presented by: bill ladewig 866.204.9733 email site

Presented By:Presented By:Bill LadewigBill Ladewig866.204.9733866.204.9733

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Everything You Need to Know

Class Presented on 03-27-09 - Rev 01-02-12 Presented By:Presented By:Bill LadewigBill Ladewig866.204.9733866.204.9733

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Presented By:Bill [email protected]

Http://www.YourFhaGuru.com


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Presented By:Presented By:Bill LadewigBill Ladewig

Call: 866.204.9733Call: 866.204.9733Email

Website

VA was established in 1945

And, along with FHA, VA is responsible

for the high percentage of

American Home Ownership.


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Presented By:Presented By:Bill LadewigBill Ladewig

Call: 866.204.9733Call: 866.204.9733Email

Website

Quoted From VA Underwriting Guidelines:“This topic in the “VA Lender's Handbook” is intended to encourage underwriters to find ways to approve loan applications which ought to be approved but may not appear approvable upon direct application of the credit standards.”Presented By:Presented By:

Bill LadewigBill Ladewig866.204.9733866.204.9733

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VA Asks Lenders to Seek Common Sense Ways to

Approve Veteran Borrowers





The first Question Most buyers should be

asked…“Have You or Your

Spouse served in the Armed Services?”


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Benefits of A VA Loan No Down Payment, 100% Financing. No Monthly Mortgage Insurance Premiums. Leniency on Credit and Employment history. No Reserve Requirements (1 unit only). Seller can pay all Closing Costs Seller can pay off debt for borrower. 100% Gift Funds allowed. 100% Cash-Out Refinance. VA Loans do not take longer to close than other loan types.


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VA Funding Fee The Funding Fee is a charge to Veterans for the

VA to Guarantee 25% of the VA loan to the lender. The VAFF percentage is calculated on the loan

amount. The VAFF is typically financed in the loan but can be

paid in cash by Buyer or Seller. The following Veterans are exempt from paying VAFF. Veterans receiving VA compensation for service

connected disabilities. Veterans who would be entitled to receive

compensation for service connected disabilities if they did not receive retirement pay.

Surviving spouses of Veterans who died in service or from service related disabilities.


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VA Funding Fee Veteran Down Pmt % 1 st Time Use % 2 nd + Use

Purchase and Construction Loans None 2.15% 3.30% Regular Military 5% to 10% 1.50% 1.50% 10% or more 1.25% 1.25%

None 2.4% 3.3% Reserves / 5% to 10% 1.75% 1.75% National Guard 10% or more 1.5% 1.5%

Cash Out Refinancing Loans N/A 2.15% 3.3% Regular Military N/A 2.4% 3.3% Reserves /

National Guard 0.5% Interest Rate Reduction Refinance Presented By:Presented By:


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Borrower Eligibility Eligible borrower is a Veteran who:

Served with acceptable character of service, or: Is the unmarried spouse of a deceased Veteran

who died while in service or of service connected issues.

Two unrelated VA eligible borrowers can purchase together.

The Only a non-veteran co-borrower is the spouse the Veteran. No other non-veteran person may co borrow,

i.e. brother, sister, parent, aunt, uncle, significant other, etc.


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Borrower Eligibility


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Maximum Loan Amounts • Maximum 100% Loan Amounts vary in each county

up to $1,000,000 in three California Counties.• Maximum Loan includes VA Funding Fee.• Loans are available above the maximum allowable

Veteran must pay 25% down on balance over maximum allowable VA loan amount.

• Example: $650,000 Purchase San Diego. Maximum VA loan is $593,750. 650,000 – 593,750 = 56,250. 56,250 X 25% = $14,062 Down or 2%• VA Funding Fee must be paid cash when loan

is above VA maximum.• Maximum VA loans can be found at: http://www.homeloans.va.gov/docs/2009_county_loan_limits.pdf


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http://www.homeloans.va.gov/docs/2009_county_loan_limits.pdf



Refinance

Plus The cost of energy efficiency

improvements up to $6,000, VA funding fee.

100% of Appraised ValueCash Out Or, Rate & Term Refinance


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Eligible veterans can use a VA loan to refinance other loan types.



Streamline Refinance • Used to refinance an existing VA loan to a lower

interest rate or improve loan terms. No appraisal or underwriting is required. Closing costs may be financed in the loan. Any reasonable discount points can be charged, but

only 2 discount points can be financed in the loan. No cash to the borrower.

Note: A fixed rate loan to refinance a VA ARM may be at a higher interest rate.


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VA Loan Types 15 Year Fixed 30 Year Fixed 3/1 ARM and 5/1 ARM

Caps: 1% Initial, 1% Periodic and 5% Lifetime Index: 1 Year US Treasury Margin: Set by Lender


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Occupancy Owner Occupied only, except:

VA Streamline Refinance, Veteran does not need to currently occupy the property, but must have occupied the property in the past.

Occupancy by Veteran’s spouse in the case when a Veteran is stationed in a distant location satisfies the occupancy requirement.


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Entitlement and Certificate of Eligibility A COE does not expire. It can be re used again and

again if it is properly re stored. If a Veteran holds a valid COE, you can assume

she/he has appropriate length and character of service. Sometimes, the COE is annotated for individuals currently servicing in active duty.

It is possible for the Certificate of Eligibility to show an amount that is less than $36,000. In these cases, refer to the VA Lender Handbook, Chapter 2, for more details on this issue.


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CAIVRS CAIVRS (Credit Alert Interactive Voice Response

System) is a HUD system to determine if the borrower has defaulted on any federally assisted loan. A CAIVRS inquiry must be performed on all borrowers.

HUD offers online access for CAIVRS to current FHA lenders, and to VA lenders with registration. https://vip.vba.va.gov (Veterans Information Portal).


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https://vip.vba.va.gov/

https://vip.vba.va.gov/



Property Eligibility SFR, Condo*, PUD, 1 4 Units.

Units 2-4 require 6 months reserves. Manufactured Homes Check with lender. Condos must be on the VA approved condo list

before any unit in the project can be eligible for VA loan guaranty.

Condo Lookup: http://condopudbuilder.vba.va.gov/2.2/frames.html


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http://condopudbuilder.vba.va.gov/2.2/frames.html



Allowable Closing Costs The Veteran can pay:

Veteran cannot pay Escrow or Settlement Fees Lender Fees (Doc, Admin etc.) Termite report and repairs, Notary fees.

Appraisal, Recording, Credit report, Origination Fee (maximum 1%) Reasonable discount points. Flood certificate. Pre paid items, taxes, assessments and insurance. Hazard Insurance Premium


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Cash to Close Verify all liquid assets to the extent they are needed

to close the loan. VOD’s two months bank statements, gift letters and receipt, etc.

Reserves are not required on 1 unit but are helpful in determining overall credit analysis.

VOD’s two months bank statements, gift letters Seller concessions are 4% Seller may pay off debt for Veteran, provided it is

within the 4% maximum concession.


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Credit History VA Credit Guidelines are not score driven but lenders

impose their own guidelines. CAIVRs Inquiry is required on all borrowers. RMCR or MCR (3 files merged) reports are acceptable. Current Rent and/or Mortgage history. Absence of Credit History, use alternative credit Adverse credit history of non purchasing spouse is not

considered against veteran. Monthly obligations are considered due to community property state. A credit report is required on all non purchasing spouses.

Collections may not necessarily be required to be paid, upon review of explanation and any supporting documentation by borrower, this is considered on a case by case basis. Seller can pay collections.


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Credit History Continued Judgments must be paid in full, or subject to

repayment plan with timely payments (12 months). Consumer Credit Counseling 1 year payments made

with no with lates Bankruptcy discharged more than 2 years are

disregarded. Less than 2 years, must have established new and positive credit with a length of timely payments (12 months), and the bankruptcy was caused by circumstances beyond the control of the borrower.

1 year into Chapter 13 pay out. Foreclosure or Deed in Lieu, follow BK guidelines

above.


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Income and Employment Wages: require 2 year history, less than 2 years

considered case by case. Overtime income and 2nd job income generally

needs 2 year history, less than 2 years is considered case by case.

Commission: 2-year history, unless previous related employment or specialized training - 1040s required.

Self Employment: averaged 24 months, 1040’s required.

Alimony and Child Support must be verified. Seasonal jobs and unemployment may be

averaged with 24 month history of both. Other Income, pension, retirement, disability, etc. must be verified. Presented By:Presented By:


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Income and Employment Active Military income - consider base pay as stable &

reliable unless applicant is within 12 months of release of active duty. Leave and Earnings Statement is required (LES). If re enlisting, letter from commanding officer, or if leaving military, job offer letter from new employer.

Military quarters allowance can be considered income need form DD form 1747, status of Housing Availability - non taxable.

Other Military allowances - obtain verification of type and amount and length of receipt.

Income from Reserves or National Guard can be considered if the length of total service indicates a strong probability of continuance. Presented By:Presented By:


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Ratios and Residual Income Total Debt to Income Ratio (DTI) - 41% May exceed maximum DTI if loan is run through DU

with “Approve/Eligible”, or LP with, “Accept”. Additional, residual income (balance available for

family support) is calculated, with a set guide for varying family sized, according to regions across the country. When the DTI is > 41%, the residual income should be at least 20% over the stated guideline. Loans not meeting this, require very strong compensating factors.


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VA Residual Income Guideline Table of Residual Income by Region

Loan Amounts of $80,000 and Above Family N East Midwest South West Size

1 $450 $441 $441 $491 2 $755 $738 $738 $823 3 $909 $889 $889 $990 4 $1025 $1003 $1003 $1117 5 $1062 $1039 $1039 $1158

Over 5 Add $80 for each addl. member up to (7)

When DTI exceeds 41% multiply required reserve by 120%


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Income Tax Deductions Determine the appropriate deductions for Federal

income tax and Social Security/Medicare by using “Employer’s Tax Guide” charts.

Determine the appropriate deductions for state and local taxes using California Withholding charts, or applicable state materials.

State and Federal taxes at PaycheckCity.com http://www.paycheckcity.com/netpaycalc/netpaycalculator.asp


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http://www.paycheckcity.com/netpaycalc/netpaycalculator.asp

http://www.paycheckcity.com/netpaycalc/netpaycalculator.asp


Housing Expense – (P.I.T.I)CA State & Federal WithholdingMaintenance and UtilitiesMonthly Obligations Total Family ExpensesMonthly Residual Income

Required Residual Income (From Chart)DTI = 44.54

Rule: when DTI >41 actual residual income must be 120% of minimum required residual

$1,117 X 120% = $1,304 =< $1,613 OK

Income Qualification Family of 4Gross Monthly Family Income: $6,000

$2,172$1,435

$280500

4,3871,613

1,117


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Compensating Factors Compensating factors include, but are not limited to:

Excellent credit history. Conservative use of consumer credit. Minimal consumer debt. Long-term employment. Significant liquid assets. Sizable down payment Little or no increase in shelter expense. High residual income. Low debt to income ratio.


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Thank You for Attending

Services: Loan Officer – Closing Loans since 1970

Your Advantage is My Experience. All Loan Applications taken Personally. Borrowers are Counseled so they always understand their loan.

Lending Instruction Realtors: Classes can be structured to meet your office’s specific

needs Lenders: Loan Officer Classes A to Z

866.204.9733858.451.1481

[email protected]://www.Mortgage-Mentor.com

Your questions and comments on this class areappreciated.Current updates are at: http://www.YourFhaGuru.com


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presented by: bill ladewig 866.204.9733 email site

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