Posts Tagged ‘100% financing’

VA Loans: Bonus Entitlement

August 23, 2016

blog-author-clayjeffreys3

Bonus entitlement is extra entitlement that a VA loan applicant can use to buy a home under some specific scenarios. For example, let’s say someone plans to buy a new home as a primary residence prior to selling their current home secured by a VA loan. Another example would be the entitlement the borrower can use after they may have cost the VA money from a short sale or foreclosure on a previous VA loan.

So how does it work? Well, I can’t give you complete details. There is a down payment requirement for sure, but the amount of the down payment is actually determined by the loan amount and how much of their previous entitlement was used either through a loss on a short sale or foreclosure OR how much of the entitlement was used on the purchase of the previous home.

The VA provides a worksheet to use when qualifying buyers, and it varies. For example, earlier this year I worked with someone who had to use bonus entitlement due to a short sale. They also needed 100% financing. Their max purchase price wasn’t the allowable $417,000 using the normal entitlement, but was around $230,000 using their bonus entitlement. Anything above that price point would require money to be contributed as a down payment.

Another client I had this year purchase a home using a VA loan at $170,000. Based on the amount he lost the VA on a previous short sale, 100% financing wasn’t even an option at any loan amount. After using the worksheet, he needed to make about a 6% down payment on that purchase price of $170,000. Even with the short sale from several years ago, he could still buy a new home with a VA loan. While the down payment was higher (about 6%) versus an FHA loan (only 3.5%), the VA loan was a better deal for this buyer. He qualified for the VA loan without needing the funding fee, and there is never mortgage insurance on a VA loan. He would have to make mortgage insurance payments on the FHA loan.

Assuming our VA loan applicant has a qualifying credit score and meets the income requirements, bonus entitlement can be used so long as they have enough to meet the down payment requirements.

While this post doesn’t give complete specifics about how to proceed, the purpose was to let veterans and VA loan applicants know it exists and can be used.

Wanting to buy a home but denied because of entitlement? Is the home in the state of Georgia? If so, contact me today. I’ve closed clients with VA loans that were denied at other lenders by using their bonus entitlement. Make sure all of your options are exhausted before giving up.

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VA Loans: Funding Fee

August 16, 2016

blog-author-clayjeffreys3

VA loans do not require mortgage insurance, but they do have a VA funding fee… which is another way of saying an “up-front” mortgage insurance. The funding fee amount is based on the down payment being made, whether the borrower is considered a veteran or a reserve, and if the borrower has used a VA loan in the past.

There is no way to get around the VA funding fee unless the VA deems you to have a disability from military service. If so, then the fee is waived entirely regardless of whether or not the VA loan applicant makes a down payment. There are a few good things about the funding fee. First, the VA loan applicant doesn’t have to pay this fee at closing. Much like FHA up-front mortgage insurance, the funding fee is rolled into the loan amount. Second, the amount of the funding fee can be reduced by making a down payment. For example, let’s assume this is the first time a veteran has used a VA loan to buy a home.

  • With no down payment, the up-front fee is 2.15% of the loan amount. This fee is rolled into the home loan, so it is not required to be paid by the VA loan applicant at closing.
  • The funding fee drops to 1.50% when making a 5% down payment
  • The funding fee goes down to 1.25% if making a 10% down payment.

Again, this example is for VA loan applicants qualifying as a veteran status. There are different amounts if qualifying as a reserve status. The funding fee can also increase when using a VA loan on buying your next home. The subsequent VA loan use jumps to 3.30% if making no down payment, but drops back to 1.5% when making a 5% down payment. While no down payment is required, you’ll save thousands of dollars by making as little as a 5% down payment.

Regardless of the down payment, there is no monthly mortgage insurance payments ever on a VA loan.

Are you a veteran looking to buy a home? Is this home in Georgia? Regardless of the loan program you plan to use, contact me today. We can get you prequalified, look over all your loan options, and get you on your way to home ownership!

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VA Loans: How to qualify

August 9, 2016

blog-author-clayjeffreys3

VA loans are loan programs designed for those who have served our country as part of the Armed Forces. VA loans require no down payment, a 620 credit score, and one can purchase a home up to $417,000 without putting any money down.

VA loan applicants can purchase a home above $417,000, but must make a down payment of 25% of the money over $417,000. For example, let’s say someone is buying a $500,000 home. The first $417,00o doesn’t require anything for a down payment. The only money down would be 25% of the remaining $83,000, or $20,750. If you qualify, a half million dollar home could be purchased with just over $20,000 down… less than a total 5% down payment!

Who exactly qualifies for a VA loan? It is more people than you’d think.

  • Active service for at least 90 days during wartime
  • Active service for at least 181 during peacetime
  • 6+ years in the national guard
  • Spouse of a soldier who has died in combat OR died as a result of a service related disability
  • Also some personnel of Public Health Service officers and coast guard

Qualifying for a VA loan isn’t restricted to only to veterans. In fact, I closed a loan for someone earlier this year who was never in the service, reserves, ROTC or anything… he worked for the CDC in the Public Health Core of officers.

I know what you may be thinking… “Great, I qualify, no what?”

There are lots of reasons to use a VA loan if you qualify for one.

  • VA loans do not require a down payment
  • Even at 100% financing, there is no monthly mortgage insurance payment
  • The interest rate is better than a conventional loan

That is why I’ve yet to have a client not use a VA loan if they qualified for a VA loan. The only potential drawback to an FHA loan is the funding fee. More on that next time.

How do you know if you qualify for a VA loan? If you are buying in the state of Georgia, contact me today. Provide a copy of your DD214, and we’ll order your Certificate of Eligibility and get the loan process started!

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Buying a home with little money down

October 14, 2014

blog-author-clayjeffreys3

So you are looking to buy a home with as little down as possible. You have some savings, and would like to wait to save more money, but circumstances are speeding up the time frame on when you need to buy a home. Maybe you need a bigger home for your growing family. Perhaps you are moving into a new city for work. Regardless of the circumstances, you need to buy a home now.

Unless you qualify for a VA or USDA loan, you’ll need to make a small down payment. Then what about closing costs, prepaids, etc.? Let’s take a look at the minimum down payment and ways to cover the other costs of buying a home.

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While the seller can give money toward paying a buyer’s closing costs and prepaid items (more on that in a moment), the seller cannot give any money toward the down payment. The down payment itself can be as little as a 3.5% down payment using an FHA loan, or 5% if using a conventional loan.

What if you don’t have the down payment today? One option could include borrowing money from retirement accounts. Most retirement accounts allow for you to borrow money without penalty to long as you are buying a home AND you pay the money back into the retirement account. Another option would be to get a gift from a relative/acceptable gift source for the loan program.

Using one of those options (or a combination of them) will take care of the down payment, now let’s focus on finding ways to pay the closing costs (costs associated with buying a home/getting a loan) and prepaids (insurance and property taxes on the home).

As mentioned earlier in this post, the seller can contribute money toward paying your closing costs and prepaid items. The exact amount depends on the purchase price and loan program. FHA loans allow the seller to contribute up to 6% of the purchase price toward closing costs and prepaids. Conventional loans allow 3% of the purchase price when making the minimum down payment.

Another option would be doing a no closing cost loan. Between these two options (seller paying money toward closing costs and prepaids AND doing a no closing cost loan), we can get closing cost and prepaids covered.

As you can see, there are several options available to help someone buy a home without having a lot of assets at the start of the loan program. The best option is to work to save money up prior to making the home purchase, but sometimes “life happens” and you buy a home sooner rather than later.

This is why you need to work with the professionals at Dunwoody Mortgage Services. We can use any one or combination of the options outlined in this post to help get you into your new home sooner rather than later. If you are looking to buy in Georgia, contact me today to get started. We can talk about options, go through the prequalification process, and get you ready to buy your next home!

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You Can Still Buy a HUD Home With $100 Down

March 9, 2010

While virtually all of the 100% financing programs have evaporated, there still remains a great resource for securing a good value on your next home purchase and an unbelievable deal on financing.  Homes which have been foreclosed on and taken back by HUD under the FHA insurance guarantee program provide virtually 100% financing for qualified borrowers.   

These homes are made available through various designated asset management companies throughout the country.  These asset management companies then market homes for HUD through locally approved Brokers and an ONLINE bidding process.  We have recently become an APPROVED BROKER for HUD home resales

What Types of Homes are Available?

Homes available for purchase through HUD reflect the loan limits associated with FHA loans.  As loan limits have increased over the years so has the value of the properties financed with FHA loans.  Currently FHA loan limits are $346,250; which means that the homes for sale through HUD would not have exceeded $359,000 in sales price at the time they were financed.  Regardless of the area you want to live in there will generally be a HUD home of some sort there. 

Who is Eligible to Buy a HUD HOME?

Anyone may buy a HUD home including investors and non-profit community revitalization organizations.  However HUD always gives first priority to buyers who are purchasing a home to live in for a minimum of one year.  Owner occupants will be required to sign a certification reflecting this and can not purchase another HUD home for two years.  Investors may purchase as many HUD homes as they like, but are not eligible for the $100 down payment financing. 

How do I find HUD HOMES?

You may access all HUD homes available for sale in Georgia through our web site which provides access to the designated asset management company for the area.  You will need an approved HUD Broker to gain access to HUD properties. 

How do I Make an Offer on a HUD HOME?

All available homes will appear on the web site.  All new HUD home listings appear on Wednesdays and are offered for the first 12 days only to owner occupants.  Price Reduced listings appear on Friday and owner occupants are given a five day priority to purchase during that time.  Properties available for Daily Bidding are available to all buyers. 

Are There Incentives for Buying a HUD HOME?

YES.  Qualified buyers will only be required to put down $100 to purchase a HUD home.

YES.  If you use an FHA 203k loan you can also include all necessary repairs and improvements in the loan amount,

YES. You will receive a $1,000 sales allowance if you go under contract in the first 30 days that a property is on the market.  This is not available for investors. 

What is the Process for Buying a HUD HOME?

  • Get pre-qualified for a loan.
  • Get a qualified and approved real estate Broker to represent you. HUD REQUIRES YOU HAVE A BROKER.  So get a good one.
  • Go and see the properties that meet your needs and review the Property Condition Report provided on line for every HUD property.
  • Review the sales contract and forms on line and discuss them with your Broker.
  • Have your Broker submit your offer on line.
  • Have your Broker execute and deliver the signed contract and earnest money to the designated asset management company within two days.
  • Conduct your inspection.
  • Prepare to close 45 days after contract on a regular FHA loan or 60 on a 203K loan.