One of the most stressful times in any adult’s life is purchasing a home. It is filled with uncertainty, rejected in some cases, and you (the buyer) having to put your trust in a person/people that you really don’t know and trust that he/she has your best interest in mind. This stressful experience is compounded with many military members and veterans because in some cases they are stationed in a new area and, in addition, do not fully understand VA loans, mortgages, or everything involved in the home buying process.
I recently had the opportunity to work with a Loan Officer at Norcom Mortgage that not only enjoys what he does, but is well-versed in VA loans, including VA rehab loans (which 90% of real estate agents/lenders are unfamiliar with). He can walk you through the process and explain each step in-depth making you, the buyer, comfortable with the process. A VA rehab loan is especially beneficial to those of us who have a small business and are looking to expand. The following are questions that I asked Mike Tuley with Norcom Mortgage:
What is new in regards to VA loans?
Not sure what would be new since I am not sure how far back constitutes new? I can tell you that old school thinking in the real estate industry was that VA loans took way too long and were way to strict to meet closing dates. The VA was much more involved in the actual loan process at that point and now is pretty much removed from the entire process aside from the appraisal. All VA loans are underwritten directly within the Lenders walls which has sped the process up greatly. The appraisal process has also been made more efficient and timelier by the VA adding more appraisers to the process.
What is a VA rehab loan and why is this beneficial?
A VA Renovation loan is also fairly new and not well known in the industry. It provides for all the same VA loan benefits as a traditional VA loan while also allowing for some renovations to be included in the initial mortgage. This is beneficial in that it opens more properties a VA shopper can include in their search. Renovations can include cosmetic renovations as well as upgrades a potential VA buyer may have in mind.
Why would I use a VA rehab loan?
A VA renovation would be used when a potential buyer locates an ideal property and location but wants something upgraded with the property and will not have the means to do upgrades with additional cash after closing. It will allow the upgrades to be part of the initial mortgage.
Is there a limit to a VA rehab loan?
Yes, you are limited to $35K max which includes a 10% contingency reserve for issues that may arise during the renovation project.
What is the difference between a VA and FHA loan?
Both are government backed loans however the VA loan does not require a down payment where FHA has a 3.5% minimum down payment. Also, the VA loan does not require annual Mortgage Insurance where FHA has annual Mortgage Insurance for the life of the loan
Can I reuse my VA loan?
VA loan benefits are reusable, but the amount of eligibility is determined by the type of service a veteran is classified.
Is the different VA loan limits in regards to each state?
The VA loan limits are set by US Counties and do vary by county. The VA publishes a list of loan limits by County every year.
From our own personal experience which was a perfect storm of what shouldn’t happen when purchasing a home, we learned a lot about VA loans. If you have any more questions, feel free to comment below I’m sure Mike or myself will answer them to the best of our abilities.
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