To understand a VA loan. We need to understand the meaning of Certificate of Eligibility and VA Loan Entitlement because these two are separate things.
Certificate of Eligibility: on case of a VA loan means whether the Veteran has served appropriate length of time and service to be eligible for Home Loan Benefit.
Certificate of Eligibility can be obtained online by the Veteran himself. go to our site and fill up what it asks for and you can have it in a matter of seconds.
So what does the Certificate of Eligibility tell a Lender:
It tells the lender whether the Veteran is to be charged any Funding fee or not or is he exempt.
The lender uses the document as proof that the veteran is eligible for home loan benefit.
The COE also states the amount of Entitlement for mortgage. The basic Entitlement is $ 36000 and if the borrower has used the benefit while obtaining a home previously that he may have sold now. All he has to do is re instate the entitlement.
VA loan entitlement: is the amount that a Veterans Association is willing to guarantee for the Veteran towards mortgage. Such a Guarantee makes the VA lender safe because it has a VA guarantee that of the borrower fails. The VA will make good the sum.
VA entitlement has two basic parts: Basic and Bonus
If you are eligible for VA home loan and you have never used the program then you have Basic and Bonus entitlement. The $ 36,000 figure that you see on the COE refers to the Basic entitlement. That is VA’s maximum guarantee for loans up to $ 144,000. Bonus entitlement is over and above your basic to the amount no more than $ 68,250. This additional entitlement is used only when the loan amount on the mortgage is between $ 144,000 to $ 417,000.
Basic and Bonus Entitlement together are enough for VA Loan of $ 417,000 or more.
A seasoned loan officer can help you arrive at the maths as to how much loan is backed by VA based on entitlements.
As a rule of thumb is usually 4 times the basic and Bonus entitlement.
$ 36000 X 4 = $ 144,000
$ 70,025 X 4 = 280,100
Together it becomes $ 4244,000 of mortgage backed by VA.
VA Loan Closing Cost: An added benefit
IN case of a VA loan. A veteran is supposed to pay only the cost as required by VA rule. They are not supposed to pay all the fee as is the case in other type of mortgage.
Fee that the veterans are supposed to pay can be remembered as ACTORS:
Appraisal
Credit Report
Title Insurance
Origination Fee
Recording Fee
Survey Fee
Generally these are the kind of fee that one will find most of the VA mortgage
There are other like the below that go into doing the VA mortgage but the Veteran is not supposed to pay the fee and is generally absorbed by the VA lender give discount to the Veteran.
Attorney Fee
Underwriting fee
Escrow fee
Processing Fee
Document fee
Tax service fee
You can contact your CA mortgage expert to get you the lowest mortgage rate on your refinance.
For more information visit www.affordable-payment.com or call 323-705-3191 if you are a California Mortgage borrower.
Article by Roger Shanker
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