VA Jumbo Loan Rates in 2022

Living in an expensive area or environment can come with its own difficulty, especially when it comes to purchasing a home. The cost of a home in these areas is usually a significant amount that veterans or service members may find difficult to purchase with a conventional VA loan.

This is where the VA Jumbo loan is needed. So veterans, active duty service members, members of the National Guard, reservists, or qualified surviving spouses, and you need to purchase or refinance an expensive home or need a loan that is bigger loan, the VA jumbo loan is the best choice.

In this article, we will examine what the VA jumbo loan entails and also the current interest rate for a VA loan. At the end of this post, you will get a better understanding of VA loans and how to go about obtaining them. Contact us to help you with your application process.

Start the easy application process now!

Step 1 of 4

25%

What is a VA Jumbo Loan?

A VA jumbo loan is a non-conforming loan that exceeds the loan limit set by the Federal Housing Finance Agency (FHFA). Conforming VA loans are usually backed by the U.S government and in the real sense, don’t have limits placed on their size.

Depending on the limit placed on a VA mortgage, any loan that surpasses such limit is regarded as a jumbo loan. However, it is important to know that the FHFA adjusts these rates to fit some areas where the cost of buying a home is on the rise.

VA Jumbo Loan Advantages

The VA jumbo loan is quite different from other conventional loans. The reason is that, for conventional jumbo mortgage loans, there is no government guarantee. Therefore the loan risks lie solely on the lender.

However, for VA loans, there is a government guarantee of 25% should in case the lender defaults. but, it is essential to note that, for loans above the conforming limit, the Department of Veterans Affairs will not guarantee 25% of the full loan.

The beautiful thing about the VA Jumbo loan is that veterans and active-duty members can utilize their VA loan eligibility to have part of their Jumbo loan guaranteed.

The VA Jumbo Loan Limit

The VA loan limits do not place a fixed rate on the amount you can borrow. Instead, they are applied to determine how much you can borrow before considering if it’s necessary to make a down payment.

There are two figures to put in mind when making reference to VA jumbo loan limits. The first is the minimum amount obtainable before you can classify a loan as Jumbo. The second is the maximum amount of a VA Jumbo loan.

From 2020 to date, the VA offers uniform guaranteed percentages for VA lenders regardless of the loan size. This is given as long as you have a full entitlement. However, your VA guarantee will differ a bit if you have a partial entitlement. The maximum VA loan amount you can obtain depends on if you have existing equity on your home or you’ll be making a down payment.

Although there’s no limit to the amount of VA loan you can obtain, most mortgage lenders consider a loan as Jumbo if it exceeds the local conforming loan limits. You have to pay close attention to the maximum loan limit offered by various mortgage VA-approved lenders for a Jumbo loan.

VA Entitlement

The VA entitlement is an essential concept to know if you own a home with a VA loan and you’re seeking to get another home loan. The VA entitlement is also necessary if you have a home that was short-sold and has yet to completely pay back the difference.

When you have a partial entitlement, a down payment is usually required. Such payment would have been avoided if you have a full entitlement. For situations where you didn’t default on your previous VA loan and still own your home, you can have your entitlement restored fully at a go.

As long as you fully pay off your VA home loan in a home sale, you can use your VA entitlement numerous number of time.

VA Jumbo Loan Requirements

The supporting requirements for VA jumbo loans vary by lender and the size of the loan. More importantly, they are more stringent that a standard VA loan. The following are the necessary requirements if you want to apply for a VA Jumbo loan.

Credit Score

Most Mortgage lenders often place their credit score requirements at 620 and above for a VA jumbo loan. While a credit score of at least 580 may qualify you for a non-VA jumbo loan and another loan type.

VA Cash Reserves

Some mortgage lenders may also request fora VA cash reserves before you qualify for a VA loan of a high cost. What this infers is that you’ll be needing some mortgage monthly payment at the bank at closing. This serves as an extra level of financial security.

Standard Property and Appraisal Requirements

Firstly, it is expected that the reason for applying for a VA jumbo loan is to utilize it for constructing a primary residence. Furthermore, your primary residence needs to pass the basic inspections for safety and soundness.

Debt-to-Income Ratio (DTI)

Your debt-to-income ratio enables your VA lender to compare the minimum monthly mortgage payments on your debts to your monthly income. Sometimes, you may be eligible for a VA loan with a slightly higher DTI ratio than you can’t for another loan program.

The VA Jumbo Loan Rates in 2022

There is not much difference between VA jumbo loan rates and regular VA mortgage rates. The mortgage rates given by your lender are dependent on the bond market situation at the time of applying for your mortgage.

Note that because you’re getting a higher loan amount does not mean that the VA loan rates will be higher. Although it could be, it isn’t usually a result of your loan amount.

Current VA Jumbo Loan Rates

As of August 2022, the average 30-year VA mortgage rate is 4.65% with an APR of 4.74%. Also, the average 30-year VA refinance rate is 4.62% with an APR of 4.8%. A 30-year fixed jumbo rate has an interest rate of 5.21% with an APR of 5.22%, while a 15-year fixed jumbo rate has an interest rate of 4.56% with an APR of 4.57%.

In addition, a 5/1 ARM jumbo rate has an interest rate of 4.44% with an APR of 5.88%, while a 7/1 ARM jumbo rate has an interest rate of 4.85% with an APR of 5.29%.

Is Down Payment Required for a VA Jumbo Loan?

The need for a down payment is dependent on the amount of the VA home loans. For loans that amount to $1.5 million accompanied with a credit score of 640 or more, no down payment is required. However, for VA loans within the range of $1.5 million and $2 million, a 10% down payment or 10% equity in a refinance is required. Coupled with this, you’ll need to have a 680 credit score.

Funding Fee on a VA Jumbo Loan

Veterans Affairs charge borrowers a funding fee. The VA funding fee is a certain percentage of the loan amount. The amount charged is dependent on the loan type and eligibility of the members. Information on this can be found on the website of the Department of Veterans Affairs.

The Va funding fees can range from 3.3% if you are utilizing a VA eligibility for the second time on zero-down Veterans united home loans to 5% for an Interest Rate Reduction Refinance Loan (IRRRL). If you qualify for an exemption, you will certainly save money with a VA jumbo loan.

While it is important to pay the VA funding fee, some veterans are exempted from payment. This includes:

  • Veterans who are receiving VA compensation due to a service-connected disability.

  • Veterans who did not receive retirement or active duty pay, but are entitled to receive compensation for a service-connected disability.

  • The surviving spouses of Veterans who passed away during service or from a disability connected to service.

Ascertain Your Jumbo Loan Eligibility

When you compare VA jumbo loans to conventional VA loans, you’ll figure that it offers you the avenue to pay smaller down payments, save money through lower interest rates, have lower closing costs, and there is no Private Mortgage Insurance (PMI) premiums on the VA loan.

VA jumbo loans come allows you to enjoy better refinance rates and VA loan rates while getting for getting a bigger loan. You also get to enjoy most of the same benefits as that other VA loans.

To ascertain whether you are eligible for a VA jumbo loan, reach out to us at our office. We will gladly help determine your eligibility and walk you through the process of securing a VA jumbo loan.

Can a Reservist Get a VA Loan? VA Loan For Reserves and National Guard Members

Many veterans, active duty service members, and their families have benefited from the helpful home ownership guarantee offered by the VA loan program. However, many individuals have been uncertain and questioning if Reservists and National Guard members have access to VA loans.

Reservists and National Guard members can apply for the VA loan program and be eligible for all the benefits offered by the program if they meet specific requirements. If you are a reservist or member of the National Guard and you’re considering what VA options are available for you, this article will explain in detail all that’s required for you to get a VA home loan.

Start the easy application process now!

Step 1 of 4

25%

What is a VA Loan?

A VA loan is a loan program offered through the U.S Department of Veterans Affairs to veterans and active duty service members for the purchase or refinance of a home. In order words, the VA loan allows current or past service members and their surviving spouses looking to purchase a home with low-interest rates, little or down payment, and a government agency guarantee.

Members of the National Guard or Army Reserve can qualify for a VA loan, but they have to meet certain requirements before they can be eligible to access the loan. However, the issue is that many reservists or National Guard members are unaware that they can qualify for a VA loan.

Let’s examine how a Reserve or National Guard member can go about getting a VA home loan.

Are Reservists and National Guard Members Eligible For a VA Loan?

One vital documentation a Reservist or National Guard needs in order to apply for a VA loan is the certificate of eligibility. Before you can proceed with your application for a VA home loan, you will require this documentation.

If you don’t have the certificate of eligibility documentation, you can file for it online using Form 26-1880. You can solicit the help of a VA-approved lender to get your certificate of eligibility “COE” from the Department of Veterans Affairs. This makes it much faster for you to get the document.

In addition to having the COE, you need to have a good credit score. This is another important determinant of obtaining a VA loan. At American Security Mortgage, we can help you review your credit score and income sources verification to facilitate your eligibility.

VA Home Loan Benefits For Reservists And National Guard Members

There are various VA home loan benefits available to veterans and their families if they qualify for the VA loan program. The benefits that can be derived from this program include approval of loan requests with lower interest rates, no predetermined down payment, limits on closing costs, no monthly private mortgage insurance (PMI), and competitive interest rates. The VA home loan benefits can assist eligible veterans to save enough dollars when purchasing or refinancing their homes.

Most people pegged the biggest benefit of the VA home loan to be the fact that you don’t have to pay a down payment on your home. However, another interesting VA home loan benefit is that of credit score. The Department of Veterans Affairs makes it possible for mortgage lenders to be lenient on the credit score requirement for veterans, service members of the National Guard and Reserve, and their families to qualify for a VA loan.

Therefore, there’s an off chance that if you have a lower credit score, you may be eligible for a mortgage under the VA loan program and receive a competitive interest rate.

Qualifications To Apply For a VA Loan As a Reservist or a National Guard Member

Served at least six years honorably

Before you can be eligible for a VA loan, you need to have six years of active service in the National Guard or Reserve. This requirement is all-encompassing.

Honorably discharged

Once you attain six years of honorable service, you are automatically eligible for a VA home loan.

Mobilized for 90 consecutive days in active duty service under Title 10

There are instances where the government can grant home eligibility to members before the six years stipulated interval. Over the years, National Guard or Reserve members called to active duty service under Title 10 have been granted VA loan eligibility, on the occasion that they serve at least 90 consecutive days.

Activated under Title 32 after serving at least 90 days, 30 of which are consecutive

National Guard members activated under Title 32 orders and have served 90 days of full-time active duty, out of which 30 must be consecutive, are also eligible for a VA loan.

Disability

In cases of non-active duty service due to disability, a reserve or National Guard member must be honorably discharged for service-connected disability before they can be eligible for VA loans.

Retired

Aside from the six years of service in the Selected Reserve or National Guard, another eligibility requirement is being placed on the retired list or continued service in the selected service.

Transferred to standby reserve after honorable service

Another VA Loan eligibility thing to consider is being transferred to a Standby Reserve or some part of the Ready Reserve different from the Selected Reserve. The service must be characterized as honorable service.

Additional VA Loan Consideration a Reservist Will Need

Reservists are not excluded from paying the VA funding fee when applying for a VA loan and expect to take hold of the benefits they offer. The VA funding fee is a one-time added to the cost of the VA loan paid by veterans, service members, or their spouses as the case may be.

The VA funding fee is included in VA loans to help finance the program so that other service members and their families can access the same privilege provided by the program in the future. Also, the VA funding fee helps cover losses incurred from defaulted loans. The VA funding fee is usually paid at closing.

Minimum Property Requirements (MPRs)

The essential significance of VA loans is to ensure and promote home ownership. It is on this premise that the VA exerts effort to ensure that the homes purchased with VA loans meet some required levels of habitability, especially their safety, soundness, and sanitary. This is the basis of the Minimum Property Requirements.

To ensure these standards are meant, the VA imposes MPRs on all properties bought using VA loans. Before your loan is finally approved, the VA will send appraisers to check the property. Your VA loan may suffer delays if there are any issues discovered on your property by the appraisals.

it is until all issues relating to MPRs are resolved either the buyer, seller, or both before your VA loan will be approved.

Occupancy Requirements

Considering the homeownership benefits offered to National Guard and Reserve members when they get a VA loan and the objectives, VA loans cannot be used to purchase an investment or real estate For properties. When you purchase or refinance a home with VA loans, it needs to function as your primary residence only.

To enforce these standards, the VA imposes an occupancy requirement. The occupancy requirements imply that within 60 days of closing your VA mortgage loan, you must occupy the home and make it your primary residence. You must also live in the residence for at least a year.

It’s important to note that there’s an exception to these requirements for activated or deployed National Guard and Reserve members. As long as your spouse adheres to and meets the occupancy requirements.

VA Loan Documents Required For Reservists or National Guard Members

The required paperwork and documentation for VA loans may slightly differ for Reservists and National Guard members compared to Veterans. However, the VA loan application process is similar for borrowers. They both have access to similar home purchasing benefits using this process.

To begin your mortgage process using the VA loan program, Reservists will be required to present a pointed statement and a copy of the discharge statement. Whereas for National Guard, lenders may request a DD-214 and NGB-22 document. These documents will be accompanied by a certificate of eligibility which can be obtained by filling the Form 26-1880 online or through a VA-approved lender.

A quick summary of specific documents needed by lenders for VA loan processing is listed below:

National Guard members: NGB-22 or NGB-23

The NGB-22 or 23 form is the National Guard Report of Separation and Record of Service. It is a document required by members of the Guards which shows the proof of service and conformation that they have served the required time to qualify for VA loan.

Army Reserve Members: DARP Form FM 249-2E or ARPC Form 606-E

DARP Form FM 249-2E is a form that shows the Chronological Statement of Retirements Points of the Army Reserve members. They essentially indicate the six qualifying years of active service, which is required to get a VA loan.

Navy Reserve Members: NRPC 1070-124

The NRPC 1070-124 form is the Navy Reserve Annual Retirement Point Record. The form is required to indicate that a particular service member completed his years of service.

Air Force Reserve Members: AF 526

AF 526 is used by the Air Force Reserve members to record their point credit information. This document is needed by the Air Force Reserve Members as an eligibility requirements in acquiring a VA home loan.

Marine Corps Reserve Members: NAVMC HQ509 or NAVMC 798

NAVMC HQ509 is the Reserve Retirement Service Report issued to Marine Corps Reserve Members and it required to qualify for Va home loans.

Coast Guard Reserve Members: CG 4174 or 4175

The form CG 4174 is the Coast Guard Reserve Point Statement. It is one of the most essential documents for a reservist and it’s required when they seek to obtain a VA loan.

Receive A VA Loan Quote From Security American Mortgage

To ascertain if you qualify for a VA loan as a Reservists, National Guard, and Military Service member, contact us at Security American Mortgage. We are proud to provide service members, veterans, and their families with some of the most demanding VA loans in the U.S. We will provide you with all information and assistance you need to apply for VA loans as a reservist.

VA Loans and Title Restrictions

At Security America Mortgage, we adhere to strict editorial integrity, take a look to learn more.

Title restrictions are entries on a title deed that prevents the sale or transfer of a property in some way. They can be conditional based on specific occurrences or they can be absolute. They are most often encountered in newer properties that are in some way communal, like a condo or duplex.

Some condos have a clause in their paperwork that is called the right of first refusal, this is essentially the condo version of a homeowner’s association, and it gives the association the option to buy or lease your unit before selling the unit is approved for the buyer.

In general, the VA will not restrict your rights to sell your home if you decide you need to. The VA does not have an early-exit fee or a prepayment penalty, regardless of how soon you sell your home.

The Department of Veterans Affairs will not guarantee a home loan for a property that restricts your ability to freely sell the property. According to the VA, they “may guarantee a loan on which a title restriction limits the sale, lease, or occupancy of the dwelling to persons based on age, including a prohibition against the permanent occupancy of the dwelling by children, provided such restriction complies with applicable Federal law… VA may refuse to approve a property with an age restriction if its operation would work an undue hardship upon the owner in the case of sudden, unforeseen events or be likely to result in an increased risk of loan default.”

Buying a Condo

Condos are good for a single family that does not need as much space. They are cheaper to purchase and usually, the HOA manages the maintenance of the complex. They also can have amenities that make them an attractive option, like pools, a clubhouse, a gym, and more. You can buy a condo with the VA loan, but the process is slightly different than if you were buying a free-standing home.

Since condos so often have title restrictions of some kind, if you want to buy a condo, the VA has to approve it first. The VA maintains a list of approved condominium complexes throughout the country to make this easier for you.

If the condo you want to buy is not on the list, your lender can submit paperwork to the VA to try to get it added to the list; this is a complicated process. After your lender submits the paperwork, the VA will go through the condo’s documents and policies; it is important to keep in mind that this process can take some time.

One of the requirements the VA has for a condo is that at least 50 percent of the occupants are the owners, not renters, and that at least 75 percent of the community has to be up to date on their HOA payments. If you are interested in a recently built condo, the VA will not approve it until at least 75 percent of the units have been purchased by others.

How Student Loans Impact VA Home Loan Chances

VA Mortgage & Student Loans

 

At Security America Mortgage, we adhere to strict editorial integrity, take a look to learn more.

Your debt-to-income ratio is an important factor in your home loan application, whether you are applying for a VA loan or another type of loan. The debt-to-income ratio looks at how much money you have coming in and compares it to how much money you have going out in payments.

Student loans are a huge chunk of debt for most people, and since student loan payments are usually fairly large, they can be a big factor in a home loan application. They also make it harder to save up for a down payment and closing costs.

And so, can you get a VA loan with student loans?

Having student loans is not enough to automatically make you unable to get a home loan. However, missing payments or defaulting on your loans can harm your chances of obtaining a mortgage.

Lowering Your Debt-to-Income Ratio

Most mortgage lenders will require you to have a debt-to-income ratio below 30 percent, sometimes up to 36 percent. If your student loans are interfering with that, you can look into lowering the amount you have left to pay off, refinance or consolidate your loans to lower your monthly payments or enroll in an income-based repayment plan. Those allow you to lower your payments to be aligned with your income level. They can lower your payments down to 10 to 15 percent of your monthly income.

Deferment

One way you can keep your student loans from interfering with your VA home loan application and debt-to-income ratio is by having them deferred. While your loan is in deferment, you will likely have no payment or a significantly reduced payment. If you have federal student loans, they are automatically deferred for six months following your graduation, so if you can get them deferred for an additional six months, the loans will not impact your VA home loan.

One thing that is tricky with this method is that if they are deferred due to financial hardship, this can make them count against you instead of for you. If you deferred your loan because you cannot afford it, the lenders will assume you also cannot afford a monthly mortgage payment.

Some of the reasons you can get your loan deferred are:

  • You are currently enrolled in school at least half-time or are in a career school
  • Serving active duty
  • Unemployment or under-employment
  • Economic hardship

According to the VA, “If student loan repayments are scheduled to begin within 12 months of the date of VA loan closing, lenders should consider the anticipated monthly obligation in the loan analysis. If the borrower is able to provide evidence that the debt may be deferred for a period outside that timeframe, the debt need not be considered in the analysis.”

Getting your loans deferred can be difficult, depending on who your student loans are through. Different financial institutions have different rules for deferment of student loans, so in order to get them deferred, you will need to contact them directly to find out what is required and what that entails.

VA Home Loan Changes

At Security America Mortgage, we adhere to strict editorial integrity, take a look to learn more.
Guest blog from American Financial Resources* It is a great honor to serve our military men and women, and VA home loans help us make home buying possible for many of these families. If you’ve served in the military, you should be aware of some of the big changes in VA home loans that were ushered in with the new decade. Policy changes enacted as part of the Blue Water Navy Vietnam Veterans Act of 2019** became effective on January 1, 2020. Veterans and active-duty service members may now have more borrowing power, but may also pay higher fees for new VA home loans in 2020. In addition to extending disability benefits to more Vietnam War veterans exposed to Agent Orange, the new law eliminates VA loan limits for borrowers with full entitlement to VA loans. However, the VA funding fee has increased for most borrowers. The exception being active-duty Purple Heart recipients. Members of the Armed Forces serving on active duty who are in receipt of the Purple Heart award are now eligible for the VA funding fee waiver, even if the Purple Heart was awarded during a prior period of military service.  Irrespective of the changes, the benefits of VA home loans remain the same. They have competitive interest rates and can provide 100% financing with no down payment required, among other advantages.    

No More VA Home Loan Limits


Removing the loan limits for new VA home loans is a huge win for veterans and military families for the new year. The elimination of loan limits doesn’t mean unlimited borrowing power. Borrowers will still need to have sufficient income and meet a lender’s credit requirements to qualify for the loan amount. The good news is that veterans stationed in costlier real estate markets can now stretch the zero-down buying power of their benefit. It is important to note that loan limits will still apply to veterans who have one or more active VA loans, or have defaulted on a previous loan. Existing loans will follow the same county guidelines set by the Federal Housing Finance Agency; which in 2020 is $510,400 in a typical county and higher in more expensive housing markets. If a homebuyer is subject to VA loan limits, the lender, like American Financial Resources, will require a down payment if the purchase price is above the loan limit. 

VA Funding Fee Increases for Some


The VA funding fee is a congressionally mandated fee associated with the VA home loan. For the next two years, veterans and service members will see a slight increase of 0.15 to 0.30% in their funding fee, while National Guard and Reserve members will see a slight decrease in their fee. Veterans with service-connected disabilities, some surviving spouses, and other potential borrowers are exempt from the VA loan funding fee and will not be impacted by this change. The VA funding fee paid will depend on the down payment amount and whether this is a first or subsequent VA home loan for the borrower. The fee for first-use, zero-down loans is 2.3% of the loan amount in 2020, up from 2.15% for active-duty military and veterans in 2019. The fee for subsequent use loans will be 3.6% of the loan amount, up from 3.3%. These fee levels will stay in place for two years, return to 2019 levels from 2022 through Sept. 30, 2029, and then drop further after that. Again, active-duty service members who have received a Purple Heart are now exempt from the funding fee.

Benefits of VA Home Loans


While it is important for eligible borrowers to understand the recent changes, veterans and active military should also be clear on the benefits of VA loans. 100% Financing VA loans are one of the only no-money-down options still available. Instead of waiting years to save up for a home, eligible borrowers can move forward with a home purchase, as well as borrow additional funds for renovations on the home, all with zero down payment. Locked-In, Low Interest Rates Since eligible borrowers can purchase or refinance a home, and the cost of repairs or updates, all in a single mortgage loan, a VA loan provides considerable savings when compared with other programs that might require a second mortgage. Fewer Added Costs Eligible borrowers using a VA loan not only enjoy limited closing costs with a single appraisal, but there’s also no mortgage insurance requirement, which could add up to savings on monthly mortgage payments. And, eligible borrowers don’t have to worry about being charged any prepayment penalties if they are able to pay off their mortgage earlier than expected. Continued Support If borrowers are experiencing periods of temporary financial difficulties and are struggling to make mortgage payments, the Department of Veterans Affairs can provide assistance to help them retain their home.  For 75 years, VA home loans have enabled thousands of deserving families to become homeowners. At AFR, we’re proud to provide these benefits to the brave men and women who have served our country and will continue to help many more generations of veterans come home. 

About American Financial Resources, Inc.


American Financial Resources, Inc. (AFR) is the leading FHA 203(k) lender for sponsored originations in the country and an innovator in the construction and renovation lending area, as well as being ranked among the nation’s leading mortgage lenders. AFR utilizes the latest technology and delivers educational resources to mortgage brokers, loan originators and their customers. American Financial Resources, Inc. is an Equal Housing Lender: Lender NMLS 2826 at https://www.nmlsconsumeraccess.org/. For more information, visit https://www.afrwholesale.com/ *Lender NMLS 2826. https://www.nmlsconsumeraccess.org/. American Financial Resources, Inc. (AFR) is a wholesale and correspondent lender. This is not a commitment to lend. All loans subject to credit approval. Guidelines subject to change without prior notice. This information is provided to assist business professionals only and is not an advertisement extended to the consumer as defined by Section 226.2 Regulation Z. Equal Housing Lender. Corporate Headquarters:  9 Sylvan Way, Parsippany, NJ 07054. https://www.afrwholesale.com/ ** https://www.benefits.va.gov/benefits/blue-water-navy.asp

Can I Get a New VA Loan After a Foreclosure?

At Security America Mortgage, we adhere to strict editorial integrity, take a look to learn more.

VA Loans & Foreclosure

  When a major financial hardship happens in life, and you find yourself not being able to make your mortgage payments, if this goes on long enough you may find yourself facing foreclosure. Foreclosure is what happens when a homeowner cannot make their mortgage payments and defaults on the loan. In this case, the lender will choose to take possession of the property so they can recover some of the loss. This is a stressful time for you, as you lose your home and your credit score goes down, sometimes by as much as 160 points; this can take months or years to repair. Since the VA has more flexible requirements for credit scores, you may not have to wait until your credit has gotten back to what it was before you defaulted on your loan.

Avoiding Foreclosure


There is a lot of time and money involved in the foreclosure process for the lender, and in some states,  they even have to involve the court system. To avoid all of that, some lenders will give you alternatives to foreclosure. The VA can help you retain your home and avoid foreclosure. The VA has free mortgage counselors available who can help you and give you advice to help get you back on track with your mortgage. They will work directly with your lender to help negotiate an alternative to foreclosure for you. A repayment plan is one of the options the VA has, which means you will continue making your mortgage payment, plus a little extra to make up for what is missing. You may be able to get special forbearance, which will stall the foreclosure so you can make your missing payments. Sometimes, a loan modification is available, that creates a new payment schedule, which includes your missed payments. You may be able to have a deed-in-lieu of foreclosure, where you hand the deed back to the lender instead of foreclosing. The last option is a short sale, where the lender lets you sell the home for less than you owe on the loan. If you go with the short sale or deed-in-lieu of foreclosure, they will still harm your credit, and there will be a waiting period before you can obtain a new home loan.

Getting a New VA Loan After Foreclosure


Since the VA loan is set up a little differently than other loans, if it has been at least two years since the foreclosure, they can disregard it when looking at your qualifications for the loan. If you had a foreclosure from an FHA loan, there is a three-year waiting period. This waiting period will allow you to rebuild your credit after the foreclosure. Your VA loan entitlement will be reduced by the foreclosure, which will limit the amount of money you can borrow without a down payment. You can get your entitlement back if you pay back the VA in full. If you did not use all of your entitlement on the home that was foreclosed upon, you can use what you have remaining on your new loan.

Subsequent Use of a VA Loan

At Security America Mortgage, we adhere to strict editorial integrity, take a look to learn more.

Can You Use a VA Loan Twice?

  One of the great things about the VA loan benefit is that you can use it multiple times to buy homes. There is no limit to the amount of VA home loans that veterans can use with the VA loan program; it is a life-long benefit. To secure an additional loan, your lender will look into your VA loan entitlement. The VA funding fee will go up slightly for you from what it was when you bought your first home.

What is the VA Funding Fee?


The VA funding fee goes to the Department of Veterans Affairs to help them keep the cover any losses on the loan and to keep their loan guarantee going. This fee can be rolled into your mortgage, but it will slightly increase your monthly mortgage payments. You can ask your seller to pay all or part of the funding fee on your behalf, and some sellers are willing to do this, but it is most commonly rolled into the mortgage. You are exempt from paying the funding fee if:
  • You are receiving VA disability compensation or are entitled to it.
  • You are in active service and have been awarded a Purple Heart.
  • You are the spouse of a veteran who died in service or from a disability connected to their service.
 

How Much is the Fee?


The fee ranges from 0.5 percent to 2.3 percent of the total loan amount for a first-time borrower, though the amount can be reduced if they choose to make a down payment. For a subsequent home purchase, the fee is usually 3.3 percent, but it can also be affected by a down payment.

What is Entitlement?


All veterans and active service members who meet the VA’s loan eligibility requirements have entitlement. This is the amount of money the VA will pay the lender if the borrower defaults on the loan. Usually, the entitlement is approximately $36,000 the first time and a secondary entitlement of $68,250 for if the veteran buys a home that is over $144,00. When you use your VA loan, you are using that entitlement.

Can Entitlement be Restored?


If you use your entitlement, it can be restored when the loan is fully repaid, by submitting an application to the VA. To have your full entitlement restored, you have to sell the home for the original loan and pay off the mortgage. So long as you keep selling and paying off your previous VA loan, you can have your entitlement restored as many times as you want or need to. However, if the mortgage is paid off, you can use a one-time restoration benefit that will let you keep it as a vacation home or rental property.

Can I Have Two VA Loans at Once?


You can have two VA loans at the same time, usually, this is done because an active service member has a permanent change of station but wants to keep the old house. If you have enough entitlement left, you can then buy a new home at your new station. Another use of this is for a veteran who lost their home to a VA loan foreclosure, they may be able to later use their entitlement to buy a new home.

The Closing Costs for a VA Loan

At Security America Mortgage, we adhere to strict editorial integrity, take a look to learn more.
When buying a home with the VA loan, there is no down payment, making it an excellent option for veterans. However, one financial obstacle that veterans will still need to face is closing costs. Closing costs are paid at closing for the lender’s fees, insurance, taxes, title transfers, and other fees needed to complete the purchase.  

How Much Are Closing Costs?


While the exact amount can vary in different parts of the country, they usually average between three and five percent on a less expensive home. There are online loan estimate forms that can help you determine an approximation of what your total closing costs will be. These costs are paid for by you out of pocket, but in some cases, the seller will pay up to four percent of the closing costs for the buyer. This is discussed in negotiations with the seller, and they can help pay for any of the fees, up to the four percent mark. There are also programs that can help you pay for closing costs if you need financial assistance.  

What Fees Are Included in Closing Costs?


While most of the closing costs you will pay are the same for a VA loan and another type of loan, the VA does have some differences. There are some fees that the VA prohibits, including mortgage broker commissions, prepayment penalties, attorney fees, and settlement charges. The only attorney fees that the VA will allow are for title work, no other fees will be included in closing costs.  
While the fees included in your closing costs can vary, depending on your location, these are some that can give you a general idea of what you can expect.  

Appraisal


The cost of an appraisal can vary, but it is usually around $500. The VA sets the cost of the appraisal, and it does need to be paid upfront. The appraisal is to determine the full value of the house, to ensure you are not overpaying, and to make sure the home meets the VA’s minimum standards.  

Flood Certification


The lender will use this to determine if the home is in a flood zone; this is usually around $20. If it is, you will need to purchase flood insurance too.
Flood insurance is an ongoing insurance policy that is required by your lender and is not usually covered by a standard homeowner’s insurance policy. The first year’s premium is due at closing, and depending on how much it is, you may end up having a lot more money added to your closing costs.  

Homeowners Association (HOA) Fees


Often HOAs will charge you annual dues, which are not necessarily included in your closing fees, but you may want to factor the amount due into what you will need for closing.  

Homeowner’s Insurance


The full year’s premium for homeowner’s insurance is due at closing. The standard policy does not protect against flooding, and it may not cover damage from natural disasters like earthquakes. Usually, these policies only cover things like trees falling on homes, fires, and other things like that.  

Loan Origination Fee

This is the lender’s compensation for the loan, which the VA limits to one percent of the total loan amount. The lender might not include fees for underwriting or processing the loan in this fee.
The lender can itemize the fees up to one percent or they can charge a flat rate of one percent. If they choose the flat rate option, they are not allowed to charge you additional processing fees. This is unique to the VA loans.  

Record Fee


Your local area sets this fee, and it is to make the sale public record. It can be as little as $20 or up into the hundreds of dollars.  

Reserves for Tax and Insurance


This is another fee that varies by the taxes and insurance on the home and the area. This escrow is intended to cover the taxes and insurance premiums when they become due. Your lender can help you establish how much you will need for this.  

Survey Fee


A company will come out to the property to determine where the physical property lines are. While this is not usually required, it is recommended so you know exactly where the boundary lines are on your property. This usually costs around $400.  

Title Fee


This fee is difficult to average, because it is dependent on the loan amount, purchase price of the home, and your location; ranging from a few hundred dollars to over $1,000. The title report and title insurance protect both the owner and the lender from someone claiming ownership to the house and winning in a lawsuit. If that happens, both the owner and the lender are reimbursed for the loss.  

VA Funding Fee


This is a one-time fee the VA charges most borrowers for their loan benefit, and it can be rolled into the mortgage if desired. If a veteran is receiving VA disability, they are exempt from paying the VA funding fee. This fee helps fund future loans for other veterans. The fee can be anywhere between 0.5 percent and 3.3 percent, depending on the loan amount.

Getting a VA Loan When Self-Employed

At Security America Mortgage, we adhere to strict editorial integrity, take a look to learn more.
When buying a home, your employment and your income are a key factor in whether or not you will be approved for a mortgage loan. If you are self-employed, you may face some unique challenges to get a loan. The income from being self-employed is often less stable and consistent than what you would receive working for someone, and this inconsistency can lead to your lender needing to probe more deeply into your financial records.

Who is Considered Self-Employed?


You are considered self-employed if you have sole ownership or at least 25 percent ownership in a business or if you are a freelancer or contract worker whose income is mostly covered under  IRS Form 1099-MISC.

Documentation You Need


If you are self-employed, you will need to provide your lender with a year-to-date profit and loss statement, and something to show your current finances, two years of your individual tax returns and business tax returns, and a list of your partners and/or stockholders. The lender may also want to see your business license and a letter from a CPA stating that you are still in business. This is more in-depth than you would have to provide as an individual because your lender needs to ensure that you have the income necessary to make your mortgage payments. They need two years of income records to ensure that your income is not dropping every year and is either remaining steady or increasing. If you do have a significant drop every year, you will need to provide a written explanation for this drop, but if it is too big, your lender is likely to decline your loan application. The process of proving your income is a little easier if you have recently taken over a family business, if the business has a proven track record of success. In this case, you only need to provide one year of income, though the more you give the lender, the better they can determine how much to give you for your mortgage loan.

Net Income


One area the lenders will focus on is the business losses and expenses. Your net income is what you make after your expenses, so everything you write off on your taxes is not taken into account by lenders. The tax write offs are something that businesses like to utilize on their taxes, but having too many expenses can be problematic when seeking a loan. Writing off expenses gives you less taxable income, which is all that lenders are allowed to count when they process your loan application.
For example, you made $80,000 last year, but you wrote off $25,000 of it in expenses. This means that your net income for the last year is only $55,000, which is all the lender will count in your income.

Keep Personal and Business Accounts Separate


Proving your income is difficult enough when you are self-employed, so keeping your personal and business finances separate is important. If you work alone, it can be easier, since you know which expenses are personal and which are business, but if you have a partner it can be a little bit trickier.

Lower Federal Interest Rates Affect Home-Buying Power By Boosting Confidence

 

At Security America Mortgage, we adhere to strict editorial integrity, take a look to learn more.

For months now, we’ve read the news covering the trade war between China and the U.S., particularly regarding the tariffs placed on China’s exports to the U.S. While people on one side of the aisle are saying, “It’s about time,” the other side says, “this is not going to end well.” 

 

Most recent in a series of economic strategic moves, the Federal Reserve bank announced cutting interest rates by a quarter of a percent. What that means, basically, is that banks and borrowers are going to pay a lower interest rate to borrow money from each other. Designed to bolster confidence in borrowing, and therefore spending and hiring, a federal interest rate cut intends to keep wind in the sails of the American economy as prices of some items rise and people dependent upon favorable U.S.-China trade relations struggle.

 

While a lower federal interest rate could impact you in some ways, it’s not directly linked to mortgage interest rates. It’s more of a domino effect where, as banks’ interest rates are lowered, interest rates in other industries follow suit. While no one grins at the prospect of an economic downturn and all that could come with it, if you’re considering purchasing a home in the near future, it could work out in your favor.

 

Broadly speaking, people and government entities who have some control over economic decisions lower interest rates in order to make it easier for people to keep spending their money because 

 

  • it’s easier for your to put money into a house if your mortgage interest rate isn’t sky-high
  • it’s easier to make renovations or furnish your home if your credit card company’s interest rates go lower, which could be another by-product of a lower federal interest rate.

So, what should you do?

 

If you’re considering buying a home and you have a steady, reliable source of income, this may be the time to make a move. Start doing the research and getting names of potential mortgage lenders, and find out what kind of rate you can get. If it’s four percent or lower, that’s pretty good.

 

Already own a home and a mortgage? This could be an opportunity to renegotiate your interest rate and refinance your home. If you’ve lived in the home for a year or longer, you may be eligible. Check with your current lender to find out what kind of rate you could get if you refinance, and what that process would look like. It could lower your monthly payment and the total that you pay for your home when it’s all said and done. If your income allows for a higher monthly payment, you can change the terms of your loan, turning a 30-year loan into a 15-year loan. You’ll speed up the rate at which you build equity in your home and get that much closer to being debt free. Your mortgage lender can guide you through your options and shed a lot of light on the outlook in the mortgage industry to know if now’s your best chance or if a better rate might be just around the corner.

 

But if experts are saying the economy is slowing down and may get worse…

 

We like that you’re thinking in that direction. It literally pays to be smart with your money. What would be great is if the U.S. and China could work out this trade war RIGHT after you secure that low mortgage rate. Recession crisis averted, jobs secure, and a collective sigh of relief rings out across the land.

 

 

Meanwhile, know that these industries are the ones currently most affected by the tariffs. If you’re employed in one of them, it might be a scary time to take on a new debt. As it was once said by a great king, everything exists in a delicate balance. Industries not directly affected by current economic policies may still feel some ripples. If you do take advantage of lower rates on your mortgage, your credit cards, or even student loans, it’s wise to still keep a level head. Increasing your budget and spending more than you originally had in mind is likely not in your best interest, but it may be the perfect time for you to make some reasonable investments for a better deal than you would have gotten in the past, and perhaps better than you’ll get if you wait longer.