VA Loan Limits to Remain Unchanged in 2011

August 29, 2011 by Leave a Comment

VA has announced they are keeping their existing loan amounts through the end of 2011 instead of reducing them, like conforming and FHA loan amounts are set to do. From VA's website:

The maximum guaranty for VA guaranteed loans closed October 1, 2011 through December 31, 2011 will remain unchanged.  The Veterans’ Benefits Improvement Act of 2008 provided a temporary increase in VA loan limits for loans closed January 1, 2009 through December 31, 2011. Because of this legislation, VA loan limits will remain the same for the remainder of the calendar year.  Please note that VA does not have a maximum loan amount.  Loan limit refers to the maximum loan a lender could make and still receive a 25% guaranty from VA, assuming the veteran has full entitlement.

Currently (and for the remainder of 2011) in King, Pierce and Snohomish County, qualified Veterans can have a loan amount of $500,000 and still have zero down payment. Loan amounts above $500,000 have a down payment of 25% of the difference between the sales price and loan amount.  You can read more about VA loan limits (VA Jumbos) in Washington state here.

If you're a Mortgage Porter subscriber, then you know that in just a matter of a couple weeks, we're going to see Conforming and FHA loan limits reduced (technically "rolled back") effective on October 1, 2011 (loans must be funded and sometimes, delivered prior to this date). Congress may still take action to keep the existing loan amounts through the end of this year, however I'm thinking that is unlikely.   Currently the loan limit for a single family home in the Seattle area for FHA and conforming loans is $567,500, it is set to be reduced to $506,000.  Loan amounts $506,001 and higher will be considered "jumbo" soon.

Filed Under: VA Mortgage Loans

How much can Sellers contribute towards Closing Cost?

May 12, 2011 by 10 Comments

If negotiated in your purchase and sales agreement, a Seller may agree to chip in towards some or all of your bona fide closing costs, prepaids and reserves.  They cannot contribute towards your down payment.  The amount the seller can contribute varies depending on the program type and the amount of home buyer’s down payment. The percentage is based on the sales price and if the credit exceeds the closing cost, the mortgage originator can often use it towards discount points to buy down the interest rate.

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Filed Under: Fannie, Freddie and FHFA, FHA, First Time Home Buyer, Underwriting and Qualifying, USDA, VA Mortgage Loans Tagged With: , , , , , , ,

VA Loan Limits for 2011

December 21, 2010 by Leave a Comment

UPDATE:  VA loan limits will remain the same through the end of this year!

UPDATE December 6, 2011: VA Loan Limits for 2012 (lower than 2011).

Below are the loan limits for VA loans in Washington State for all loans closed January 1, 2011 through September 30, 2011 December 31, 2011.  

  • King, Snohomish and Pierce Counties:  $500,000
  • San Juan County: $468,750
  • Clallam County:  $417,500
  • All other counties in Washington state: $417,000

If a Veteran elects to purchase a home with a sales price higher than the loan limit, they're down payment is 25% of the difference between the loan amount above and the sales price.

Example:

A veteran purchases a home in Kitsap county with a sales price of $560,000.  

$417,000 (Kitsap county VA loan limit) x 25% = maximum guarantee and possible entitlement = $104,250.

$104,250 / $560,000 = 19%.  Since this is less than the 25% maximum guarantee, a down payment will be required. 

$560,000 x 25% = $140,000.  

$140,000 – $104,250 (maximum guarantee) = $35,750 required down payment.

The base loan amount for this scenario (not including the funding fee) is $524,250.

A Veteran can purchase this home with 6% down payment!

Zero down loans are also available as long as the sales price does not exceed the VA loan limit. 

Lenders have various limits as to how large of a VA loan they'll fund.  This is one reason why it's great to work with a company like Mortgage Master Service Corporation where we have several sources for government loans.   If I can provide you a quote for a VA loan on a home located in Washington state, please contact me.

Attention Sellers: you're really limited the chances of selling your home if you don't consider buyers who are using VA or FHA financing!

Last but not least, THANK YOU to those who serve and have served our country.

Filed Under: VA Mortgage Loans

VA Loan Limits for Washington State

September 16, 2010 by Leave a Comment

Below are the loan limits for VA loans in Washington state for 2010.  I should have posted this earlier this year, I've recently had more inquiries about this great program.  

  • King, Snohomish and Pierce Counties:  $481,250
  • San Juan County: $505,000
  • All other counties in Washington state: $417,000

If a Veteran elects to purchase a home with a sales price higher than the loan limit, they're down payment is 25% of the difference between the loan amount above and the sales price.

Example:

A veteran purchases a home in Kitsap county with a sales price of $560,000.  

$417,000 (Kitsap county VA loan limit) x 25% = maximum guarantee and possible entitlement = $104,250.

$104,250 / $560,000 = 19%.  Since this is less than the 25% maximum guarantee, a down payment will be required. 

$560,000 x 25% = $140,000.  

$140,000 – $104,250 (maximum guarantee) = $35,750 required down payment.

The base loan amount for this scenario (not including the funding fee) is $524,250.

A Veteran can purchase this home with 6% down payment!

Zero down loans are also available as long as the sales price does not exceed the VA loan limit. 

Today's rates make VA loans very attractive and sellers are more likely to consider paying closing costs.   Rates right now are still in the low to mid-4s for a VA loan.   A Seattle area home with a sales price of $685,000 can be purchased with a down payment just under $51,000 and a rate of 4.375% priced with 0 points (apr 4.683).  

King, Pierce and Snohomish VA loan limit of $481,250 less the sales price of $685,000 = $203,750.  $203,750 x 25% = $50,937.50 required down payment for VA loan.

Lenders have various limits as to how large of a VA loan they'll fund.  This is one reason why it's great to work with a company like Mortgage Master Service Corporation where we have several sources for government loans.   If I can provide you a quote for a VA loan on a home located in Washington state, please contact me.

Attention Sellers: you're really limited the chances of selling your home if you don't consider buyers who are using VA or FHA financing!

Last but not least, THANK YOU to those who serve and have served our country.

Filed Under: VA Mortgage Loans

From the Junk Mail Bag

August 10, 2009 by Leave a Comment

Seems like junk mail from random mortgage companies are on the rise again.   I recently had a client who I helped with a home purchase utilizing an FHA mortgage send me a piece of junk mail that he had received from a company (NOT Mortgage Master) that bothered him beyond the typical "deluge of refi offers from firms who's marketing strategy is to look up public records for a targeted mailing".

Some mortgage originators will buy list of home owners who have a specific type of mortgage, such as FHA, where they can offer a streamline refinance thinking if they use your originating mortgage companies name enough times, they just might fool someone into calling them. 

This piece of mail junk has many red flags that home owners should be aware of.

Letter 007

There is no return address on the mailer anywhere.  You have no idea who you will be calling or if they are even approved to do business in Washington State.  I would never contact a mortgage solicitor if you have no way of researching them first.

They are also miss-using HUD's logo in the upper right corner as if it is there own.  This is a big time no-no that I'm sure HUD would be interested to see.

There is no APR to go along with the rate and the small print on this doozie must be too small for my old eyes.

It is true that FHA streamline refinances do not require an appraisal (therefore you are not proving equity) and assets are not verified either.  However the scenario still needs to qualify and HUD frowns about this type of marketing.

The eligibility for a streamline FHA refinance DOES NOT EXPIRE.  This is a weak attempt to try to create a "call to action" to the home owner.  HUD or lenders couldchange guidelines that would have an impact on an FHA streamline refi. 

Oh by the way, IRRL is a term used for VA "streamlined" refinances–not FHA.

What really pushed my clients button was the outside of this mailer garbage.

DSC_0171 

Another attempt to make this look like it came from Mortgage Master and a nice little threat as a bonus to really make sure you don't disregard their efforts.

I've written about junk mail before many times at Mortgage Porter.  You are welcome to forward this type of crap to the local officials.  They do not want consumers mislead or taken advantage of either.  

As a Washington State home owner, or if you're receiving mail from a mortgage company in Washington State, you can forward mail that you feel is misleading to DFI:

Enforcement Unit, Division of Consumer Service

DFI, P.O. Box 41200, Olympia, WA 98504

A letter like this should also be forwarded to HUD.

I strongly recommend not selecting your mortgage professional by what randomly lands in your mail box.  

Filed Under: FHA, Predatory Lending, Rant, VA Mortgage Loans

Why I’m Thankful I Don’t Work for a Bank or a Mortgage Broker

April 22, 2009 by Leave a Comment

Mortgage Master Service Corporation, my employer for the past nine years, is a Correspondent Lender–which is kind of like a blend of a bank and a broker.  I think it's the best of both worlds because like a broker, we have the ability to select which bank/lender we're going to work with and like a bank, we fund the mortgage.  We also process, underwrite and prepare loan documents at our location in South King County (this may be unlike a bank who'd processing center can be located in another State).

I've recently been provided a few examples of why it's advantageous to be a Correspondent Lender.   Ardell wrote a post at Rain City Guide about home buyers (or borrowers) being informed of when loan docs are "ordered", "sent" and "in".  A mortgage broker has to "order" loan documents from the wholesale lender/bank.   A form is submitted on paper or on-line requesting the loan documents be drafted.   The wholesale lender/bank where the loan is being brokered to will notify the mortgage broker once loan documents have been "sent" to the escrow company.  The escrow company will then send a confirmation to the mortgage broker that they have received loan documents–docs are "in". 

At our office, once conditions are met and we have final loan approval from our in-house underwriters, my processor prepares loan documents.  They are reviewed and then delivered electronically to the escrow company.  I receive notification from my processor that loan docs have been delivered to escrow and escrow confirms.  Our loan doc steps are "sent" and "in".

This creates a much smoother transaction since we remain in control of these vital steps.  Especially if there are any modifications or corrections that need to be made to the loan documents.  Instead of having to order a correction from the wholesale lender, our company is able to quickly react to any required changes.

The reason why I'm thanking my lucky stars I work for a correspondent lender and not a bank is because the bank is generally limited to their products and guidelines.   (A bank loan officer will tell you that they can broker or use outside lenders–just ask them how often they do–they're often compensated at a lower split if they send a mortgage outside of the bank).   Recently Wells Fargo decided they are going to start requiring appraisals on VA Streamline refinances.  (Hopefully other banks don't follow).  One of the benefits of a VA (or FHA) Streamline refinance is that an appraisal may not be required.   If I was a mortgage originator employed at this bank, then I would be stuck with their underwriting overlays (guidelines in addition to what VA is requiring); my clients who are Veterans would be required to prove their homes values and may not receive the benefit of reducing their mortgage rate.

As a correspondent lender (or mortgage broker), I know that odds are, if I have a VA Streamline refi (aka IRRL: Interest Rate Reduction Loan) I'm going to use another source for my client where an appraisal is not required.  

During these times, many banks/wholesale lenders have their own underwriting overlays in addition to what is being required by Fannie Mae, Freddie Mac, HUD or VA.  Correspondent lenders and mortgage brokers have the ability to review wholesale lending guidelines to help direct their clients to a product best suited for their needs.

It's nice to have options and control–it's nice to be a correspondent lender.

Filed Under: Escrow and closing, Mortgage, Underwriting and Qualifying, VA Mortgage Loans
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