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Frequently Asked Questions
What Is A VA Energy Efficient Mortgage?
It’s simply a loan feature that allows a VA borrower to borrow additional funds, whether purchasing or refinancing, to pay for energy saving home improvements.
Eligible improvements include solar water heaters, solar cooling, vapor barriers, insulation, weather proofing and storm doors/windows, among other things. Check our Blog Post, “A Mortgage That Saves Energy” for more information.
What is pre-qualification?
Pre-Qualification is the process of reviewing your income and debts to determine the amount you have available each month to service a mortgage debt – after you’ve paid your existing obligations. This establishes the maximum price of the home you may be able to buy. PreQualification is NOT a loan approval, but again, simply determines the maximum purchase price of the home you’re eligible to buy.
What is pre-APPROVAL?
Pre-Approval means that you have obtained a written lending commitment, subject to certain conditions, prior to searching for a home. Loan approval occurs after your loan application has been underwritten. Underwriting is the formal process of reviewing your present financial status and your financial history (including credit report, pay stubs, tax returns, employment history, etc)., within the context of established lending guidelines and credit scoring models, to determine whether you present an acceptable lending risk.
Pre-Approval differs from Pre-Qualification. As stated before, Pre-Qualification simply establishes the amount you’re eligible to buy. On the other hand, Pre-Approval confirms you meet all requirements and are fully qualified to purchase a home in a certain price range, as evidenced by a written conditional lending commitment. Pre-Approval also means you’re essentially a cash buyer with the accompanying gravitas and bargaining power.
Can I Use My VA Eligibility To Buy A Home With My Brother?
Yes, but with a caveat. Read further.
These are VA’s co-borrower guidelines:
- If the co-borrower is your spouse, you’re good. There are no special guidelines or restrictions beyond the standard VA underwriting guidelines.
- If the co-borrower is also a veteran who is eligible for a VA loan (married or unmarried, related or unrelated), that too is permissible with no special restrictions beyond the standard VA guidelines. In fact, two eligible veterans buying as co-borrowers can split their eligibility with each using 50% of their entitlement.
- Finally, in your case, where the co-borrower is not a spouse or an eligible VA applicant, VA will guarantee the loan with the following restriction: The VA Guarantee will only apply to the eligible veteran’s portion of the loan. Let’s assume you’re purchasing a home and the loan amount is $400,000. Normally VA would guarantee 25% of the total loan amount or $100,000 (this means that VA would indemnify your lender up to $100,000 if you defaulted on the loan). However, in this instance VA will only issue its guarantee on 50% of the loan amount, or $200,000 (remember, repayment of the other half of the loan is not promised by a spouse or VA eligible borrower). Consequently VA’s Guarantee will only cover 25% of the $200,000 attributable to the VA eligible borrower, or $50,000. Since it’s a VA loan, 25% of the total loan balance has to be guaranteed by VA or otherwise covered in the form of a down payment. So yes, VA will allow your non VA eligible brother to be your co-borrower, but would require a $50,000 down payment.
I Bought A Home 20 Years Ago Using My VA Eligibility And Sold The Home 12 Years Later. I Want To Use My Certificate Again To Buy ANother HoMe, But VA Has No Record Of The Prior Loan Being Paid. What Can I Do?
This is not uncommon. When you sold your home you should have received a Certified Closing Statement. The Closing Statement includes the preparer’s name, property address, buyer’s name, seller’s name, closing date, and a summary of the final financial details, including the name of the lender who held your prior VA loan and the amount they were paid to retire the balance in full. You should provide a copy of the Closing Statement to VA (this can typically be uploaded into the VA Portal) verifying that the home was sold along with all the details mentioned above. Normally this provides a trail sufficient for VA to confirm the payoff and restore your full entitlement.
Do I need a home warranty?
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I'm Single. I Served 12 Years In The Army, And Recently Graduated From Dental School, But I'm Still Somewhat Afraid When It Comes To Buying A Home. Any Advice?
As a threshold matter I’d start with a Rent vs. Buy analysis because your reluctance may be well grounded. Homeownership is not the best path for everyone. According to the U.S. Census Bureau, Residential Vacancies and Homeownership Report, Third Quarter 2021, 58.4% of homes are owned, and 30.9% are rentals (10.7% are vacant). So for every three occupants, two are buying and one rents. Some decided to buy, some decided to rent, and others have no choice but to rent. You have a choice, so lets weigh all the factors and determine what’s in your best interest long term. For example, what do the numbers say (does it make sense to payoff or pay down the student loans first)? What are your cultural and lifestyle demands?
After undertaking the Rent VS. Buy analysis, let’s assume you’ve concluded that buying is best for you, I’d then ask this question: What would you do if you were not afraid? I understand that obtaining a mortgage and buying a home can be daunting, but try changing the way you think about the process. You said you just finished dental school, so typically that means you completed 4 years of college and 4 years of dental school. You had to live somewhere for 8 years (96 months), right. So let’s assume you paid $1,000 per month to rent an apartment during the 96 months you matriculated through college and dental school. You’ve already proven you can handle a mortgage payment, because you paid your landlord’s mortgage to the tune of almost $100,000 in 8 years. You paid your landlord to rent the apartment you occupied. If you now buy a condo, similar to that apartment, you’ll apply for a mortgage, and pay the lender interest (rent) for use of their funds. You’re essentially going from renting shelter, to renting the money to buy shelter. When you think of it that way, it’s not that big of a step. Granted, there won’t be anyone to call when the sink gets clogged (you’ll have to handle that yourself), but the upside is you’ll enjoy the equity that accumulates as you pay down the mortgage and your home appreciates in value. I have little doubt that you can handle homeownership. Again, what would you do if you were not afraid? .
What Is The VA Funding Fee?
The VA Funding Fee is a charge imposed on all VA borrowers, except for those who are exempt. The Funding Fee is collected by the lender and paid to VA at closing. Its purpose is to support the VA Home Loan Program by helping lower the cost of the loan guarantee for U.S. Taxpayers. PLEASE NOTE: There are a number of exceptions to the Funding Fee assessment, including: 1) A veteran who receives compensation for a service-connected disability; 2) The surviving spouse of a veteran who died in service, or from a service-related disability; and, 3) Purple heart recipients. This list is not exhaustive.
The amount of the VA Funding Fee varies depending on whether the loan is a purchase or a refinance, and whether the applicant has used their eligibility before. The Funding Fee is .50% on VA Streamline loans, and ranges from 2.3% – 3.6% on VA Cash-Out loans, depending on whether it’s the first or subsequent eligibility use. On VA Purchase loans the Funding Fee ranges from 1.4% to 3.6% depending on down payment (if the applicant chooses to make one–it’s not required), and whether it’s the first or subsequent eligibility use.
My Brother-In-Law Served In The Coast Guard From 2000 - 2008. Would He Be Eligible?
Based on the basic VA eligibility requirements HE IS:
- If he served 90 consecutive days of active service during wartime;
- OR Served 181 days of active service during peacetime;
- OR He’s served 6 years of service in the National Guard or Reserves.
Usually when we think about VA Loans we think Army, Navy, Air Force & Marines, but they’re actually seven uniformed branches that are eligible to earn a VA Loan entitlement, including:
Army
Navy
Air Force
Marines
Coast Guard
National Oceanic Atmospheric Admin (NOAA)–Commissioned
Officers
Health Service (USPHS) — Commissioned Officers
Can I Use My $0 Down VA Loan To Finance a Recreational Vehicle?
No! Here’s what you can finance with your VA loan:
- Single Family Residence
- Multi-Family 2-4 Units
- Condominium
- Townhome
- PUD (Planned Unit Development)
- Modular Home
- Mobile/Manufactured Home (with the Land)
In 2018 My Wife And I Bought A Home In California Using My VA Entitlement. We've Decided To Move To Texas. My Nephew Is Also In The Military And Wants The Home. There really Isn't Much Equity. Can We Just Sign It Over To Him?
I’m not really sure what “Sign it over to him” entails, but I assume you mean deeding the home into your nephew’s name. As you know, sometimes actions have unintended consequences, and this action is fraught with peril. I understand the lack of equity, and your desire to seek a simpler solution than formally selling him the home. To effect a sale the two of you would have to absorb all the associated fees and commission.
You didn’t say anything about your nephew’s financial status, other than he’s in the military. If he’s got reasonably good credit and sufficient income I would suggest you have him assume your VA loan. In formally assuming your VA loan, he would substitute his VA Certificate of Eligibility (home loan entitlement) for yours. In addition, your name would be removed from the title to the property and you’d no longer be an obligor on the loan. You could then ask VA to restore your entitlement so you can use it later to buy in Texas. Since you say there’s no equity, he won’t have to come up with any money to pay you for the difference in the property’s value and the balance owed on the loan. He’d simply pay the Assumption Fee and provide the lender with any qualifying documents. It takes about 45 – 60 days if all paperwork is submitted timely.
This way everyone gets what they bargained for and everyone is protected. There are no real estate commissions or closing costs, just the Assumption Fee (which for VA loans is typically less than $500.00). You did your Nephew a solid. He did you a solid. And everyone’s still speaking!!
My Brother-In-Law Served In The Coast Guard From 2000 - 2008. Would He Be Eligible?
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Additional questions?
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