out at a time (or at least for a primary residence).

    There are 10 types of people in the world, those that understand binary and those that don't
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