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Basic Military ResidentialHome Guide
T.Booker Real Estate ServicesTarrant Alexander Booker
REALTOR® CMRS
A Guide To Owning A Home Through The VA Home Loan Program
Contents
3 - Introduction to CRMS
4 - Meet The CMRS Agent
5 - VA Loan Credit Score Requirements
6 - Why Consider A VA Home Loan First
7 - What is a VA Home Loan Guaranty
9 - Obtaining Your VA Certificate of Eligibility
10 - Why Work With a Local Mortgage Lender
11 - What Is A VA Loan Pre-Approval Letter
12 - Questions to Ask Before Buying Your First Home
The objective in offering the Certified Military Residential Specialist Pro-gram is to provide a platform whereby Real Estate Professionals can betrained and equipped to handle with excellence the home purchase needsof active duty and former military clients.
Why would a real estate professional consider training to provide veter-ans with a more professional and positive real estate experience? Onereason is this is a way to honor the men and women of the United Statesmilitary and their families, for their service to our nation, and to fulfill theobligation we have to each and every one of these heroes for thefreedoms we enjoy.
Another reason is that the men and women of the military are often a “targeted population” with somebusinesses cheating, scamming, and over billing. Many are young, financially inexperienced, andtransient, unaware of dishonest businesses.
Some of the challenges faced today by active duty military are:
● Never has so long a conflict been fought by such a small percentage of Americans.
● Repeated deployments
● Higher rate of suicide
● Higher rate of divorce
● Higher rate of unemployment
● Higher rate of homelessness
● Post-Traumatic Stress Disorder
● Traumatic Brain Injury
● Depression
● The invisible wounds of war
This is an opportunity to become a “watchdog”for the warrior by pursuing excellence in servingthe home purchase needs of military clients.
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Rank:E-4 Specialist
MOS:63G Fuel and Electronic System Repairer
Certified Mail Clerk
Basic Training:Ft. Leonardwood, Missouri
AIT:Aberdeen Proving Grounds, Maryland
Duty Stations:Cco. 702d Infantry Division, Camp Casey Korea, Toung Do Chun
548th FSB Mountain Division, FT. Drum, NY
My duties as a Realtor® is to help my clients with the process of home selling and buying and educatethem so that they can make the right decisions that will suit their needs, and to provide a service toMilitary personnel a service from which I was Certified as a Military Residential Specialist.
From Soldier to Soldier I will make it my duty to help in the home buying process!
"I will make it my duty to help my fellow soldiers"
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In the last several years eligibleveterans and military personnelhave enjoyed an easier mortgageprocess than what was availableto many home buyers attainingconventional or FHA loans. Unfor-tunately, the meltdown within themortgage industry coupled withincreased losses due to loan de-faults has prompted lenders tomake this process a bit more com-plex. Since early 2010, manylenders in the U.S. have tightenedtheir lending and credit score re-quirements, making VA loansharder to qualify for.
These requirements have also im-pacted the VA Streamline Refi-nance program. Previously,borrowers who already had a VAloan were able to refinance intoanother VA loan without an ap-praisal. Although this is no longerthe case, it still allows veterans totake advantage of lower interestrates while providing significantlyless paperwork to the lender.
For a qualifying veteran, your VAhome loan eligibility is an amazingbenefit you should be using! VAoffers the best financing optionalong with the lowest interestrates whether you’re a first timehome buyer or a home buyer look-ing to use your VA eligibility onceagain.
If you’re concerned aboutpast credit issues and whether ornot you will qualify based on VAcredit score requirements, let mefirst tell you to breathe a sigh ofrelief. VA is very lenient when itcomes to your past credit historyand offers far more flexibility inregards to a previous bankruptcyor foreclosure.
While VA does not have a mini-mum credit score requirement,most lenders are able to set theirown individual guidelines for VAloan requirements. Consequently,you will find that most major banksor lending institutions have set theminimum credit score requirementat 620.
VA loans are one of the lastremaining 100% mortgage fi-nancing options. The good newsin that is this: VA borrowers de-fault significantly less (2.6%) thanborrowers in general (3.4%).
Even so, according to the Feder-al Housing Finance Agency, thecredit scores of VA insured bor-rowers are generally lower thanother borrowers.
All things considered, VA loansremain a terrific opportunity. Vet-erans and active duty militarypersonnel who qualify can oftensecure a low mortgage rate andmeet the VA loan requirementseven if their credit score is lessthan perfect. In addition, about25% of applicants such as dis-abled or retired veterans qualifyfor an exemption from the fund-ing fee or what is considered aone-time insurance fee. That feecan really add up when you mul-tiply the 0.5% – 3.3% by the loanamount.
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If you are a veteran considering a home purchase, you may wonder where to begin. Your first step isloan approval. A common misconception is that VA loan approval is done directly through the Veter-ans Administration. This is not the case. You must qualify through a VA Guaranteed lender such as abank, mortgage lender, or savings & loan company.
Once your VA loan is approved by your lender, VA will guarantee a portion of the loan amount to thelender. The guarantee insures the lender against default. This means that if you were to default andyour lender foreclosed against your property, they would be guaranteed against a percentage of thatloss.
However, there are certain items the VA does not guarantee:
● You will be asked (not required) to complete a home inspection since VA does not guaranteethat the home is defect free.
● Order a builder to fix defects in your home if you had a house built.
● Guarantee that a veteran is making a good investment.
● Provide veterans with legal services.
One of the amazing benefits of a VA loan is a VA borrower’s ability to qualify with no money down.A VA home loan is one of the last remaining zero down payment loans which means you can pur-chase a home with little to no money out of your pocket.
Additional Benefits of a VA Loan:
● Any qualified veteran or current military personnel has equal opportunity to be given a VA loan.● 100% financing is often available.● Buyer is notified of appraised value.● VA will assist borrowers in case of default due to financial difficulty.● The VA funding fee can be financed into the loan amount.● Closing costs comparable (possibly lower) to other financing types.● Interest rate can be negotiated.● An assumable mortgage.● Ability to prepay without being penalized.● For houses appraised by the VA during construction, builder-provided warranty and help from
the VA in acquiring builder cooperation.● No mortgage insurance required.
Qualify for a VA Loan
Whether you have used your VA eligibility previously or are using your VA benefits for the first time,we would love to help you understand the unique advantages of a VA Home Loan.
Start using your VA Benefits and be on your way to owning a home of your own.
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WHAT IS A VA GUARANTEED LOAN?
A VA-guaranteed loan can be used to:
● Buy a home, either existing or pre-con-struction, as a primary residence
● Refinance an existing loan
BENEFITS OF A VA GUARANTEED LOAN:
● Equal opportunity for all qualified Veterans to obtain a VA loan
● Reusable
● No down payment (unless required by the lender or the purchase price is more than thereasonable value of the property)
● No mortgage insurance
● One time VA funding fee that can be included in the loan 1
● Veterans receiving VA disability compensation are exempt from the VA funding fee
● VA limits certain closing costs a Veteran can pay
● Can be assumed by qualified persons
● Minimum property requirements to ensure the property is safe, sanitary, and sound
● VA staff dedicated to assisting Veterans who become delinquent on their loan
WHO IS ELIGIBLE?
Generally, the following people are eligible:• Veterans who meet length of service requirements
• Service members on active duty who have served a minimum period
• Certain Reservists and National Guard members
• Certain surviving spouses of deceased Veterans
Note: There are other groups of individuals who may be eligible. To determine your eligibility, contactVA Eligibility Center at 1-888-768-2132.
[Continued]
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KEY UNDERWRITING CRITERIA:
● No maximum debt ratio; however lender must provide compensating factors if total debt ratioover 41%.
● No maximum loan amount; however, VA does limit its guaranty; Veterans can borrow up to$417,000 without a down payment in most of the country. Find out the limit in any county.
● Published residual income guidelines to ensure Veterans have the capacity to repay their obli-gations while accounting for all living expenses.
● No minimum credit score requirement; instead VA requires a lender to review the entire loanprofile to make a lending decision.
HOW DO I START THE PROCESS?
VA provides policy, guidelines andoversight of the program. Lenders pro-vide financing for eligible Veterans.The guaranty allows Veterans to ob-tain a competitive loan without a downpayment. Lenders need a Certificateof Eligibility (COE) to prove your enti-tlement. Most Veterans can obtain theCOE online through eBenefits. Lend-ers also have the ability to request theCOE on your behalf.
VA encourages prospective buyers totalk to several lenders to find one thatfits their needs, knows the VA loanprogram, and offers competitive ratesand terms.
Note: The VA appraisal is not intend-ed to be an “inspection” of the property. A Veteran should get expert advicefrom a qualified residential inspectionservice before legally committing to apurchase agreement. Veterans are al-so encouraged to have radon testingperformed.
CAN VA HELP IF I’M HAVING TROUBLE MAKING PAY-MENTS ON MY EXISTING LOAN?
VA Loan Technicians are trained to help Veteran borrowersretain their homes and avoid foreclosure. Please call toll-free1-877-827-3702 to speak to a VA Loan Technician.
[Continued]
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If you’ve served in the military and are interested in utilizing your VA Eligibility to purchase a home, yourfirst step to qualifying for a VA Mortgage is to apply for a “Certificate of Eligibility or COE” as it’sfrequently referred to.
Option 1: Veterans, Activity Duty, Reservists and National Guard Members Who Been on Active Duty
For those who belong to one of the above groups, you have three different means to obtaining a COE:
● Apply Through Mail: Fill out VA Form 26-1880, which you can find on www.va.gov, the officialVA website.
● You will be able to then mail it to the address which is listed on the form.● Apply Through A Lender: Your lender may be able to acquire your COE for you online; if this is
the case, the process typically only takes a few minutes. Make sure you speak to your lenderup front to determine whether or not this is an option.
● Apply Online: Visit the Veterans Information Portal to request the certificate.
If you are unable to print Form 26-1880 it is possible to contact the VA at 1-888-244-6711 and ask fora copy be mailed to you.Option 2: Reservists and National Guard Members Who Have Not Been On Active Duty
This category enjoys exactly the same options as the first group. See options 1, 2 and 3.
Option 3: Spouses of Veterans Who Either Passed Away During Service or As a Result of Service
Unfortunately, the options available to both groups above do not pertain to you. You are required tomail your application to the Veterans Administration.
Additional Information on How to Obtain YourCertificate of Eligibility
If your spouse passed away in the course of service,the procedure is relatively simple and shouldn’t take toolong. Keep in mind though, if your spouse passed awayafter service, the VA must first confirm that the deathderived from a disability connected to the service. Thisprocess usually takes somewhere between 2 to 3months depending on the existing caseload of the VA.
To apply, obtain and fill out VA Form 26-1817, whichyou can find on the official VA website. If you havetrouble printing the form, you’re also able to contact theVA at 1-888-244-6711 and request a copy be mailed toyou.
The address you should mail the form tois:
VA Loan Eligibility CenterPO Box 20729
Winston-Salem, NC 27120
If you have trouble printing the form, you’realso able to contact the VA at 1-888-244-6711 and request a copy be mailed to you.
No matter what group you find yourself in,you will be required to provide proof thatyou are eligible for VA home loanbenefits and a COE.
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Buying a home with your VA mortgage eligibility is most likely the largest purchase you will make inyour lifetime. You will need to qualify for a mortgage. When you begin to research lender options,knowing how to choose can be difficult. What is the difference between a local lender, mortgage lender,mortgage banker or credit union? And what do those variations mean to you as the consumer?
Working with a local lender that comes recommended from your real estate agent, friend or next doorneighbor carries a lot more weight than one you randomly find online. In fact, a recent study shows that90% of consumers trust recommendations from people they know, like and trust.
1. You can look them in theeye – Sitting across from yourlender while they explain theloan process is very differentthan trying to track someonedown that’s across the country.How uneasy does it make youfeel when you call to ask a ques-tion only to find out that the per-son you’re talking to isn’t evenqualified in your state to answerthat question?
2. They can’t hide rates orfees – When you’re sitting faceto face with someone, it’s verydifficult to hide behind a comput-er screen. Working with a locallender allows you to go throughevery detail of the loan with areal person, not someone on theother end of a phone line.
3. They should will show up atyour closing – I can’t evencount the number of times I’vebeen asked by a real estate
agent or buyer “what are youdoing here?” when I show up atclosing. It’s my duty to makesure you’re taken care of frombeginning to end and that in-cludes attending your closing.How can a National Lender an-swer last minute questions orhandle any final needs of yourcloser when they’re half wayacross the country?
4. The best rates possible –Contrary to what national lend-ers may tell you, a local mort-
gage lender will be able to offeryou the lowest interest rate; low-est fee’s and best customer ser-vice available. Just becausethey’re smaller doesn’t makethem less effective.
5. Your best interest is a VAloan – Many mortgage compa-nies are filled with loan salesrepresentatives that will sell youa loan product regardless ofwhether or not it’s in your bestinterest. They are only interest-ed in the numbers game and ithas nothing to do with whatnumbers work best for you.They worry about their bottomline, not which loan program isright for your family. Workingwith a local lender ensures thatthey have an established repu-tation within the community. Andif it’s not a positive one, well –you’ll find this out through wordof mouth research.
Need a great local lender that specializes in Military funding
that will work hard for your best interest?
Contact me and I will point you in the right direction.
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A VA loan pre-approval letter is a document grantedby a VA mortgage lender that states that based onpreliminary information such as the potential borrow-er’s credit, assets, and income, that they qualify for aVA loan of a specified amount. It is different from apre-qualification in that some or all of the submittedinformation is reviewed for accuracy before the letteris issued.
Having a pre-approval letter from your VA lenderwill show home sellers that you are a qualifiedbuyer and may lead to your offer being moreseriously considered.Once you have obtained your VA loan pre-approvalletter, you will then be able to begin making offers onhomes you are interested in purchasing.
In order to get your VA loan pre-approval letter,your lender may require the following:· At least one month's pay stubs or LES (if still active
duty).· W2′s and Tax Returns for the past two years.· Two months bank statements for any/all assets.· Your DD 214 form (if no longer on active duty).· Statement of Service from S1 (if still active duty)
Your pay stub is needed to show that you are currentlyemployed, as well as your current income. W-2 state-ments (for the past two years) then show how muchyou normally earn in a year.
If you are currently still on active duty, your Statement of Service must show a minimum of 12 months remain-ing on your contract. Finally, your DD 214 form will enable your VA lender to decrease the amount of timenecessary for processing your certificate of eligibility. Once again, this is not required, but it is generally asmart idea. The reason why this is a smart idea is that the majority of direct lenders with the VA can put in anorder for your certificate of eligibility, which determines whether or not you are eligible for a VA loan. The pro-cess can be very quick as long as you turn in all these documents as soon as possible to your loan officer.
After your VA loan officer or lender has the described documents, he or she can submit your information in theVA loan analysis software to determine your eligibility. The calculation that will determine your eligibility is:
(Monthly Income) – (Proposed Mortgage Payment + Insurance + Taxes + Utilities for the house +Monthly Credit Card Payments Due) = Residual IncomeResidual income is the amount of money that you have after you have paid the sum of your monthly bills. TheVA will use their judgment after they have calculated your residual income to decide if you will have a satisfac-tory amount of money left over after you have paid your bills. The VA has established various requirements forwhat your minimum residual income will have to be, such as what part of the country you live in, the size ofyour family, how old your children are, and various other factors. When obtaining VA pre-approval letter, beaware that simply getting the letter does not commit the lender to giving you a loan. It just means the initialinformation has been reviewed. In order for the mortgage application to be approved additional information anddocumentation about both the borrower(s) and the property must be reviewed to be sure that all of the guide-lines are met.
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Buying your first home is an excit-ing but often overwhelming under-taking. Whether you have beenrenting or living with friends andfamily, taking the leap into homeownership requires education andcommitment. While buying a homebeats renting in most circumstanc-es, it’s not right for everyone. Beforediving in, be equipped to answerseveral important questions.
The first time home buyerchecklist below is designed to as-sist in answering important financialquestions as well as clearly definewhat qualities in a home are criticalto you and your family. Taking thetime to devise a step by step ac-tion plan will allow you to determinewhether or not now is the time foryou to buy your first home.
First Time Home Buyer Checklist:
1. Are you employed full time? If so,how are you paid? Hourly, Salary orCommission. Commission or 1099employees income must be calcu-lated based on an average of yourlast 2 years tax returns. There aremany variables that might affectyour net or qualifying income. It isimportant to discuss your incomewith a mortgage professional priorto writing an offer on a home. Allother employees will need to pro-
vide your most recent 30 days’ paystubs.
2. Have you been employed withinthe same line of work for the last 2years? If not, have you recentlygraduated with a degree within yourcurrent field? A 2 year consistentwork history will be required. Haveyou filed your last 2 years tax re-turns? It is now necessary for lend-ers to request transcripts directlyfrom the IRS. This quality controlverification allows your lender toverify that what you have supplied atloan application is the same docu-mentation filed with the IRS. If youhave not filed yet, this will create amajor delay within the process.
3. Do you have money in checkingor savings that is set aside for thedown payment and closing costs?Depending on the type of loan youare qualifying for you may be re-quired to put anywhere from 3.5 –5% down. Understand the differ-ence between an FHA and VA loan,two loans used frequently by firsttime home buyers.
Any money used for down paymentor closing costs must be verified.You will be required to provide thelast 60 days bank or asset state-ments.
4. Have you checked your creditrecently and are you aware of anynegative marks that might impactyour qualification? You can order acopy of your free credit reportat www.annualcreditreport.com be-fore meeting with a loan profession-al.
5. Develop a family budget and de-termine the monthly mortgage pay-ment you can afford. Having abudget clarifies your mortgage pay-ment comfort level instead of some-one else determining that for you.Familiarize yourself with commonmortgage terms before you buy ahome.
6. Be prepared and pull together allof the documents required for mort-gage pre-approval before meetingwith a loan officer.
7. Work with a Real Estate Agentthat understands the your area andis familiar with the particular neigh-borhood you are interested in.
8. Your final and most importantpiece in the home buying processis loan pre-approval. Meet with alocal mortgage professional anddetermine eligibility before you setyour sights and your heart onyour first home.
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