VA loans and Student Loan debt

Thursday, March 23rd, 2017
 

Student Loan and VA loansTucson, Arizona: Received a phone call from a real estate agent the other day asking me how does the VA look at student loans. Her client’s spouse had quite a bit of student loan debt and they didn’t think they would qualify for a VA loan. So I thought I would take a second to explain how the VA looks at student loan debt.

Student Loan Deferment and VA Loans

First, it the student loan is deferred 12 months or more from the close of escrow date, then the lender does not have to count the debt. But what if it is less then 12 months deferred or there is no payment on the credit report?

Student loan debt can get confusing as each lender and investor will look at it a little differently. The Department of Veteran Affairs recently issued their Student Loan Payment Policy (VA Circular 26-17-02 – Clarification and New Policy for Student Loan Debts & Obligations) and there is some good news for Veteran borrowers with such debt.

Recent Changes to Student Loans using a VA home loan

If a veteran or spouse has a student loan that is in a repayment or is scheduled to begin repaying within 12 months from the date of the VA home loan closing, then the lender must take into consideration what the monthly payment on the loan will be. To calculate, the lender should you this formula: take each student loan at a rate of 5% of the outstanding balance divided by 12 months.

For example: credit report shows a $25,000 student loan that has a deferment less then 12 months from the closing date on the VA loan. There is no payment showing.

$25,000 student loan balance X .05 = $1,250 … divided by 12 months = $104.17 per month is the monthly payment for the debt ratio purposes.

But what if the credit report shows a payment that is higher then the calculation above? The lender must use the payment on the credit report.

So what if the credit report has a student loan payment that is less then the 5% calculation? In this case, the lender can use the lower payment if the borrower can provide a letter from the student loan servicer that actually reflects the loan terms and payment information. This letter cannot not be dated more then 60 days from the VA loan closing date. The borrower can also use an electronic copy from the student loan servicer’s website or a printed statement provided by the student loan servicer. However, this is a lender discretion on what documentation they will accept.

Tucson/S. Arizona: 520-303-5620 Phoenix/N. Arizona: 480-648-1733

If you have any questions on Student loans and using a VA home loan, or other VA loan questions, then please feel free to contact us. And if you like this post, then please share or like… or leave a comment below.

The Joe’s My Lender Team – Arizona’s VA home loan experts! Proudly helping Veterans in Tucson, Phoenix, Scottsdale, Yuma and Sierra Vista, all of Arizona. We are here to help serve you. Tucson and Sierra Vista (520) 303-5620 or Phoenix: (480) 648-1733

Termite Inspections and VA Loans in Arizona

Saturday, April 30th, 2016
 

Pest or Termite Inspections and VA Loans in Arizona

termite damage

Tucson/Phoenix Arizona: As we have discussed in the past, the VA home loan benefit is an excellent program to help out our Arizona veterans and their military families by giving them an opportunity to enjoy home ownership. One of the most common questions that we get is about the requirements and overall condition of the home the Veteran is purchasing with a VA loan. The big requirement is that the “Move-in-Ready” home must meet the VA standards of Safe, Sound and Sanitary. So where does a termite or pest inspection report fit into this and can a Veteran pay for it?

Termites and other wood-destroying insects can absolutely destroy a home. This can also be a huge financial drain with costly repairs and treatment. This is a big reason why you’ll be required to get a pest inspection when you’re purchasing with a VA home loan in certain parts of the country. The VA Phoenix Regional Loan Center has determined that Arizona is located in “Heavy” Termite Infestation Probably Zone, Read here. You will often hear, “you either have termites, or will have them” from pest inspectors in Arizona.

Can a Veteran pay for a termite or pest inspection?

Termites and other wood destroying insects are more prevalent in certain areas of the country then other parts. Arizona, being determined to be a “Heavy” Termite Infestation Probably Zone, does require a termite or pest inspection before your VA home loan can close.

There are over 30 States that require a termite or pest inspection report. Other States have discretion and may be required if the appraiser notices signs of termites. In most of the States that require a pest inspection, the Veteran can’t pay for the pest inpection fee. However, there are nine States where the VA home buyer can pay the termite or pest inspection fee.

Here is a list of the 9 States where VA home buyers can currently pay for a termite/pest inspection:

  • Alabama
  • Arkansas
  • Arizona
  • California
  • Florida
  • Louisiana
  • Mississippi
  • Oklahomaa
  • Texas
  • Termite Damage Statistics

    • Each year, termites and similar pests cause an estimated $30 billion in damage to crops and man-made structures in the U.S.
    • A homeowner who discovers termite damage will spend an average of $3,000 to repair the damage.
    • (Source: Termites.com

    • According to the United States Department of Agriculture (USDA), U.S. residents spend at least $1 billion on Formosan termite control and repairs each year. Some experts estimate the number is closer to $2 billion.

    So can a Veteran pay for Termite Treatment in Arizona?

    Veterans in Arizona can pay for both the pest inspection and treatment. Although it is common practice that these fees and treatment are usually negotiated between the VA buyers and sellers, especially since the Veteran hasn’t closed yet.

    So if you live in one of the 9 States mentioned above, and are purchasing with a VA home loan, then yes you can pay for a pest or termite inspection.

    The Termite Report

    Once you have a pest inspection done, then you will receive a report on an Arizona state form. Example: 3 page Termite Report It is very important to get this to your lender right away. Section 8 of the report should have the box checked that “No visible evidence of infestation from wood-destroying insects was observed.” If evidence is found, then treatment will be required and a Supplemental report will have to be provided to show that it was treated and cleared.

    On page 2 of the report, you want to look for No wood to earth contact, No excessive cellulose debris, No faulty grades, and No excessive moisture. These items will have to be addressed if called out by the pest inspector.

    Tucson/S. Arizona: 520-303-5620 Phoenix/N. Arizona: 480-648-1733

    If you have any questions on termite or pest inspections using a VA home loan, or other VA loan questions, then please feel free to contact us. And if you like this post, then please share or like… or leave a comment below.

    The Joe’s My Lender Team – Arizona’s VA home loan experts! Proudly helping Veterans in Tucson, Phoenix, Scottsdale, Yuma and Sierra Vista, all of Arizona. We are here to help serve you. Tucson and Sierra Vista (520) 303-5620 or Phoenix: (480) 648-1733

    Refinancing Non-VA Loans

    Saturday, April 16th, 2016
     

    Can I Refinance a Non-VA loan into a VA home Loan?

    VA RefinanceTucson / Phoenix Arizona: Over the years, I have had a few veterans that originally purchased a home with conventional or FHA financing ask me if it is possible to refinance out of their current loan and into a VA home loan. Having never used their VA home loan benefits before, they aren’t sure if this can be done – or what would be required to refinance a non-VA loan to a VA home loan.

    So today I thought I would address this. Borrowers that purchased a home with a non-VA home loan can indeed refinance. However, the VA will treat this as a VA Cash-out refinance loan, as opposed to a simple rate and term refi.

    As some of you know, the VA does offer a type of streamline refinancing known as a VA IRRRL (Interest rate reduction refinance loan). Read more here: VA IRRRL in Arizona VA IRRRL’s can only be used for those borrowers who currently are in a VA mortgage. The VA does offer a cash-out refinance option that is available to all eligible Veteran/Active Duty borrowers, regardless of what type of existing mortgage they currently have.

    One caveat that borrowers should be aware of before deciding to refinance out of a non-VA loan to a VA loan is that they will have to occupy the property as a primary residence. So if the property you are thinking of refinancing is an investment or a second or seasonal home, then you will be required to move into this property.

    One big advantage of refinancing into a VA Cash-out loan is that they have no mortgage insurance. So if you would like to know more about refinancing out of a non-VA loan into a VA loan, or any other mortgage financing questions, then please give us a call.

    Tucson/S. Arizona: 520-303-5620 Phoenix/N. Arizona: 480-648-1733

    If you have any questions on this topic, or other VA loan questions, then please feel free to contact us. And if you like this like this post, then please share or like… or leave a comment below.

    The Joe’s My Lender Team – Arizona’s VA home loan experts! Proudly helping Veterans in Tucson, Phoenix, Scottsdale, Yuma and Sierra Vista, all of Arizona. We are here to help serve you. Tucson and Sierra Vista (520) 303-5620 or Phoenix: (480) 648-1733

    Arizona VA Home Loans

    Saturday, March 12th, 2016
     

    Arizona’s VA Home Loan Experts!

    Tucson, AZ – Thank you for visiting our Arizona VA home loan mortgage page. If you are Active Military or a Veteran living in Tucson, Phoenix, Sierra Vista, Yuma – or anywhere else in Arizona – looking to purchase a home or refinance your current VA loan, or just have questions about VA loans, then you have come to the right place!

    Joseph Small and team at Guild Mortgage Company, are very knowledgable with VA home loan financing, professional and use the latest in technology to help serve Arizona’s veterans.  So give Arizona’s VA home loan mortgage experts a call now! (520) 303-5620 or (480) 648-1733 and let’s get started.

    The Benefits of Using a VA Home Loan in Arizona

    Arizona VA loan FICO Scores
     

    VA Home Loan Features:

    Up to 100% financing available

    No monthly private mortgage insurance

    Seller concessions up to 4% of the reasonable value of the property

    Credit scores as low as 600 FICO in Arizona

    Must be a veteran, active duty or reserve member to be eligible

    Manufactured homes allowed (requires a 620 FICO score)

    Non traditional credit

    All loans are subject to underwriter final approval, terms and conditions may apply. Subject to change without notice. Always consult an Accountant or Tax Advisor for full eligibility requirements on tax deductions.

    Which one of these describes you best?


    Arizona VA Home Loans
    VA Home Loans
    VA home loans in Arizona
    VA Manufactured Home Loan
    Arizona USDA home loans
    VA Loan – Refinance

    “Thanks for serving our country….it means the world to us”!

     

    Top 5 Reasons to do business with the Joseph Small

    1. We make our living helping Veterans & Active Military in the Tucson, Phoenix and Sierra Vista area, as well as throughout Arizona… so you get straight talk & honest answers!
    2. Need answers to your many questions about VA mortgages?  …let us clear up all of the myths about purchasing with a VA loan!
    3. What about the rates and terms? We offer competitive VA mortgage rates and great terms – we also offer a variety of other home loan products, so we will find the right program for your needs!
    4. Don’t like being forgotten about or ignored? Our team is always available, get the personal service you deserve!
    5. You earned the right to use your VA benefits! We would be honored to help you….please give us the chance!

    So let us hear from you! Remember….it doesn’t cost a penny to talk…so call us right now and we will answer all your questions! Phoenix – (480) 648-1733 Tucson and Sierra Vista: (520) 303-5620  


    VA loans Tucson AZ

    If you really like the content of this website, then please “Like Us” on Facebook or “Follow US” on Twitter. And remember to tell your friends, family and co-workers about us! We would love to help them our with their home loan needs, too.

    Joseph Small and team at Guild Mortgage Company – Arizona VA Home Loan Experts! – are your trusted source for all your VA home loans needs. Proudly serving Tucson, Phoenix, Yuma, Sierra Vista.

    Student Loans and Mortgages

    Monday, December 14th, 2015
     

    Student Loan Debt
    Tucson / Phoenix Arizona – I recently posted an article on the new FHA loan changes. We got a few calls on one particular part of the changes – deferred student loans. So I thought I would write a quick little breakdown on student loans and how they may or may not effect your new home purchase here in sunny Arizona.

    Little known scary fact on Student Loan Debt: Currently, the U.S. student loan debt as a whole is 1.2 trillion dollars. WOW! The average student debt for a 2014 graduate is $33,000. Student debt accrued every second is $3,000. Read more here: Wall Street Journal – Most indebted Ever

    Mortgage lenders have become increasingly concerned about the rapid rise in student loan debt in this country, which has tripled over the last decade, and a borrower’s ability to repay such debt. When applying for a mortgage, borrower’s with student loan debt should also know before hand how this debt – deferred or in forbearance – can impact how much loan you will qualify for.

    Sadly, the internet is full of outdated and misinformation on this topic. So I thought I would share the basic mortgage guidelines on deferred student loans on different type of loans – FHA, VA, USDA and Conventional mortgages.

    FHA Loans and Deferred Student Loans

    As of September 14, 2015, deferred student loans will be counted in the debt-to-income ratios on all FHA insured home loans. What that means is that even if the student loan is in a deferment plan, a payment will have to be entered. If no payment is available, then FHA guides say to use 2%. So, for example, a borrower with $30,000 in student loan debt deferred with no payment reporting would have an estimated payment of $600/month used in the ratios, which could really effect how much the borrower would qualify for.

    Before applying for a mortgage, borrowers with deferred student loan debt should contact their student loan servicer to find out what a future payment will be.

    VA Loans and Deferred Student Loans

    For the time being, VA home loans will exclude still allow the lender to omit the student loan if it is deferred 12 months from the funding date. If the student loan is less then 12 months deferment, then a payment will be applied.

    USDA Home Loans and Deferred Student Loans

    The USDA requires all deferred student loan repayments be included in the debt-to-income ratio, regardless if the student loan is in a deferment plan. If no payment is available, then 1% is used for the estimated student loan payment.

    If the student loan is not in deferment, payments must be determined by documentation other than the credit report. This could be a letter from the loan servicer or from a payment coupon. USDA also has very specific requirements when a student loan repayment is based on Graduated or Income Based Repayment (IBR) schedule. Please call for the details.

    Conventional Home Loans and Deferred Student Loans

    Fannie Mae requires that all deferred installment debt, including student loans not yet in repayment, be included in the calculation of the borrower’s debt-to-income ratio. In determining the payment for deferred student loans, Fannie Mae currently requires that the lender obtain a copy of the borrower’s payment letter or forbearance agreement or calculate the monthly payment at 1% of the balance of the student loan.

    So if you are thinking of purchasing a home and have student loan debt, then it would be advisable to get all your documentation on those loans before hand. Using the 1 or 2% guideline could be much higher then what your actual payment is or will be.

    If you have any questions on the new FHA loan changes, or other home loan financing questions, then just give us a call. 520-303-5620

    Joseph Small and his Team at Guild Mortgage Co. helps Tucson and Phoenix Homeowners and homebuyers with all their home mortgage loan needs. Give them a call today! Also proudly serving Sierra Vista, Green Valley, Sahuarita and Nogales Arizona.

    520-303-5620

    Purchasing with a VA Mortgage Loan in Tucson Arizona

    Friday, September 21st, 2012
     

    By Joseph Small

    veteran in front of houseSo you would like to purchase a home in Tucson, Arizona with a VA mortgage loan? VA mortgage loans offer 100% financing to eligible veterans and active military. Unlike other types of home loan financing, VA home loans do not have annual mortgage insurance (MI). Coupled with low mortgage interest rates, you can quickly see the advantages of using a VA mortgage loan for your Tucson home purchase.

    VA mortgage loans can be used for the following purposes:

    1. To buy an existing home, including a townhouse or condominium unit in a VA-approved development.
    2. To build a home.
    3. To simultaneously purchase and improve a home.
    4. To improve a home by installing energy-related features.
    5. To refinance an existing home loan.
    6. Cash-out refinance
    7. Reduce the interest rate (Interest Rate Reduction Refinance Loan)
    8. Hybrid Adjustable Rate Mortgage
    9. Adjustable Rate Mortgage (ARM)
    10. Convert an adjustable rate mortgage to a fixed rate loan.

    What property types are available for VA mortgage financing in Tucson?

    VA mortgage loans are an excellent choice for Tucson veterans and active military and can be used for either a purchase of an existing home or for the construction of a new home.

    However, we often get asked about purchasing an investment property with a VA mortgage loan. In short, VA mortgage loans are for owner-occupied properties only and cannot be used for an investment or a second home.

    Note: All loans subject to underwriter approval; terms and conditions may apply. Subject to change without notice.
     
    Joseph Small and his team at Guild Mortgage Company is your trusted source for all your VA Mortgage Loan needs in Tucson, Sierra Vista, Green Valley and Nogales, Arizona.

    Tucson’s VA home loan mortgage experts!


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    Buying With A VA Home Loan in Tucson or Sierra Vista

    Sunday, June 3rd, 2012
     

    By Joseph Small
     
    A-10 Plane There are many benefits to purchasing with a VA home loan in Tucson or Sierra Vista, Arizona. But first, a little history. In 1944 the U.S. Congress, under the Servicemen’s Readjustment Act, created the Veteran Administration Home Loan Guaranty program. Under this program, VA guaranty home loans are made by lenders and are guaranteed by the U.S. Department of Veteran Affairs to eligible active military, National Guard and Reservists, as well to Veterans for the purchase of a home. To date, this program has help more than 19 million individuals who have served in the military to become homeowners.

    So who is eligible for a VA home loan? Those who might be eligible have to be on active duty status or received a discharge which was not dishonorable. Service members who were on active duty for 181 days or 90 days during peacetime or wartime, respectively, may be able to get a VA loan, as may Reservists and National Guard members who served for at least six years. Spouses of service members who died in the line of duty or because of a service-related injury may be eligible for VA loans. There is a new bill currently being proposed to help Surviving Military Spouses

    There are many benefits to purchasing with a VA home loan mortgage. One of the biggest benefit would be the option for zero down payment or 100% financing. You can put money towards a down payment, if you choose, but in most cases it might not be required.

    Another benefit is the no private mortgage insurance (PMI). Private mortgage insurance (PMI) is often a monthly expense seen in conventional home loans with a loan-to-value of greater than 80%; however, VA financing does not have PMI, which lowers monthly payments when compared to traditional mortgages. Because VA mortgages are guaranteed by the Veterans Administration, the mortgage interest rates are very comparable to conventional home loans.

    However, the VA does have a funding fee that will be applied towards your loan. This can be rolled into the VA loan or can be payed by the borrower at settlement.

    The VA loan limit in Tucson and Sierra Vista, and throughout Arizona, is $417,000. However, VA home loans can be guaranteed up to $1,000,000. If you plan to purchase above the $417,000, then you will be required to put down an additonal 25% of every dollar over the $417,000 – up to a million. Example: You want to buy a house in Tucson that is selling for $517,000. Because the VA only will guaranty zero down payment on home loans in Arizona up to $417,000, you would have to put $25,000 down ($517,000 – $417,000 = $100,000) X 25% = $25,000.

    If you think you might qualify, then click here: Apply Now

    Note: All loans subject to underwriter approval; terms and conditions may apply. Subject to change without notice.
     

    Joseph Small and his team at Guild Mortgage Company proudly serves Active Military and Veterans in Tucson, Sierra Vista, Vail, Sahuarita, Green Valley and Nogales Arizona with their VA loan purchase and refinance needs. We are your trusted source for all your VA home loan mortgage needs! Give us a call today (520) 303-5620.


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