A number of years ago the IRS created the rule where if you occupy a house as your primary residence 2 out of the last 5 years, when you sell the house you pay NO taxes at all on the profits from the sale. This rule is perfect for active military members to take advantage of who all qualify VA loan and move every few years when they re-assigned. Every time an active military members moves to a different part of the county, they can search hard for a really good deal on a house and get 100% financing by getting a VA loan. During their 3 or more year stay in that area, they could perhaps add a little value to that house by fixing it up, etc… Then when they move to a different city, they could sell the house and pay NO capital gains.
Imagine if you did this throughout your entire military career how much cash you could amass without paying ANY taxes! And they every time you moved and made profits from the sale of your house, you could invest that savings in additional cash flow rental property or some type of other investment that earns a good yield. After moving 7 or 8 times you could easily amass a million dollars from just this practice.
Now is a much better time (than say the last 5 years) to use you VA loan benefits and get a VA loan to buy a house as the housing prices in much of the U.S have fallen by large percentages where there are some incredible bargains out there not seen in a decade. To make this “VA loan serial home buyer” strategy work, you need to do your homework and make sure you are getting a good value on a house in an area and neighborhood you feel has potential. Additionally as mentioned above, you can look for a place that you can add value to by fixing up or other methods to help force up the appreciation further.
So I hope this article makes you think about combining your VA loan benefits with the frequent re-locating involved in an active military career to increase your net worth and savings.
Some great advantages of VA loans:
- Maximum VA loans and jumbo VA loan up to $962,500 in the San Francisco Bay Area Counties, $593,750 Los Angeles, $437,500 San Diego, $593,750 Orange County (feel free to call for your county limit)
- VA loan credit score can be as low as 600 for 100% financing, you don’t need perfect credit
- VA loan interest rates for 30 year fixed loans STILL at historic lows
- VA lending has the most generous debt-to-income ratios – VA loans can allow upwards of 55% ratios where conventional with <20% down is 41% with min 720 credit
- Second VA loan (and third, fourth, etc…) available if you have paid off your first VA loan
- 100% financing on VA loans and the seller can pay all your closing costs, so you can buy with almost zero out of pocket
Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions or want to apply for a VA loan.
Warmest Regards,
Rob Chomentowski
Sr. Loan Officer (and VA specialist)
858-922-7899
“Serial Home Buyer” Strategy Perfect for Military Buyers Who Get a VA Loan is a post from: VA,FHA and Conventional Loans 858-922-7899
In the increasingly tight underwriting environment to get a mortgage loan in America, lenders are now (and have been for a while) pulling borrowers filed tax return transcripts to double verify the income submitted on the loan application matches what was filed on tax returns. This is the case to qualify for any mortgage loan, both FHA loan or conventional. Before your loan goes into underwriting, part of the initial disclosure documents you sign will be a document called a 4506T. This document gives the lender permission to request a transcript of your tax returns.
Here are some things to watch out for. If you are self-employed for example and need to count your 2009 income to qualify FHA loan, there is a delay from when you electronically file your returns with the IRS to when the transcripts will be available for a lender to pull. This delay can be from 3-6 weeks. This is important because if you are in contract to buy a property right now, and you need the lender to use your 2009 income to qualify and you just filed your returns, you loan approval could be delayed until the lender can pull that 2009 tax transcript. So make sure you get your 2009 returns filed asap if you want to get FHA loan to buy a property in the next few months.
Additionally, something to be very careful with in light of lenders pulling tax transcripts for FHA loan approval is if you claim unreimbursed business expenses. If you file a 2106 from with the IRS and claim unreimbursed business expenses these expenses have to be subtracted from your qualifying income. You can be a salaried w-2 employee and claim these expenses if you have them. When the lender pulls your tax transcripts, this will show up and could lower your qualifying income.
So now you know that lenders will pull your tax return transcripts as part of FHA home loan requirements, so make sure you are prepared.
Below are some of the advantages of FHA loans:
- FHA loan down payment is only 3.5% down payment required and that 3.5% down can be a gift from a relative
- Maximum FHA loan amount is $729,750 in many parts of California such as Los Angeles, San Diego, San Jose, San Francisco, Orange County, etc…
- FHA loans qualifications allow for a 55% back debt-to-income ratio (conventional is 41% unless 20% down), allowing you to qualify for a larger loan amount than conventional loans
- FHA loan interest rates on 30 year fixed loans are still extremely low based on temporary Government stimulus
- FHA loan credit scores allowed are much more flexible than conventional
Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions at all about getting approved for a FHA Loan.
Warmest Regards,
Rob Chomentowski
Sr. Loan Officer (and FHA specialist)
858-922-7899
When you get a VA loan it is required that you have a termite inspection done and you get all section 1 and section 2 items on the termite report fixed and then get a termite clearance report from the termite inspection company before the lender will fund your VA loan. Additionally, when you buy a home with a VA loan or refinance from a non VA loan to a VA loan, you will need to have a property appraisal done by a VA appraiser. On many occasions this VA appraiser will note on the appraisal that minor repairs have to be complete before the lender will fund the VA loan.
It is very important when you apply for a VA loan that you and your Realtor are aware and prepared for the possibilities of appraisal repair costs and termite clearance costs. Both of these costs have to be paid before you can close on the loan.
Now the question is who usually pays for these costs in a home purchase where you are using a VA financing? Is it the seller or the VA borrower? The answer is it all comes down to what you negotiate. In many cases you can get the seller to pay for both the required VA appraisal repairs and termite repairs, but in some cases you cannot. In this current market dominated by short sales and bank owned foreclosures, it is often somewhat difficult to get the seller to pay for these costs. If the seller has a choice to accept another offer that is not a VA loan (and will not have to pay for these costs), you may not have a lot of negotiating leverage, and you will need to be prepared to have to the cash on hand to pay for these costs. This negotiating is why it is important to use a Realtor experienced in working with VA borrowers, which can assist greatly with this negotiating process. I can refer you to a Realtor experienced with VA borrowers if you would like.
A minor point is the VA borrower cannot pay for the termite inspection itself (but this is a minor cost that is at most $75). But the VA borrower is allowed to pay for the termite repairs and the appraisal repairs.
The repair items that come up in VA appraisals are generally fairly minor, but can run from a few hundred dollars to even a few thousand to fix. Here is a small sample list of some common items that come up in VA appraisals that need to be fixed prior to close:
- damaged stucco fixed
- scrap and re-paint areas with peeling paint
- replace missing window screens
- replace broken windows
- replace broken closet doors
- the property has to have some kind of flooring (bare concrete not OK)
- all kitchen cabinet doors attached
- no exposed wires
- security bars removed or have quick release
So in summary, be prepared for these possible expenses or issues when you are buying a home with a VA loan or refinancing into a VA loan.
So if you have VA loan benefits and can get a VA loan, you may want to consider looking into it. Some excellent advantages to VA loans:
- VA is the only major 100% financing, zero down home financing option available today
- VA loan credit scores do not have to be perfect to get the best VA interest rates
- Interest rates VA loans are STILL at historic lows
- VA loan limits in California cities like San Jose, San Francisco, Los Angeles, San Diego and more can get up very high to above $800,000 with zero down
- The guidelines to qualify VA loan are much more flexible than conventional and FHA loans
Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions or want to apply for a VA loan.
Warmest Regards,
Rob Chomentowski
Sr. Loan Officer (and VA specialist)
858-922-7899
Termite Repairs and Appraisal Repairs on a VA Loan Home California is a post from: VA,FHA and Conventional Loans 858-922-7899
If you qualify FHA Loan, there is a good chance you will qualify for the special Homepath financing available on Fannie Mae owned properties. We are able to handle Homepath Loans so feel free to call for any questions.
Now the Homepath Loan is only available on Fannie Mae owner properties. These are properties where the borrowers had Fannie Mae owned loans and missed payments so they were foreclosed on and taken back by Fannie Mae. There are a lot of them out there all around the state of California and nationally so you will see in the listing Homepath financing available on the property. This means that this property qualifies for the special Homepath financing that we can handle for you.
Here are some highlights of Homepath financing:
- Minimum 3% down for owner occupants and 10% down for investors (although as an owner occupant you’ll want to put at least 5% down to get a better interest rate)
- No mortgage insurance
- No property appraisal required on Homepath properties
- No condo guidelines (Homepath does not care about the occupancy or any other issues with the condo that would prevent you from getting a FHA loan or standard conventional loan)
- Min credit score 660 (FHA is generally 620)
The interest rates on Homepath are slightly higher than a FHA loan. But there is no mortgage insurance, so it may end up being pretty comparable to getting an FHA loan. The credit score requirements and a little bit higher than FHA and the debt-to-income requirements are tighter than FHA. You may be able to qualify for a higher purchase price with FHA.
So if you see a property that is advertising Homepath financing, make sure you call us. Homepath properties are available in all prices ranges all over the state of California from San Francisco, San Jose, Los Angeles, Orange County, San Diego and everything in between. There are Homepath properties that are expensive coastal homes, condo’s and inland starter homes.
And here are some general benefits of FHA financing:
And here are some highlights to remember about FHA loans:
- To get a FHA loan credit score does not have to be perfect
- FHA loan interest rates are at historic lows
- You can use gift funds for FHA loan down payment
- Maximum FHA loan is $729,750, so you can get a FHA loan in expensive parts of California like Los Angeles, San Jose, San Francisco and San Diego
- Debt-to-income ratios on FHA loans are allowed up to 55% where conventional loans require 41% with less than 20% down
Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions at all about getting approved for a FHA Loan.
Warmest Regards,
Rob Chomentowski
Sr. Loan Officer (and FHA specialist)
858-922-7899
VA lending to active military and veterans remains the incredibly flexible, 100% zero down home loan it always has been as other types of home loans continue to significantly tighten their lending guidelines.
Here are some examples:
VA loan credit score:
You can still get a 100% zero down VA loan with a 600 credit score where FHA you need to be at 620 (in most cases) and sometimes 640. Conventional if you are putting less than 20% down you generally need a 720 credit score
VA loan cash out refinance
VA allows up to 90% loan-to-value on a cash out refinance where FHA and conventional loans do not allow you to go up this high on loan-to-value.
Debt-to-income ratios to qualify VA loan
VA is more concerned with a VA borrowers “residual income”, how much a VA borrower has left every month after paying income taxes, housing payment and other debt obligations. FHA and conventional home loans are more concerned with a borrower’s debt-to-income ratio. So a VA borrower can have a higher debt-to-income ratio than FHA or conventional loans would allow and still qualify for a VA loan.
So those are just three of many really significant areas where VA home loans have not changed and FHA and conventional loans have tightened substantially.
Some other highlights of VA lending:
- VA loan limits in many parts of California such as Los Angeles, San Diego, San Francisco, San Jose and Orange County can go all the way up into $900,000 range with zero down
- VA loan interest rates on 30 year fixed home loans are still ridiculously low historically
- VA loan streamline refinances allow VA borrowers to drop their rate easily once they have a VA loan
Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions or want to apply for a VA loan.
Warmest Regards,
Rob Chomentowski
Sr. Loan Officer (and VA specialist)
858-922-7899
Guidlines to Get a VA Loan Remained Unchanged Despite FHA and Conventional Loans Getting Tighter is a post from: VA,FHA and Conventional Loans 858-922-7899
As of February 1st, FHA has made some major changes to qualify FHA loan for a condo purchase. Prior to Feb 1st, to get FHA a loan a condo, the condo complex had to be on the FHA approved condo list, or if the condo was not on the FHA approved list you could apply for a FHA “spot” approval for a FHA loan on just that one unit. Now as of February 1st, if the condo is not already on the FHA approved list, you have to get the entire condo project approved. Also, every two years a condo will have to be RE-approved to stay on the FHA approved list.
There are basically two ways to get a condo on the FHA approved list and we can assist with both:
1. Have FHA itself approve the condo project
2. Work with a lender (such as us) to have the condo project approved for FHA loans
Getting the condo approved through FHA will take a minimum of 6 weeks and will require lot’s of documentation about the project. Working with a lender can speed up the process considerably.
For a condo project to be approved for FHA loans and get on the FHA condo approved list, the condo project has to meet a checklist of requirements. I won’t talk about the entire checklist here, but I will mention some of the major qualifications a condo will need to meet:
1. Owner Occupancy percentage requirements
51% or more of the units must have owners living in the unit as their primary residence. This is generally information the condo HOA keeps on record. Not meeting this occupancy requirement is the #1 reason condo’s fail to be FHA approved (and approved for conventional loans as well for that matter).
2. FHA loan concentration
Only 50% of the units in the project can have FHA loans on them. There some exceptions to get up to 100% FHA loan concentration.
3. Number of Units Owned by one owner
No one entity can owner more than 10% of the condo units in the project.
4. Percentage of Owners Late on HOA Dues
No more than 15% of the owners/units can be late on their HOA dues. This is also a big one that disqualifies many projects.
So those are the top four areas that have to meet FHA specifications for a condo to be FHA approved.
Here are some of the benefits of using FHA financing:
- FHA loan interest rates on the 30 year fixed loans are still ridiculously low!
- Maximum FHA loans in many parts of California go up to $729,750. So you can get FHA loan on a condo in places like San Francisco, Los Angeles, San Diego and Orange County with 3.5% down up to a $729,750 FHA max loan amount
- FHA loan credit score does not have to perfect, but it does help if your score is 620 or above
- FHA loan down payment is only 3.5% and that can be a gift from a relative
- FHA loan approval is a lot easier than conventional loan approval. You can have a lower credit score, higher back end debt-to-income ratio, and still get 30 years fixed rates as good as conventional loans!
Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions at all about getting approved for a FHA Loan.
Warmest Regards,
Rob Chomentowski
Sr. Loan Officer (and FHA specialist)
858-922-7899