• Document: VA Guaranteed Home Loans
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VA Guaranteed Home Loans Satellite and Streaming Video Lender Training "VA 101: Home Loan Program Basics" November 18, 2009 Student Materials U S Department of Veterans Affairs – Veterans Benefits Administration Loan Guaranty Service Training Unit - 264B http://www.benefits.va.gov/homeloans/broadcast.asp 1 of 21 Table of Contents Table of Contents 2 Eligible Loan Purposes and Loan Types 3 Advantages of VA Guaranteed Loans 4 Nature of the VA Home Loan Program 5 VA Home Loan Guaranty Program 6 Advantages of VA’s Automated Systems 7 VA Guaranty 8 Types of Lenders 9 Who is Eligible? 10 Electronic Certificate of Eligibility 11 Property Eligibility 12 Properties Not Eligible for VA Loans 13 The Appraisal System - TAS 14 Energy Efficient Mortgages 15 Refinance Comparison 16 Registering for the Veterans Information Portal 17 Contact Information - Regional Loan Centers 18 VA Assistance Programs 20 Web Site Directory 21 2 of 21 ELIGIBLE LOAN PURPOSES AND LOAN TYPES VA loans may be used for the following purposes: ~ To buy an existing home, including a townhouse or condominium unit in a VA-approved development. ~ To build a home. ~ To simultaneously purchase and improve a home. ~ To improve a home by installing energy-related features ~ To refinance an existing home loan. ~ Cash-out refinance. ~ Reduce the interest rate (Interest Rate Reduction Loan or Streamline) ~ Hybrid Adjustable Rate Mortgage ~ Adjustable Rate Mortgage ~ Convert an adjustable rate mortgage (ARM) to a fixed rate mortgage. ~ To purchase a multi-family property (up to four units). The veteran must occupy one of the units as his or her primary residence. 3 of 21 ADVANTAGES OF VA GUARANTEED LOANS No down payment Loan Maximum may be up to 100 percent of the VA established reasonable value of the property. However, due to secondary market requirements, VA loans generally do not exceed the Freddie Mac conforming loan limit for a single-family residence (currently $417,000 and $625,500 for Alaska, Hawaii, Guam and the Virgin Islands).* Flexibility of negotiating interest rates with the lender. No monthly mortgage insurance premium to pay. Limitations on the buyer’s closing costs. An appraisal that informs the buyer of the property value. Thirty-year loans with a choice of repayment plans: ∗ Traditional fixed payment: Constant principal and interest; increases or decreases may be expected in property taxes and homeowner’s insurance coverage. ∗ Graduated Payment Mortgage (GPM): Consists of low initial payments that gradually rise to a level payment starting in the sixth year. ∗ Growing Equity Mortgages: (Available in some areas) Consists of gradually increasing payments with all of the increase applied to principal, resulting in an early payoff of the loan. ∗ Hybrid Adjustable Rate Mortgage (HARM): Effective until 9/30/12. ∗ Traditional Adjustable Rate Mortgage (ARM): Effective until 9/30/12. For most VA loans for proposed construction, construction is inspected at appropriate stages to ensure compliance with the approved plans An assumable mortgage, subject to lender or VA approval of the assumer’s credit. Right to prepay loan without penalty. VA performs personal loan servicing and offers financial counseling to help veterans avoid losing their homes during temporary financial difficulties. *See our website (www.benefits.va.gov/homeloans/new.asp) for higher cost county limits for 2009. 4 of 21 NATURE OF THE VA HOME LOAN PROGRAM VA DOES NOT LOAN FUNDS DIRECTLY TO VETERANS Exceptions: NADLP - Native American Direct Loan Program (for properties on trust lands) SAH - Specially Adapted Housing grant program (for eligible service-connected veterans with loss of use of both lower extremities or both upper extremities above the elbow) SHA – Special Home Adaptation grant program (for eligible service- connected veterans who are blind or have loss of use of both upper extremities) TRA – Temporary grant, up to $14,000, to allow a veteran to adapt a house that they do not own. It must be used in a family member’s home or in a rental property that the veteran does not intend to live i

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