A Quick Look On How Favorable The VA Net Tangible Benefit Rule Of Today Is And How It Will Affect Your VA Home Refinancing?

Can you refinance your California VA home mortgage to get cash out of the equity in your home? The VA says yes — but you’ll need to qualify under new regulations that include a “net tangible benefit” rule. What is “net tangible benefit” and what does it mean for your VA mortgage refinance in California?

Now grab a pen and paper as we take a deep dive to uncover the basic types of VA loan refinances that the “net tangible benefit” rule applies to.

The Veterans Administration has defined three types of home mortgage refinancing: the VA IRRRL (Interest Rate Reduction Refinancing Loan), and Type I and Type II cash-out refinancing loans. VA IRRRL loans refinance current VA home mortgages for lower interest rates. They aren’t affected by the “net tangible benefit” rule.

Type I Cash-Out Refinances: The amount of your refinanced mortgage including the VA funding fee, doesn’t exceed the payoff for your current VA home mortgage.

Type II Cash-Out Refinances: The amount of your refinanced mortgage, including the VA funding fee, does exceed the payoff amount for your current VA home loan.

What is the “net tangible benefit test” that applies to VA Type I and Type II Cash Out Refinances?

Your refinanced loan needs to meet one of eight conditions that the VA has established for qualifying Type I and Type II VA Cash-Out refinance loans.

  1.  The #1 criterion is that you need to have more than 10% equity remaining in your home after the refinance. If this isn’t the case, you have seven other criteria that can meet the “net tangible benefit” test.
  2.  Your new mortgage term is shorter (i.e. refinancing a 30-year VA home loan to a 15-year VA home loan) resulting in less interest paid over the course of the loan.
  3. Your new VA home loan refinance eliminates mortgage insurance.
  4.  You have a lower monthly principal and interest payment.
  5. You can get a lower interest rate. Your disposable income increases (including using the funds for debt consolidation).
  6.  Your disposable income increases (including using the funds for debt consolidation).
  7.  You are transitioning from a construction loan to a permanent VA home mortgage.
  8. You are refinancing from an ARM to a 30-year fixed rate home loan or other term fixed rate VA home mortgage.

You can refinance your VA funding fee as part of a VA home mortgage refinance, but it will be included in your new refinanced mortgage equity calculation. You can find out all of your options for a VA home loan refinance by working with a qualified VA home loan and California mortgage specialist.

Sources

New headline is Sharethrough 72 – addresses the main point of Quicken loan article
https://www.benefits.va.gov/homeloans/documents/circulars/26_18_30.pdf

The Power of VA Purchase Loans: Unlocking Home ownership for Veterans

Veterans, active service members, and their families have sacrificed significantly for their country. Recognizing this, the VA home loan program has been developed to offer numerous benefits, some of which have yet to be widely known. So, what makes VA purchase loans an attractive option for veterans and their families?

Dive Deep into the Financial Perks

Zero Down Payment: The primary allure of the VA home loan is its 0% down payment requirement. This means you can finance the entire purchase price of your home, enabling homeownership without the need for substantial savings.

Competitive Interest Rates: VA loans generally offer interest rates that are more favorable than their conventional counterparts. With 30-year VA mortgage rates as low as 3.375% and 15-year rates at 3.250%, it becomes clear why many veterans lean towards this option.

Lifting County Loan Limits: As of January 2020, the VA removed county loan limit restrictions. This monumental shift means that eligible borrowers with a stable income could potentially access a VA loan up to a whopping $2 million.

Guaranteed, Not Given

While the U.S. government does not directly issue VA home loans, they carry its guarantee. This assurance is a significant reason why lenders are more than willing to offer favorable terms, such as 0% down and competitive interest rates, as well as refinancing opportunities that can help decrease monthly payments.

The Array of Other Benefits

Waived Funding Fees: Disabled veterans and their surviving spouses could have their funding fees waived, reducing the overall cost of their mortgage. With just a 10% disability rating (often equivalent to receiving a minimum of $130/month in disability), you may qualify for this waiver.

Property Flexibility: With a VA home loan, you’re not limited to purchasing only single-family residences. It offers the flexibility to invest in duplexes, triplexes, or even four-plexes, provided you plan to reside in one of the units.

Eligibility and Lifelong Validity

Once you establish eligibility for a VA loan, it’s a benefit that stays strong with time. Whether you’re an active service member, veteran, or a surviving spouse who hasn’t remarried, this program has something to offer. The VA home loan program is a testament to gratitude, providing lasting benefits to those who’ve dedicated their lives to service.

VA purchase loans are more than just a pathway to homeownership; they symbolize a nation’s gratitude. With abundant benefits tailored specifically for those who’ve served, this program ensures our heroes have a comforting abode to return to.

Take advantage of these advantages if you’re a veteran or a surviving spouse. Explore VA purchase loans today and step closer to your dream home.

 

 

 

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Condo Vs. Townhouse: Get To Know Your Loan Choices and Understand The Different Ways Of Obtaining A Loan Either via VA or FHA Today

You can enjoy “turn-key” living in a condo or, depending on services offered by your HOA, a townhouse. That means you can leave and lock the door and not worry about yard maintenance or, potentially home security. The two types of properties do have differences that can affect your choice of home loans, as well as pricing and overall property cost.

Thinking of buying a Condo or a Townhouse anytime soon? Let us help you determine which property is right for you by getting to know the pros and cons

When you own a townhome, you are usually responsible for maintenance inside your home and outside the home. The biggest difference between a townhome and a condo is that when you own a townhome, you own the land it sits on.

When you own a condominium, you do not own the land that it sits on. It’s obvious this is true for condos that are part of high-rise apartment-style buildings. With a condo, you own everything from the walls inward. Depending on your homeowner’s association, you may or may not be responsible for maintaining the interior of your condo.

How your choice of property as a buyer affect your eligibility for financing options such as VA, FHA home loans, or other types of financing in California right now

Property ownership affects how you get home loans. In order to get a VA or an FHA loan to buy a condo, the entire complex must be eligible for and approved for VA or FHA financing. Loans for condominiums can be complex and can involve more underwriting steps than loans for single-family residences or townhomes.

Townhomes include ownership of land, and even if they’re part of a homeowner’s association or planned unit development (PUD), they can be eligible for a VA or FHA loan without an additional approval process.

Condominiums also have an additional hurdle that prospective owners seeking a mortgage could potentially face. A condo can be identified as “non-warrantable,” which means that it isn’t meeting conventional loan guidelines as established by Fannie Mae or Freddie Mac, the two national home mortgage-buying corporations.

With both a townhome and a condominium, your purchase price and home mortgage payment aren’t the only costs you’ll need to pay each month. Nearly all townhomes and condominiums have homeowners’ associations. The associations provide amenities, can maintain streets, and landscaping, and offer security services, including gates, guards, and other forms of security. Your monthly HOA fees are counted as part of your debt-to-income ratio when you are applying for a home loan to buy a condominium or a townhouse.

Sources

Headline scores 74 on Sharethrough now – I used basic knowledge and the original article to answer key questions.

https://www.bankrate.com/mortgages/types-of-mortgages/