Common Questions about VA Loans – Interview with Duff Dyer
We interviewed Duff Dyer (NMLS 68583), a loan officer at Oxbow Financial Group, about the new changes to the VA loan program. Duff goes over some of the details pertaining to VA loan limits, funding fees, up front payments, as well as qualification details like required documents and loan eligibility.
There is a limit to how much can be financed through a VA loan, depending on the county that the property is located in. Have these VA lending limits changed for 2013?
The VA loan limits actually vary based on the county in which the property is located. The “general” loan limit for a single family residence is $417,000.00. But as an example, the loan limit in King and Pierce County (WA) is now $500,000.00. In San Juan County it’s $468,000.00. With technology today, it’s very easy to look up the respective loan limits by county. The current loan limits were increased back in 2010.
Although VA loans don’t require a down payment, are there any up-front fees required of borrowers who are purchasing a home with a VA loan?
There are NO up-front fees. In fact, VA is the one loan option that does not require that the appraisal be paid for up front. The VA appraisers will generally send a copy of the invoice along with a copy of the appraisal to escrow and it will/can be paid at closing.
Have the required VA funding fees changed for 2013?
The VA funding fees have changed, but not since September of 2011. Currently the VA funding fee for first time users is 2.15% of the base loan amount (or purchase price). For 2nd/3rd time users the fees is increased to 3.30%*. However, these funding fees vary drastically based on if a down payment is brought to the table and/or if the veteran qualifies for a reduction in the funding fee due to a disability due to his/her military service.
Let’s assume the buyer has previously purchased a home with a VA loan, but it was ten years prior. The buyer wants to sell this home and purchase a new one. Can the buyer use a VA loan to purchase another home?
You may use your VA eligibility as many times as you like. However, you can never have 2 VA loans at the same time. If a borrower currently has a VA loan and wants to use it again to buy another home, he/she must sell the current home or pay off the current VA loan prior to the closing of the new VA mortgage. And yes, this can be done simultaneously if need be.
Is there private mortgage insurance required for VA loans?
The is NO PMI or private mortgage insurance on VA loans. The funding fee is essentially the required insurance that VA collects.
If somebody has found a house and comes to you to get qualified for a VA loan, which documents do you require they have?
The minimum required documentation to get pre-approved or pre-qualified for a VA loan should be a copy of the following: Most current LES (or pay stub), Last 2 months bank statements (all pages), photo and/or military ID, most current year end W-2 form. There are a few other items that we like to collect, but aren’t necessarily required at this point.
In general, can VA loans be processed very quickly or are they difficult to obtain?
VA loans can/should be processed in the same amount of time as any other loan. Unless there are unforeseen issues that can arise, a VA loan should be processed in the same amount of time as any other type of mortgage.
Any other info about VA loans that you would like to add:
I think it’s imprtant to note that VA does not actually “loan” the money to the borrower at this point. They simply guarantee that in the event the borrower defaults on their mortgage, the bank or lender will be made whole. VA does not set the interest rates, or the fees. Those are all established by the banks/lenders.
*source: VA Handbook