Recently the office of Veteran’s Affairs announced a few updates to the VA loan program and now an extension of the tax credit is still available for active members of the armed service. This is very difficult information to find and I wanted to post this out there for all of the men and women that serve our country. They deserve our thanks and help in manners like this that can help them own a home.
Here are some of the details that I was able to find:
- Tax credit is good until April 30, 2011. This means an accepted offer has to close by this time.
- No repayment penalty of the tax credit
- You don’t have to live in the home for 3 years. This can be due to a variety of different reasons (reassignment, etc)
VA Loans are still available and are the only loans that are offering 100% financing. 100% financing still means that the veteran can have closing costs, escrow of taxes, and many other costs that will need to be brought to the closing table. A great way for these to be covered entirely or partially is asking the seller to pay up to 3% of the purchase price in closing costs and prepaid. A great resource is http://www.benefits.va.gov/homeloans/docs/2010_county_loan_limits.pdf for loan limits. Here are some other guidelines with a VA Loan:
- Loan limit of $417,000 unless you live in any of the other high cost counties (see the pdf above.)
- No private mortgage insurance
- 100% Financing
- No Mortgage Insurance
- No Minimum Investment or Down Payment needed from the buyer
- Lenders are limited to only charging 1% Origination Fees
- Seller must pay the entire escrow fee (Lender pays this if it’s a refinance)
- If the property does not appraise for the sales price, the Veteran’s earnest money is protected
- No Credit Report or Appraisal needed for VA Interest Rate Reduction Refinance Loan (A VA-to-VA refinance with no cash-out. Often called VA Streamline refinances).
- Low rates
- No limit in seller’s concessions used to pay Veteran’s closing costs
- 4% Seller’s concessions for non-VA costs as well as Veteran’s debt (That’s right, the seller can pay off some of the veteran’s debt in the transaction).
- Can be used for a Stick Built House, Manufactured home (must be on land), Condo, Townhouse, and multi-family from 2-4 units
- No Funding Fee for disabled Veterans (It doesn’t matter if the veteran is 10% disbaled or 100% disabled, they won’t be charged a Funding Fee).
Here are some basic guidelines for a VA loan( check with a VA lender to get all of them):
- Most lenders will want the Veteran to have at least a 620 credit score
- You must be 3 years separated from a foreclosure
- You must be 2 years separated from a Bankruptcy
- The Veteran should have at least 3 tradelines on credit to review.
- Nobody can be on the VA Loan with the Veteran other than a Spouse
- Surviving Spouses of deceased Veterans with VA Benefits can also use a VA Loan
- VA Loans are assumable, which means you can sell the house and pass the loan to another Veteran as long as they can cover the difference between the sales price and the existing loan.
- VA Funding Fees, which is a fee that goes directly to the Department of Veterans Affairs, varies depending on whether the Veteran was full-active duty or reserve, how much the Veteran puts down, the type of transaction (Purchase, Streamline refinance or Cash-out Refinance) or if the Veteran is disabled.
Whether you are looking for a home, condo or income property, finding a local lender and local Realtor will help you in the process. Please feel free to pass this along. It is really important that veterans understand all of the benefits available to them.
Article originally appeared on Charlie’s Madison real estate news blog
Thank you for reading the First Weber Wisconsin real estate blog for information on VA loans to help veterans buy real estate in Wisconsin.