FAQs About VA Benefits and VA Loans

Last Edited - Tuesday, November 25, 2014 01:49 PM
By "G-II" Varrato II, RealtorŪ, Retired USAF Red Horse 820th CES
ePRO 500, ABR, RECS, Mentor
Coldwell Banker Residential Brokerage

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Here are few Questions and Answers that we often encounter from potential VA Buyers.
Do all lenders and loan officers or loan counselors fully understand the VA Loan process?
VA Transactions are not for every agent, nor are they even for 'just any ol-lender'.  The VA Loan platform has it's own set of rules and regs.  Heck, even the appraisers are given up to 21 days to complete an appraisal of a home, something that in most cases can be accomplished in 24 to 72 hours by most appraisers.
By now you know that I am retired USAF.  Not to beat our own drum, but long ago, Lori & I decided that we would make it a point to learn all we could about the VA loan process and over our 15 years, as practicing Professional Realtors, we have become something of an expert on the subject.  Many fellow Realtors, Title Agencies and Lenders call us for advise and/or our opinions concerning certain issues they encounter with the VA Process.
A quick story:  In October 2002 one of our Realtor associates encountered a lender's underwriter who was pressing for a form 1747 as a condition for loan approval.  The 1747 is a form that is only required by active duty troops who do not have a shortage of on base housing and assumes that the troop wants to live off base.  Of course Luke AFB is well over the top with its waiting list for on base housing.  Well... our VA Regional Underwriting Center had never issued a document negating the need for a 1747.  Even though I knew this form was not required because of the conditions that exist here in the state, I could not get the VA Underwriter to understand this point.  Through our connections at Luke AFB and the VA Regional Center on Central, down town Phoenix, we had the document drafted by the VA in about 24 hours.  To this date, there are still some lenders that do not know that the 1747 is not required in AZ.  But... no worries... I have the document, direct from VA Regional right here in my hot little hand... LOL
I just received my Certificate of Approval for the VA loan, it guarantees $36,000 and states that most lenders will loan 4x that amount.  It also stated that up to $24,000 can be add  to the $36k until it becomes 1/4 of the price of the house.  What's that all about?
Ya know... that darn form causes more confusion than the law should allow.  While you are correct in all that you have said and all that is disclosed on the VA COE (Certificate Of Eligibility), the actual maximum amount for which a Vet may obtain a loan is regulated by Region.  For example, here in the Valley, the maximum VA Loan Entitlement is $417,000, including the VA Funding Fee.  Not too long ago, that figure was only $240,000.   Soooo... if you want to, and if you qualify for it, under the VA Loan Platform, you can buy a house up to about $407,800.  Then, assuming you are a first time user of your VA benefit, the VA funding fee of 2.2% of the loan amount would be just under $9,200 putting your total loan right at $417,000.
Ok... I have heard that a VA Buyer can buy a house with no money down.  What does that really mean?
One of the greatest benefits of using the VA loan platform is the flexibility of entering into a contract negotiation of your prospective home under the strategic veil of the "VA No No"... LOL.  I'll explain. A "VA No No" simply means the the VA buyer wishes the Seller to pay the Vet's Closing Costs, Pre Paid Escrow Items and Discount Points and Origination Point/fee if they are part of the Buyer's loan package.
Suffice to say that all it really means is that if we find a seller who is a bit more motivated than other sellers, a sound strategic posture would be to ask the seller to fund some or all of the Buyer's Closing Costs, Pre Paid Escrow Items and Discount Points and Origination Point/fee.  Additionally, because you are a VA buyer, there are certain fees that the Feds absolutely prohibit the Buyer from paying.  That means that, either the fees don't ever come to the table from the lender and escrow company (not likely in most cases) or that the Seller will pay those 'Non Allowable' fees for the Vet.
In reality, this all means that under the right conditions, you could end up buying your new home with no money out of your own pocket, short of the earnest money deposit you tender at the opening of contract negotiations and the amount of money you will spend for your professional home inspection... and we can talk more about home inspections later too (very necessary in today's market and suicide to try and buy a home without having one)
I have a loan person that I have been speaking with about a home loan.  What do you think about me simply using the loan person that I have been speaking with? 
We have no idea of their track record, their standing with the Arizona Banking Commission or the caliber of competence their employees have in any lending platform, let alone the VA/FHA arena.  You may want to check these relationships and standings out for yourself.  As we mentioned at the beginning of this post, VA Loans are not for every or just any-ol loan officer.  This is a pretty intricate lending arena and an inexperienced loan officer could soon find that he/she has put her client, YOU, in a terrible position.  If the lender is extremely inexperienced in the VA lending platform, it is conceivable that the VA Buyer could find himself/herself in breach of their real estate purchase contract for failure to perform under the financing terms of the contract.
Do you have a preference of mortgage company?
We would like to suggest one of our favorite VA Lenders, Pacific Funding Group, Inc.  The Loan Officer who will contact you is Mark Schmidt.  Mark and we have conducted business together for the past 6 years.  He is top drawer and knows the VA program inside and out.  What he does not know, we do.  Even better, he only sends his VA Loans to one underwriter.  She too is top drawer when it comes to processing these types of loans.
While we respect that you may have some obligation to the loan officer you have been speaking with, we would really encourage you to at least allow Mark Schmidt, Pacific Funding Group, Inc. to chat with you for a short moment about your loan needs.  Then you and Pac Funding can determine if you are even a good business fit with each other.  We have included Pacific Funding in this post so they know who you are if you choose to contact them.  Be sure to let us know if and when you do contact Pacific Funding Group and Mark Schmidt. 

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This article written by "G-II" Varrato II, Coldwell Banker Residential Brokerage. All rights reserved

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