Eligible veterans can get long-term loans with little or no down payment, more flexible qualifying standards, and possibly, lower interest rates.  These loans are made possible by the Department of Veterans Affairs.  They are offered directly to the homebuyer via companies such as Republic Mortgage Home Loans.  Fixed loan are available.

The Department of Veterans Affairs (VA) guarantees loans offered by Republic Mortgage Home Loans to help qualified veterans, reservists, and active-duty service members to finance their homes.  VA loans are suited for veterans with:

·        Low or moderate income

·        Limited savings

2009 Washington County VA Loan Limits.

·        Kitsap $417,000

·        Pierce $550,000

·        King $550,000

·        Mason $417,000

Why a VA Loan?

VA loans offer these features:

·        A no down payment option

·        Flexible income, debt and credit requirement to help borrowers qualify

·        Down payment and closing costs that may be funded by a gift, grant or secured loan

·        A variety of fixed-rate and adjustable-rate loan options

Purchase or Refinance your home with a VA mortgage

VA mortgages, which are insured by the Department of Veterans Affairs, make home financing easier and more affordable for veterans, reservists, and active-duty service members.  They offer some of the easiest approval requirements of any mortgage, including:

·        Flexible credit guidelines

·        Expanded qualifying ratios

VA Loans are the #1 mortgage for military families.  Republic Mortgage Home Loans is committed to providing military home buyers VA loans and services. 

The more you know about our home loan program, the more you will realize how little “red tape” there really is in getting a VA loan.  These loans are often made without any down payment at all, and frequently offer lower interest rates than ordinarily available with other kinds of loans.  Aside from the veteran’s certificate of eligibility and the VA-assigned appraisal, the application process is not much different than any other type of mortgage loan.  And if the lender is approved for automatic processing, (Republic Mortgage is and automated lender), a buyer’s loan can be processed and closed by the lender without waiting for VA’s approval of the credit application. 

Additionally, if the lender is approved under VA’s Lender Appraisal Processing Program (LAPP), the lender may review the appraisal completed by the VA-assigned appraiser and close the loan on the basis of that review.  The LAPP process can further speed the time to loan closing. , (Republic Mortgage is a LAPP lender)

VA Financing – a Good Deal for Veterans.

More than 29 million veterans and service personnel are eligible for VA financing.  Even though many veterans have already used their loan benefits, it may be possible for them to buy homes again with VA financing using remaining or restored loan entitlement.

Before arranging for a new mortgage to finance a home purchase, veterans should consider some of the advantages of VA home loans.

1.     Most important consideration, no down payment is required in most cases.

2.     Loan maximum may be up to 100 percent of the VA – established reasonable value of the property. 

3.     No monthly mortgage insurance premium to pay.

4.     An appraisal which informs the buyer of property value.

5.     Thirty years loans with a choice of repayment plans:

a.     Traditional fixed payment (constant principal and interest; increases or decreases may be expected in property taxes and homeowner’s insurance coverage);

b.     Graduated Payment Mortgage - - GPM (low initial payments which gradually rise to a level payment starting in the sixth year); and

c.      Income areas, Growing Equity Mortgages – GEMS (gradually increasing payments with all the increase applied to principal, resulting in an early payoff of the loan).

6.     For most loans for new houses, construction is inspected at appropriate stages to ensure compliance with the approved plans, and a 1-year warranty is required from the builder that the house is built in conformity with the approved plans and specifications.  In those cases where the builder provides an acceptable 10-year warranty plan, only a final inspection may be required.

7.     An assumable mortgage, subject to VA approval of the assumer’s credit.

8.     Right to prepay loan without penalty.

9.     VA performs personal loan servicing and offers financial counseling to help veterans avoid losing their homes during temporary financial difficulties.

What is a VA-guaranteed Loan?

These loans are made by a lender, such as a Republic Mortgage.  VA’s guaranty on the loan protects the lender against loss if the payments are not made, and is intended to encourage lenders to offer veterans loans with more favorable terms.  The amount of guaranty on the loan depends on the loan amount and whether the veterans used some entitlement previously.  With the current maximum guaranty, a veteran’s who hasn’t previously used the benefit may be able to obtain a VA loan up to (See County Limit Chart)  depending on the borrower’s income level and the appraisal value of the property. 

What Can a VA Loan be used for?

·        To buy a home, including townhouse or condominium unit in a VA approved project.

·        To simultaneously purchase and improve a home.

·        To improve a home by installing energy-related features such as solar or heating/cooling systems, water heaters, insulation, weather-stripping/caulking/storm windows/doors or other energy efficient improvements approved by the lender and VA.  These features may be added with the purchase of an existing dwelling or by refinancing a home owned and occupied by the veteran.  A loan can be increased up to $3,000 based on documents costs or up to $6,000 if the increase in the mortgage payment is offset by the expected reduction in utility costs.  A refinancing loan may not exceed 90 percent of the appraised value plus the costs of the improvements.  

·        To refinance an existing home loan up to 90 percent of the VA-established reasonable value or to refinance an existing VA loan to reduce the interest rate.

·        To buy a manufactured home.

Who is Eligible?

Veterans with active duty service that was not dishonorable, during World War II and later periods are eligible for VA loan benefits.  World War II (September 16, 1940 to July 25, 1947), Korean conflict (June 27, 1950 to January 31, 1955), and Vietnam era (August 5, 1964 to May 7, 1975) veterans must have at least 90 day’s service.  Veterans with service only during peacetime periods and active duty military personnel must have had more than 180 days’ active service.  Veterans of enlisted service which began after September 7, 1980 or officer with service e beginning after October 16, 1981, must in most cases have served at least 2 years.

Persian Golf Conflict.  Basically, reservists and National Guard members who were activated on or after August 2, 1990, served at least 90 days and were discharged honorably are eligible.  VA regional office personnel may assist with eligibility questions.

Members of the Selected Reserve, including National Guard, who are not otherwise eligible and who have completed 6 years of service and have been honorably discharged or have completed 6 years of service and are still serving may be eligible.  The expanded eligibility for Reserves and National Guard individuals will expire October 28, 1999.  Reservists will pay a slightly higher funding fee than regular veterans. 

Remaining Entitlement. 

Veterans who had a VA loan before may still have “remaining entitlement” to use for another VA loan.  The current amount of entitlement available to each eligible veteran is $36,000.  This was much lower in years past and has been increased over time by changes in the law.  For example, a veteran who obtained a $25,000 loan in 1974 would have used $12,500 guaranty entitlement, the maximum then available.  Even if that loan is not paid off, the veteran could use the $23,500 difference between the $12,500 entitlement originally used and the current maximum of $36,000 to buy another home with VA financing.  An additional $14,750, up to a maximum entitlement of $50,750 is available for loans above $144,000 to purchase a home.

Restoration of Entitlement.

Veterans can have previously – used entitlement “restored” to purchase another home with a VA loan if:

·        The property purchased with the prior VA loan has been sold and the loan paid in full, or

·        A qualified veteran- transferee (buyer) agrees to assume the VA loan and substitute his or her entitlement for the same amount of entitlement originally used by the veteran seller.  The entitlement may also be restored one time only if the veterans has repaid the prior VA loan in full but has not disposed of the property purchase with the prior VA loan.

VA Application

The application process for VA financing is no different from any other type of loan.  In fact, the VA application form is the same as that used for HUD/FHA and conventional loans.  The mortgage lender verifies the applicant’s income and assets, and obtains a credit report to see that other obligations are being paid on time.  If all is well and the appraised value of the property is enough to cover the loan needed, the lender, in most instances, can then close the loan under VA’s automatic procedure.  Only about 10 percent of VA loans applications have to be submitted to a VA office for approval before closing.

Requirement for Loan Approval

To obtain a VA loan, the law requires that:

1.     The applicant must be an eligible veteran who has available entitlement.

2.     The loan must be for an eligible purpose.

3.     The veterans must occupy or intend to occupy the property as a home within a reasonable period of time after closing the loan.

4.     The veteran must be a satisfactory credit risk.

5.     The income of the veterans and spouse, if any, must be shown to be stable and sufficient to meet the mortgage payments, cover the costs of owning a home, take care of other obligations and expenses, and have enough left over for family support.

Costs of Obtaining a VA Loan

Funding Fee

A basic funding fee of 2.15 percent must be paid to VA by all but certain exempt veterans.  A down payment of 5 percent or more will reduce the fee to 1.5 percent and a 10 percent down payment will reduce it to 1.25 percent.

A funding fee of 2.75 percent must be paid by all eligible Reserve/National Guard individuals.  A down payment of 5 percent or more will reduce the fee to 2.25 percent and a 10 percent down payment will reduce it to 2.0 percent.

The funding fee for loans to refinance an existing VA home loan with a new VA home loan to lower the existing interest rate to 0.5 percent.

Veterans who are using entitlement for a second or subsequent time who do not make a down payment of at least 5 percent are charged a funding fee of 3.30 percent.

NOTE: For all VA home loans, the funding fee may be paid in cash or it may be included in the loan.