Top 5 Myths Regarding VA Loans
One of the main reasons we started HawaiiVALoans.com was that we found that there were so many misconceptions about VA Loans. Whether it was the broker/lender giving the wrong information or Veterans finding outdated information from non-reliable websites - it was evident that for whatever reason, the facts about VA Loans were getting distorted.
Over the years - we’ve heard it all. I thought it would be a good idea to debunk the 5 most common myths we’ve heard about VA Loans:
1. “I can only use my VA Loan eligibility once”
This is by far the most common myth we hear - but this is definitely false. There is no limit on the number of times you can use a VA Loan. Now if you’ve had a VA loan previously, you need to have had your entitlement restored by paying off the mortgage (pay off balance, sell the property, refinancing into a conventional mortgage) in order to get another VA Loan. There is a possibility in which you could have more than one VA Loan outstanding at a time - but only if you didn’t use your entire entitlement on the purchase of the first property. Now if you’ve already used a VA Loan previously, you just have to keep in mind that the cost of the VA funding fee is increased from 2.15% to 3.3% (no down payment) for every subsequent use of a VA Loan. If you’ve accumulated equity on the sale of your first home, and you can put a 5% down payment the next time, your funding fee can be reduced from 3.3% to 1.5%.
2. “Sellers won’t accept my offer if they know I’m doing a VA Loan”
This was the case a few years back when it was a “sellers’ market” and it was common for sellers to get multiple offers on a property that were over the asking price. Sellers would often be reluctant to accept VA offers because they had to pay additional costs to cover the VA non-allowables. Now that the market has shifted to a “buyers’ market” - we’ve been seeing sellers more than happy to accept VA offers. In fact, since the guidelines for traditional conventional loans are constantly changing and getting tighter, sellers are more confident that the loan will be approved if the buyer is using a VA loan because the guidelines for VA Loans very rarely change.
3. “VA Loan amounts are not high enough to buy a property in Hawaii”
When I speak with military personnel who are new to the islands, many of them think that the VA Loan amount is $417,000. This was true for the continental 48 states - but in Hawaii and Alaska, maximum VA Loan amounts for 100% was actually 625,500. This past July, congress recently passed a bill which temporarily increases the maximum VA Loan amount to $793,750 for Honolulu County until 12/31/2011. With loan amounts up to $793,750 - there is no shortage of properties in Hawaii that a VA Loan can cover.
4. “Those in the National Guard or Army Reserves are not eligible for a VA Loan”
Not true. Those who have only served in the National Guard or Army Reserves may also qualify for a VA Loan - they just have to have at least 6 years of service compared to 2 years or less in the regular military (Army, Marines, Navy, Air Force, Coast Guard).
5. “I cannot qualify for a VA Loan since I’ve declared bankruptcy in the past”
Again - not true. If you filed bankruptcy but have been discharged for at least 2 years - we can disregard the bankruptcy. If it was discharged within the last 2 years, there is a possibility to still get a VA Loan if:
- the applicant or spouse has obtained consumer items on credit subsequent to the bankruptcy and has satisfactorily made the payments over a continued period, and
- the bankruptcy was caused by circumstances beyond the control of the applicant or spouse such as unemployment, prolonged strikes, medical bills not covered by insurance, and so on, and the circumstances are verified.
Now if you filed for Chapter 13 - you may be eligible for a VA Loan if:
- the applicant has finished making all payments satisfactorily.
- the applicant has satisfactorily made at least 12 months’ worth of the payments and the Trustee or the Bankruptcy Judge approves of the new credit.
These are just 5 of the most common myths we hear about VA Loans. If you have a question about VA loans - feel free to contact us. No VA question is a “stupid” question.
Buying vs. Renting: Which is More Expensive Upfront?
Having little to no money in the bank can be one of the main deterrents to homeownership. In this case, the logical option would be to rent since it would be less cost upfront, right? Well, if you are eligible for a VA Loan, this may not be necessarily true. Let’s do the math!
Meet Cindy, Joe & Mark
Cindy & Joe are both looking to buy a $500,000 property. Joe is eligible to finance the purchase through a VA Loan. Cindy on the other hand is not VA eligible, and will purchase via a conventional mortgage.
Now Mark is eligible for a VA Loan but feels like he can’t afford the upfront costs of buying a home right now, so he’s looking to rent. He’s looking to rent a home for about $2500, which is comparable to the $500,000 property that Cindy & Joe want to purchase (see rentometer.com).
Top 4 Ways To Use a Seller Credit
Right about now, you’re probably getting tired of reading headlines about how bad the real estate market is and that the financial world is on its way to a meltdown. Me too, but there’s another side to all of this, and one that you, on main street, can turn to your advantage. Guess who else is aware of this phenomenon. That’s right, every seller of a home currently listed for sale. Credit is tightening for other loan programs and, in many pockets, prices are lower than they have been in years.
As a VA eligible homebuyer, you can purchase one of these homes at a value not seen in years…and with potentially very little out of pocket expense. How so? Not only can you negotiate on price when buying a house, there’s another tool that can make getting into a home much easier, seller credit. A seller credit is an additional sum of money paid by the seller for you to use to pay the closing costs on your loan. Make sure to discuss this with your real estate agent.
VA Homebuyer Seminar
When we started HawaiiVALoans.com - our vision was to make it as easy as possible for those who may be eligible for a VA Loan to learn the basics of the VA Loan program; who’s eligible, the benefits of a VA Loan & how the home buying process works.
Step one was to create our site, HawaiiVALoans.com & the VA Loan Blog that has a wealth of information, tips and tools. Step two was to create our 21-page eBook - “VA Homebuyers’ Guide - Understanding Your VA Loan Benefits & the Home Buying Process” and so far, we’ve received great feedback on how informative this guide has been. Finally, we are at step three. In an effort to continually provide more FREE information to those who would like to learn more about the VA Guaranteed Home Loan program, we will be doing a free VA Homebuyer Seminar, which we plan on holding every month.
What Can Your Housing Allowance Buy (8/13/08)?
This is our second installment of our segment, “What Can Your Housing Allowance Buy?”, in which we feature properties currently for sale and determine what pay rank in the military you need to be in order to have your housing allowance cover the the mortgage payments (with no down payment).
Today’s property is beautiful executive home that is listed roughly a $100,000 below the current tax assessed value ($694,200).
Ocean Pointe, Ewa Beach - $599,000
91-1051 Kaikala Street
Ewa Beach, HI 96706
Land: 4,491 sqft
Interior Living Area: 2,131 sqft
Bedrooms: 4
Bathrooms: 3/1
Monthly Taxes: $200
MLS #: 2813378
Description: Short Sell. New Ocean Pointe executive home never lived in! Home has over $73k in upgrades through the developer including recessed plantation shutters, 16 & 20 inch ceramic tiles throughout, Corian Countertops, and best of all a detached 2 car garage with separate mother-in-law studio or guest suite/game room.
What Can Your Housing Allowance Buy (7/9/08)?
In our previous blog post we explained how homeownership may not be as hard as you may think - especially if you are eligible for a VA Loan. We touched on a few benefits of VA Loans which include 100% financing as well as reduced closing costs. We also explained that current military personnel have an added benefit in that they already receive a monthly housing allowance to pay or subsidize their rent or mortgage payments.
Today HawaiiVALoans.com is introducing a new segment to our blog called “What Can Your Housing Allowance Buy?”. With this, we will feature a specific property for sale to give examples of how much buying power one would have by just using their monthly housing allowance to cover their mortgage expense (with no down payment).
Mahi Ko at Waikele - $349,000
94-529 Lumiaina Street, #D101
Waipahu, HI 96797
Living Area: 830 s.f.
Lanai (Patio): 92 s.f.
Bedrooms: Two
Bathroom: Two
Parking: Two
MLS #: 2810757
Description: Exceptional Value: GROUND floor, CORNER unit with fenced large yard and patio-great area for BBQ. Ready-to-move in condition freshly painted, with laminate flooring and w-w carpet. Renovated kitchen w/new granite counter top, cabinets, refrigerator and washer- dryer, microwave oven. Hall bathroom: new vanity, toilet, ceramic flooring. Updated light fixtures in living room & kitchen.
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