Mortgage Industry Tightens Up, But VA Loan Program Marches On With Best Terms
VA Loans Hawaii owner Tony Dias supplies an interesting statistic regarding home ownership among U. S. Veterans. Although the rate of home ownership among the public at large in America is nearly 70 percent, approximately 82 percent of our veterans own their homes, according to the Mortgage Bankers Association.
While the subprime mortgage meltdown and ensuing financial crisis created a restrictive credit environment and made it significantly tougher for some prospective borrowers to purchase homes or to refinance existing mortgages, VA Loans have continued to be a reliable resource of financing for America’s veterans and their families.
VA loans are consistently easier to qualify for than other loan products. Veterans and active duty service members are not required to hit strict credit or income criteria to participate in the program. Credit history plays less of a role in determining their eligibility for home ownership than it does for other borrowers.
These loans also come with significant financial benefits…clearly, the most powerful is the “signature” VA Loan benefit that enables qualified borrowers to purchase a home with no money down. Additional benefits include no PMI, or private mortgage insurance, as VA guarantees 25% of the appraised value of the home, and no prepayment penalties. Cash out refinances are available at up to 90% of the appraised value of the home (up to $741,250 in Honolulu County, $625,500 in all other Hawaii Counties). Veterans with a disability rated at 10% or higher are exempt from funding fees.
“Given the current lending environment, it’s hard to believe anyone can buy a house today without shelling out money up front, but in fiscal 2010 nearly 90 percent of the VA loans were issued with no down payment,” Dias said.
Dias pointed out that VA loans have the lowest rate of foreclosure of any product on the market, due in part to VA educational and counseling programs. But he noted that successful home ownership among veterans can also be attributed to the military lifestyle. “Order, structure, and obligation are deeply ingrained in most service members. That conditioning tends to follow them throughout their lives, including when the time comes to take on the responsibilities of home ownership and make the required mortgage payments.”
“What’s really amazing,” Dias said, “is that despite their wide-ranging benefits, VA loans have been utilized by only a fraction of the nation’s 24 million veterans. Fewer than 10 percent have taken advantage of the program to purchase or refinance a home. When we hold our VA Loan seminars, we find that many of the attendees are not aware of all the benefits or their own eligibility to take advantage of them.
“In our seminar presentations, I always include a segment on ‘dispelling VA Loan myths.’ One such myth is that you can’t use your VA Loan benefit twice or at the same time. Recently a military family who had been told about our seminars attended and asked during the question and answer period whether they would have to sell their house on the Mainland, which had been financed through VA, in order to buy a home in Hawaii with a VA Loan. They had a great deal on the Mainland with a house they had purchased with a $180,000 VA Loan and which they now had rented out, creating a positive cash flow. They had actually been looking into an FHA loan based on this misinformation. I explained that they were still entitled to an additional loan of as much as $561,250 under VA. They applied for the VA Loan, were approved, and they now also own a home in Ewa Beach. Every such success story really energizes us, but especially in cases like this one since the husband is a disabled veteran and they almost made what would have been a bad financial move.”
Dias estimates that more than 1,000 veterans have attended the free monthly VA Loans Hawaii seminars. For information on the two seminars coming up in June, to make reservations, or to inquire about the latest VA Loan terms, call Tony Dias at 676-8254.