The term “Loan to Value” or LTV is frequently used in the mortgage industry to determine the percentage of the financed amount in relation to the current market value of a property. In comparison to other popular mortgage programs, the VA program enables veteran borrowers to secure financing at a 100% LTV. This increased LTV allowance provides more flexibility for cash-out options, ultimately enabling a smoother path towards achieving financial goals with the most favorable terms available.
Private Mortgage Insurance is required for most mortgage programs with less than a 20% down payment. With VA's mortgage guarantee, monthly PMI isn't required.
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VA mortgage rates often time have lower interest rates that comparable conventional mortgages with similar borrower qualifications.
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The VA program qualifying standards for income, credit, and assets are more flexible than most mortgages, making loan approval easier.
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Jumbo loans are high balance loans based on the Fannie Mae/Freddie Mac conforming limits set on a per county basis. The VA doesn't impose any limitations so qualified veteran borrowers can borrower higher loan amounts without a required down payment.
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VA loans are a unique type of mortgage loan that offers some significant benefits over other conventional mortgage loans. For instance, VA loans come without the burden of expensive private mortgage insurance premiums that are typically required for most mortgage loans if the down payment or equity in the property is less than 20%. This means that VA loans are a more affordable and accessible option for eligible veterans, active-duty service members, and their families looking to purchase or refinance a home. As a result, VA loans are an ideal choice for those looking for a flexible, budget-friendly, and secure way to finance their home purchase or refinance.
It is important to know that VA mortgage rates often have lower interest rates compared to conventional mortgages, even when the borrower qualifications are similar. This is because VA loans are guaranteed by the Department of Veterans Affairs, which lowers the risk for lenders and ultimately results in more favorable rates for borrowers. By choosing a VA mortgage, you could potentially save a significant amount of money over the life of your loan in comparison to a conventional mortgage.
As a former service member, you may have wondered whether buying a home is even possible given the stringent qualifying standards of most mortgage programs. Luckily, the Veterans Affairs (VA) program is an exception. The VA loan program offers more flexibility when it comes to assessing applicants’ income, creditworthiness, and assets. This means that you potentially have more options for obtaining a home loan than you might expect. Whether you’re currently on active duty or a qualifying spouse, you may be eligible for a VA loan that could make the home buying process much easier. With the VA program, you can potentially achieve your dream of home ownership without the roadblocks of traditional mortgages.
Jumbo loans are a type of mortgage loan that can provide borrowers with more purchasing power, allowing them to buy homes that may be expensive for ordinary mortgage loans. They are known for their high balance, which means they exceed the limits set by Fannie Mae or Freddie Mac on a county basis. This type of loan is typically used for luxury properties and high-priced homes. For veterans, jumbo loans can offer even more benefits, as the VA doesn’t impose any maximum loan limitations. This means that qualified veteran borrowers can borrow higher loan amounts without a required down payment. With a VA jumbo loan, borrowers can obtain the financing they need to purchase their dream homes, without limitations.
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The VA permits a variety of uses for cashout refinance proceeds.
Consolidation mortgages, credit cards, or other consumer debt in to a lower more convenient payment.
Finance home improvement projects with a wide range of flexibility.
Invest in yourself of your children's future by finance higher education expenses.
Invest in real estate, stocks, or other investment vehicles with a higher rate of return.
Refinance from another mortgage program to the VA with better terms.
Flexibility to choose what you'd like to use for the cash proceeds.
Loan seasoning applies to all cash-out refinancing VA loans. A loan is considered seasoned if both of the following conditions are met as of the date of loan closing:
Exception to the seasoning requirements.
A cash-out refinancing loan is a VA-guaranteed loan that can assist homeowners in refinancing any lien or liens against their secured property. This can include mortgage liens such as VA, FHA, or conventional, or even liens related to tax or judgment against the property.
However, it’s important to note that a property without a lien is ineligible for this type of financing. This is not a requirement we’re particularly fond of at our bank because most mortgage programs don’t have this type of restriction.
It is important to note that the VA mandates that all VA loans must be held in 1st lien position.
Every VA cash out refinance must pay one of the following net tangible benefits test listed below and also include a loan comparison and home equity disclosure to the veterans.
Fee recoupment applies to refinancing loan in which the loan amount (including VA funding fee) does not exceed the payoff amount of the existing VA loan being refinanced . The lender must certify that the recoupment period of fees, expenses, and closing costs (included in the loan and paid outside of closing), divided by the principle and interest monthly savings do not exceed 36 months from the date of the loan closing.
The veteran must certify that he or she intends to personally occupy the property as his or her residence.
In order to determine the current market value of the home, a VA appraisal is necessary. Additionally, the property must meet the minimum property requirements as set out by the VA. Depending on the location of the subject property, further inspections may be required for wood destroying insects, well water, or septic.
In order to secure a VA loan, it is important for the veteran borrower to meet the required income and credit qualification standards set by both the VA and the lender. These standards are similar to those that must be met when purchasing a home, and they ensure that the borrower can afford to repay the loan and is creditworthy.
Texas state regulations place specific restrictions on mortgage refinancing, with cash-out refinances limited to an 80% loan-to-value. Such mortgages are referred to as Texas A6. As Texas views the VA program as a federal guarantee, it enforces strict regulations prohibiting VA cash-out refinances that involve cashback or paying off further debt, aside from the first mortgage lien at closing.
Ultimately, Veterans in Texas may only refinance a non-VA mortgage to a VA mortgage or a VA to VA streamline without any cash back at closing.
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Community First National Bank
11900 W. 87th Street Pkwy, Suite 115
Lenexa KS 66215
