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VA Eligibility and Service Requirements
The Department of Veteran Affairs provides a guaranty, backed by the
U.S. government, on VA mortgage loans made by any qualified VA mortgage lender protecting them
from loss if the Veteran should default on the mortgage loan throughout
the United States and its territories.
The Veteran Affair's (VA's) Home Loan Program is for active duty
military personnel, veterans and certain members of the reserves and
National Guard. VA's mortgage program provides an outstanding product and
benefits for those individuals who have served or are actively serving.
VA mortgage loans may be used for your primary residence only.
Benefits for obtaining a VA mortgage loan:
- Mortgage loans for veterans at 100%(no down payment) of the purchase
price, unless purchase price is above reasonable value(appraisal).
- All closing cost may be paid by seller.
- Negotiable interest rates
- No
Private Mortgage Insurance(PMI).
- The mortgage "is" assumable by other qualified buyers, making
the process of selling easier.
- No prepayment penalties
- You may finance the VA's funding fee
- Assistance for borrowers in
default due to temporary financial
difficulty.
Drawbacks to a VA mortgage loan:
- You may have to pay a fee to the VA up to 5 percent depending on
eligibility to acquire your mortgage loan (the average fee is 2%).
- If you allow someone to assume your VA mortgage loan you will lose your
VA eligibility until that mortgage note is paid off by the party assuming the
mortgage loan. "Your
eligibility can be restored sooner if the buyer is also
a qualified veteran and is willing to substitute his/her available
eligibility for that of the original veteran."
Obtaining a VA loan with a Bankruptcy:
- If your bankruptcy was discharged more than two years ago, it may be
disregarded.
- If your bankruptcy was discharged within the last 1 to 2 years,
the following requirements must be met:
- you and/or your spouse must have reestablished satisfactory
credit, and
- the bankruptcy was caused by circumstances beyond your
and/or your spouses control (such as unemployment, medical
bills, etc.)
- If your bankruptcy was discharged within the past 12 months, it will
generally not be possible to determine whether your a satisfactory
credit risks.
Veterans Affairs (VA) Mortgage Loan limits 2009
The basic entitlement for a VA mortgage loan is $36,000. For mortgage loans that exceed
$144,000 on a purchase or construction, additional entitlement may be
available up to an amount equal to 25 percent of the Freddie Mac
conforming
loan limit for a single family home. The conforming mortgage loan limits for 2009 is
$417,000 ($625,500 for Hawaii, Alaska, Guam and U.S. Virgin Islands). This
means that qualified veterans can receive a no down payment purchase up to
these loan limits.
The veterans affair fee is currently just over two percent on no down payment
loans for a first-time use. The funding fee for second time users who do not
make a down payment is over three percent. The basic idea behind the
higher fee for second time users is based on two reasons. One is the fact
these veterans have previously used their benefit once already, and second
they've had a chance to accumulate equity or save money towards a down payment
on their next house.
| Percent Down |
Veteran Fee |
National Guard Reserve Fee |
| 0% to 4.99% |
2.00% |
2.75% |
| 5% to 9.99% |
1.50% |
2.25% |
| 10% and up |
1.25% |
2.00% |
Second use with less than 5% down requires 3% funding fee.
No funding fee is required if you are a disabled veteran.
The funding fee may be financed into the mortgage loan.
For 2009 VA county mortgage loan limits for high-cost counties
click here