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The following materials is sourced
from: http://www.homeloans.va.gov/vap26-91-1.htm
WHY A VA LOAN?
The more you know about our home loan program, the more you
will realize how little "red tape" there really is
in getting a VA loan. These loans are often made without any
down payment at all. Aside from the veteran's certificate of
eligibility and the fact that the appraiser is assigned by VA,
the application process is not much different than any other
type of mortgage loan.
VA FINANCING - A GOOD DEAL FOR VETERANS
More than 27 million veterans and service personnel are eligible
for VA financing. Even though many veterans have already used
their loan benefits, it may be possible for them to buy homes
again with VA financing using remaining or restored loan entitlement.
Before arranging for a new mortgage to finance a home purchase,
veterans should consider some of the advantages of VA home loans:
- Most important consideration, no down payment is
required in most cases.
- Loan maximum may be up to 100 percent of the VA-established
reasonable value of the property. Due to secondary market requirements,
however, loans generally may not exceed $417,000 ($625,500
for loans in Hawaii, Alaska, Guam and U.S. Virgin Islands).
This figure is subject to change each year.
- Flexibility of negotiating interest rates with the
lender.
- No monthly mortgage insurance premium to pay.
- Limitation on buyer's closing costs.
- An appraisal, which informs the buyer of estimated
property value.
- Thirty-year loans with a choice of repayment plans.
- Traditional fixed payment: (constant principal and
interest: increases or decreases may be expected in property
taxes and homeowner's insurance coverage); Graduated Payment
Mortgage-GPM (low initial payments which gradually rise to
a level payment starting in the sixth year); and in some areas,
Growing Equity Mortgages-GEMs (gradually increasing payments
with all of the increase applied to principal, resulting in
an early payoff of the loan). Hybrid ARMs: VA is authorized
to guarantee hybrid ARM loans where the initial rate remains
fixed for at least 3 years. The initial adjustment can be as
much as 2 percent if the fixed rate period is 5 or more years.
Annual adjustments thereafter are limited to 1 percent if the
fixed rate period is less than 5 years, and 2 percent if the
fixed rate period is 5 or more years. If the fixed rate period
is less than 5 years, the initial adjustment is limited to
1 percent and the annual cap to 5 percentage points.
- New homes, which are appraised before or during construction,
are inspected to help ensure compliance with the plans and
specifications used for the appraisal and with VA minimum property
requirements. All new houses, regardless of when appraised,
are covered by either a 1-year builder's warranty or a 10-year
insured protection plan.
- An assumable mortgage, subject to VA approval of
the assumer's credit.
- Right to prepay loan without penalty.
- VA performs personal loan servicing and offers financial
counseling to help veterans avoid losing their homes during
temporary financial difficulties.
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WHAT IS A VA-GUARANTEED LOAN?
These loans are made by a lender, such as a mortgage company,
savings and loan, or bank. VA's guaranty on the loan protects
the lender against loss if the payments are not made, and is
intended to encourage lenders to offer veterans loans with more
favorable terms. The amount of guaranty on the loan depends on
the loan amount and whether the veteran used some entitlement
previously. With the current maximum guaranty, a veteran who
hasn't previously used the benefit may be able to obtain a VA
loan up to AREA LIMITS ($625,500 for loans in Hawaii, Alaska,
Guam and U.S. Virgin Islands), depending on the borrower's income
level and the appraised value of the property. Your VA Regional
Loan Center can provide more details on guaranty and entitlement
amounts.
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WHAT CAN A VA LOAN BE USED FOR?
- To buy a home, a condominium unit in a VA-approved project,
or to purchase a unit in a cooperative (co-op).
- To refinance an existing home loan up to 90 percent of
the VA-established reasonable value or to refinance an existing
VA loan to reduce the interest rate.
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HAD A VA LOAN BEFORE?
Remaining Entitlement
Veterans who had a VA loan before may still have "remaining
entitlement" to use for another VA loan. The current amount
of entitlement available to each eligible veteran is $36,000.
This was much lower in years past and has been increased over
time by changes in the law. For example, a veteran who obtained
a $25,000 loan in 1974 would have used $12,500 guaranty entitlement,
the maximum then available. Even if that loan is not paid off,
the veteran could use the $23,500 difference between the $12,500
entitlement originally used and the current maximum of $36,000
to buy another home with VA financing. For certain loans in excess
of $144,000, the basic $36,000 entitlement can be increased to
a maximum guaranty equal to 25 percent of the Freddie Mac conforming
loan limit for a single family residence, minus any previously
used entitlement.
Most lenders require that a combination of the guaranty entitlement
and any cash down payment must equal at least 25 percent of the
reasonable value or sales price of the property, whichever is
less. Thus, in the example, the veteran's $23,500 remaining entitlement
would probably meet a lender's minimum guaranty requirement for
a no-down payment loan to buy a property valued at and selling
for $94,000. The veteran could also combine a down payment with
the remaining entitlement for a larger loan amount.
Restoration of Entitlement
Veterans can have previously-used entitlement "restored" to
purchase another home with a VA loan if:
- The property purchased with the prior VA loan has been
sold and the loan paid in full, or
- A qualified veteran-transferee (buyer) agrees to assume
the VA loan and substitute his or her entitlement for the
same amount of entitlement originally used by the veteran
seller. The entitlement may also be restored one time only
if the veteran has repaid the prior VA loan in full, but
has not disposed of the property purchased with the prior
VA loan. Remaining entitlement and restoration of entitlement
can be requested through the VA Eligibility Center by completing
VA Form 26-1880.
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ODVA (or ORVET)
The following information is from the Oregon Department of Veterans' Affairs
(ODVA) http://www.oregon.gov/ODVA/
The Oregon Department of Veterans' Affairs (ODVA) offers a state veterans'
home loan (ORVET) that is an additional and distinctively separate benefit
from the USDVA (Federal VA) Home Loan Guaranty Program. The current maximum
loan amount is $417,000 or a veteran’s remaining eligibility amount if
there has been a previous ODVA loan.
The ORVET home loan is an ideal product for those who served their country
in uniform. The program is designed specifically to provide veterans the lowest
interest rate possible and is secured through special federal bonding only
available to state home loan programs.
Special Program Notes
- Interest rates are generally below market.
- Closing costs are limited.
- Loans are serviced by ODVA in Salem, not sold to investors.
- No tax service fee.
- 15 to 30 year terms.
- No pricing adjustments for manufactured housing classified
as real property.
- Loans may be re-amortized after unscheduled principal
reductions of $3,000 or more.
- Up to 100% financing may be available.
- Guaranteed acceptance loan cancellation life insurance
available.
- No recapture or prepayment penalties.
- Loans are NOT limited to “first time” homebuyers.
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Loan Terms
- The current maximum loan amount is $417,000 or a veteran’s
remaining eligibility if there has been a previous ODVA loan.
- The home being purchased must be within the State of Oregon.
- The home must be the veteran’s primary residence.
- By statute, only the veteran and spouse (if applicable)
are permitted to sign for financial responsibility or to
be vested with title to the home.
- ODVA is prohibited from financing vacation homes, investment,
commercial, personal properties, or bare land.
- Course-of-construction loans are not available. ODVA may
only loan on completed dwellings.
The ORVET Home Loan benefit is available only to eligible qualified veterans
purchasing a primary residence within the State of Oregon. Veterans must establish
their eligibility for the benefit by meeting at least one of the three following
military service criteria:
Service in a theater of operations for which a Campaign or Expeditionary Ribbon
or Medal is authorized by the United States
Served less than 210 consecutive days of active duty, if discharged or released
from active duty due to a service-connected injury or illness
210 consecutive days of active-duty (other than active-duty for training)
To be eligible, a veteran must be within 30 years of release from active duty
with a discharge characterized as honorable, or general under honorable conditions.
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Eligibility Application Materials
Complete an Eligibility Application Form and fax or mail it to the ODVA office
in Salem together with a copy of the veteran’s military discharge DD
Form 214. The DD 214 indicates the nature of discharge and is generally the
Member Copy 2, 4, or 6. Establishing eligibility does not guarantee loan approval.
The veteran and the property must meet current ODVA underwriting guidelines.
Fax eligibility documents to 503-373-2393, or mail them to:
Oregon Dept. of Veterans' Affairs
Home Loans
700 Summer St NE
Salem, OR 97301-1285
To contact the ODVA ORVET Home Loan unit,
Call 1-888-673-8387
or503-373-2051
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