Homeownership May Be Easier Than You Think
Our main goal here at HawaiiVALoans.com is to educate current military personnel and Veterans about their VA Loan Benefits. When you look at the benefits that the VA Home Loan Program provides compared to doing a conventional mortgage - you truly realize how advantageous it is to be a VA eligible home buyer.
In addition to these benefits, most current military personnel have another great advantage in that they currently receive a monthly housing allowance to pay or subsidize their housing payments. This housing allowance, also known as BAH, can range from $1491 - $3419 per month depending on rank and whether this person has dependents or not.
The VA Funding Fee
In our last post I wrote about how on conventional mortgages, a borrower not putting at least 20% down is required to pay for Private Mortgage Insurance (PMI). The cost of PMI will increase the borrowers monthly payments an average pf $150 - $400 per month depending on the loan amount and down payment.
We also discussed how with VA loans, the home buyer is not required to pay for this PMI since the VA Department serves as the insurance backer on these loans. So how does the VA Department insure all these VA loans without being a burden on the US taxpayers? They do this by charging a VA Funding Fee.
The VA Funding Fee is a one time upfront cost that the VA Department charges the borrower on every VA transaction. This fee is collected and pooled into a fund that is used to repay any losses (up to 25% of the original loan amount) that the mortgage lender has incurred when VA loan goes into default and lender has to either short sell or foreclose on the property.
How Much Does the VA Funding Fee Cost?
The cost of the VA Funding Fee depends on three main factors:
- Whether the borrower is/was a member of the regular military (Army, Navy, Marines, Air Force, etc.) or if they were/are a member of the Reserves or National Guard.
- If the borrower is a first-time user of the VA Home Loan Program or a repeat user.
- The amount of down payment (if any).
VA Loan Benefits: No Mortgage Insurance Required
When it comes to insurance (auto, health, homeowners, etc.) they all have the same thing in common: it is never fun having to pay the premiums, but always a relief when the insurance company foots the bill. But what if you have to write the check to pay the premiums, yet you are not the one being insured?
This is the case with Private Mortgage Insurance (PMI). PMI is insurance the lender requires their borrowers to pay when they don’t put a minimum of a 20% down payment on a home purchase. Not to be confused with homeowners’ insurance, PMI does not insure the homeowner, instead – mortgage insurance insures the lender in the event the borrower goes into default and the lender needs to foreclose on the property. In this circumstance, PMI insures the lender (up to a certain percentage of the loan) to offset loses incurred during the foreclosure process.
Testimonials
It’s always rewarding to hear kind words from past borrowers we’ve helped at Hawaii VA Loans. Here are a few testimonials from some of our happy customers that we’ve helped get VA loan to purchase a property or refinance their current VA loan to a lower interest rate:
We had moved back to Hawaii in 2004 from Ohio and we decided to rent until we got settled in. When we finally felt comfortable enough to buy, we were referred to Gabe Amey at Hawaii VA Loans to help us qualify for a VA mortgage. I have to admit, he made the entire mortgage process easier than we had anticipated. He thoroughly answered all of our questions, made us very comfortable with the home buying process and qualified us for a VA mortgage that fit our exact budget. We would definitely recommend using Gabe and the Hawaii VA Loans team to anyone interested in getting a VA mortgage!
Sincerely,
Lorraine & Brock McNeal
Ewa Beach, Hawaii
The team at HawaiiVALoans.com were great to work with and very professional. They truly were experts and put me at ease during the entire process. I recommended HawaiiVALoans.com to all my associates and I know they will treat them right.
Mahalos,
Gabriel Rubio
Mililani, Hawaii
When I was looking around to refinance my VA loan I did a lot of checking around. Out of the five companies I contacted, Gabe Amey at HomeLoan Financial (HawaiiVALoans.com) was the only one that truly came across as honest and knowledgeable. He took the time to fully explain the process and were true professionals. I ended up taking a full percentage point off my VA loan and I’m now saving hundreds of dollars on my monthly mortgage payment.
Thanks Again!
Edwin Robles
Aiea, Hawaii
VA Condo Eligibility Check Tool
When shopping for the perfect home to buy, it is always recommended to get prequalified by a lender first so that you don’t waste your time looking at properties that may not be in your price range. In the same token, when shopping for a condo and you know that you will be getting financing through a VA loan - you must first check to see if the particular condominium you are interested in is eligible for VA financing.
Even though most condos in Hawaii are VA eligible, you want to double check ahead of time. The last thing you want to do is fall in love with a particular condominium only to find out after the fact, that this condominium is not on the VA approved condo list.
HawaiiVALoans.com makes checking the VA eligibility easy by introducing the Condo Eligibility Check Tool. With this particular tool, you just type the first few letters of the condo name and the suggestion tool will automatically return the most relevant results. Once you see the condo name you are searching for, click the name and just like that - you can find out if the condo is approved for VA financing or not.
Now if you cannot find the condo name in the search box, not to worry. It just means that this particular condo has yet to be reviewed by the VA Regional office here in Hawaii. Feel free to contact us if there is condo that you would like to be added to the VA approved condo list here in Hawaii.
Paying Points vs. Not Paying Points
If you’ve ever purchased a home before, you’ve probably been asked if you wanted to “points” or not pay “points”. Now, if you are like most people, the common answer would be, “I’m not sure - what would you suggest?”. Well, before we get into the specifics of when it is beneficial to pay points or not, let’s go over what the exact purpose of points when it comes to closing costs.
A point is an upfront fee that is paid at closing to reduce your interest rate. A “point” is always 1% of the loan amount. For instance, using a $300,000 loan amount, one point would cost $3,000 at closing. Now keep in mind - you don’t have to pay points if you don’t want to (except when dealing with adjustable-rate mortgage loans - where sometimes it’s mandatory to pay a point to guarantee the lender a yield) but by doing so, you’ll decrease not only your monthly payments but also the total amount of interest paid over the life of the loan.
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