VA Home Loan Tips For Buyers And Sellers
Kapolei Branch Manager
Mann Mortgage, LLC
Why are VA home loans so popular now?
There were previously many 100% financing options that appeared more appealing to buyers and sellers. After the meltdown of investors on the secondary market (Wall Street), these products went away. Now with second mortgages all but gone and conventional 100% financing out the door, not to mention the upcoming rezoning of USDA approved areas, VA loans will be more popular than ever.
Great things to know about VA Loans
The VA loan is a mortgage guaranteed by the U.S. Department of Veteran Affairs (VA) to military service members. It’s a benefit to you as a Veteran. Go use it! VA Home Loans require zero down to purchase prices up to $750,000, and you can do loans much higher with little money down compared to conventional Jumbo financing. The credit requirements are still very flexible with some lenders allowing as low as 620 FICO credit scores as long as the borrowers have had clean credit for a year and are able show the ability to repay the home loan. Another very cool item to know is that there is no mortgage insurance to pay monthly. This will definitely save you as a borrower a lot of money.
Tips for the VA home loan buyer
Look into your eligibility status or your certificate of eligibility. Most lenders can look this up at no cost to you.
Make sure that you are working with a Realtor who is familiar with VA loans. With the property inventory as tight as it is, you do not want to have your offer kicked to the curb due to incorrect verbiage on the purchase contract. I know some great Realtors if anyone out there needs a referral.
Work with a lender who has experience with VA loans. Make sure the lender is paying for the VA non-allowables for the seller. Most Mainland lenders, though they have great name recognition, do not do this. This is absolutely key in making your offer stand against conventional financing offers.
Understand your closing costs. Most of the time you should be working with lenders who have options to help you with your closing costs. Some lenders charge you a 1 percent origination fee to cover VA non-allowables; however, I have yet to charge a veteran the origination fee. We find other ways of covering the VA nonallowables for the seller.
Although most VA loans don’t require a down payment, there are closing costs. You will have the normal closing costs less the non-allowable fees. If you have a zero point loan, you should estimate around 1% in additional standard closing costs plus the VA funding fee that is rolled into your loan.
Here are some of the non-allowable fees that cannot be charged by the lender or the seller and that are most applicable to loans in Hawaii:
-Buyer’s portion of the escrow fee
-Lender processing, underwriting, and document preparation fees.
Lastly, make sure you and your Realtor agree that the house you are buying has a good chance of being rented out should you have to leave the Islands and are not in a position to sell. In my opinion, this is very important. Buying a house could be the best investment you will ever make, but having to sell your house at the wrong time could be one of the worst experiences as well.
Tips for the seller interested in accepting VA home loan offers
The main issue with VA loans is usually the condition of the property. Basically, it needs to be move-in ready and fully legal and permitted. Here are some other things to look for: • Do not have exposed wires or faulty electrical or plumbing issues.
• Your kitchen and bathrooms need to be intact with working appliances & normal fixtures.
• Floor must be covered—no exposed cement foundation.
• No exposed flooring, or exposed drywall or unfinished walls.
• Roof must be in good standing
• No peeling paint on the outside of the house.
• The home should have a good working water heater.
Make sure if you are selling a condo unit that the condominium building is on the VA condo approved list. You never want to assume the lender has done their due diligence. Also, CPR’d (Condominium Property Regime) properties do need to be on the condo approved list. Also, understand the appraisal process. The VA needs to issue a Notice of Value (NOV) on the property after the appraisal is completed. You have to wait for that NOV to be issued to truly see what problems need to be remedied, or even if the VA agreed with the appraiser’s valuation of the property.
Embrace the VA Home Loan
It is here to stay. The VA home loan is really a great product for veterans and for educated sellers once you get past the misconceptions. I personally feel honored to help veterans into a home and you should feel the same way too. If you have any questions about VA home loans, myself or my team are always willing to help. You can contact me, Jeff Howard, Kapolei Branch Manager, at (808) 258-7653, or find me the web at teamhowardhomeloans.com. I offer 30-day VA closing guarantees that I would be happy to share with any veteran or Realtor.