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In this article, I will share how you can determine if the loan officer that you’re talking to on the phone because a lot of times you find somebody on the internet and you pick up the phone and you call them how you can tell if they really know what they’re doing and I call it being proficient in the home loan.

So the one thing about VA home loans is that there’s not a lot of loan people who are really proficient at doing them. And I’ll tell you why it’s not their fault, but in the United States,

less than 10% of the US population ever served in the military. And less than 10% of that 10% ever used their VA home loan benefit. So that’s a very small group of people using the VA home loan benefit.

So for a loan officer, the person who’s gonna put together a loan, the opportunity to do a VA loan does not come up very often. In fact, on average, a loan officer will do one VA loan a year.  For us, we do 150 VA loans a year. It doesn’t mean that we’re a better company, but we’re more proficient at doing VA because we do them a lot.

I think of it like if you were going to get a car fixed. Honda accord is a car and a Tesla is a car.

But you wouldn’t take a Tesla to a Honda repair facility. They’re both cars, but the Honda guys probably aren’t going to know how to fix a Tesla. Like the loan person who doesn’t do very many VA loans probably isn’t as proficient at doing VA as the person who does them all the time. You want to work with someone who really knows what they’re doing in the world to keep up with what’s going on. It’s very difficult.

They send out these things called circulars. The VA does to update what’s going on with the loans. In 2018 there were over 30 circulars or updates to VA loans. In 2019 there were 33 plus updates. In 2020 there were over 40 and year to date in 2021 we already have 14 updates to what’s going on in VA. So for the person who doesn’t do VA all the time, it’s very difficult to keep up.

So how do you know? You pick up the phone, you call one of those big companies that you see online, how do you know the loan officer knows what they’re doing?

Well, I have a little test that I recommend that people give a call it the proficient loan officer test and it goes like this, you ask the person on the phone a couple of simple questions.

1. One of them being if I’ve never used my VA home loan benefit before and I’m going to buy a house, what is my funding fee going to be? If the person on the other end of the phone does not know that the answer is 2.3% off the top of their head, they probably don’t do a lot of VA loans.
2. If you want to test them further, say, hey, what happens if I’ve used my VA loan before and in the same situation, what’s my VA funding fee? The answer right now is 3.6%. They should know that off the top of their head.
3. You could ask him further, what are my options for paying my funding fee? Off the top of their head, they should know that the funding fee can be rolled into your loan, which is what most people do. You can pay it out of pocket at closing or somebody else could gift you money or give you a credit as part of the loan and pay that funding fee.
4.  Final question you can ask the person is, how do I get out of paying the VA funding fee? A service-connected disability benefits, if you’re receiving pay from VA then you are not subject to the funding of the and a person who is proficient at VA loans would know that.

So just make sure when you’re talking to the person on the phone, quiz them a little bit, and make sure that the person who’s helping you really knows what they’re doing.

Hopefully, you found this information helpful. Ask questions. Let us know how we can help. Remember I always say the answer’s no if you don’t ask, so just ask.

Today we’re gonna talk about the certificate of eligibility and what it takes to get one and what it means in having one when it comes to the VA home loan.

So here’s the thing that you need to think about with this. The certificate of eligibility is like if you wanted to go to Disneyland and ride the rides, you need a ticket to get into Disneyland.

The certificate is your ticket to get into using the VA home loan benefit. You get your certificate of eligibility from the VA. They check your time, service, if you’re a veteran and make sure that your type of discharge is other than dishonorable. So the thing about the certificate that’s interesting is if you’re looking to get it, you can get it yourself. You can if you have an ebenefits account if they still have that website. You can go through the ebenefits account, go to the certificate of eligibility and order your own. Or you go to your lender and a lender who is proficient at doing VA home loans, they are going to order the certificate of eligibility for your lenders. Lenders proficient at doing this are electronically connected to VA. We go through a different door to the same place you would go through the ebenefits account.

We put in two pieces of information, the two pieces are your social security number and the year you were born. We input those two things and about 80% of the time we’re going to get your certificate of eligibility back in 30 seconds.

A lot of people will tell me that they have ordered their certificate of eligibility. They mail in for it. Well, I’m telling you right now, especially with everything with COVID and people working from home, if you mail in for a certificate, it might take 30 days for you to get something back and if it doesn’t come through because you need more paperwork, it’s going to take you longer than that.

If you have a lender who tells you go to them and they tell you, hey, go get your certificate of eligibility and come back. That’s your first red flag that this lender does not do enough VA to understand that they can be connected to the VA electronically. My advice to you would be if that’s what they tell you, you back out and you go find another lender that is proficient at doing VA home loans. Because any lender can do VA, which is great if they’re willing to help you. But it can be challenging for somebody who doesn’t do it a lot and maybe the process is going to be harder.

Here’s what you need to actually get your tickets. So the qualifications basics are, and I say the basics because there’s little extra nuances which you can look up at VA.gov.

But as a lender when you come to us we can run through the math that we can look at your qualifications and see if we think it’s going to work.

And by the way the lender is not the one who determines whether you get your certificate. So we can look at your information, but ultimately, the VA are the ones who determine it.

So the basics are

• 90 days of active duty service during wartime or 181 days during peacetime.
  • We have been at war since the Gulf War started. If you’re active, you’ve gone into the service, you’ve gone through basic training, you’ve gone through AIT and now you’re serving, all that time counts. Once you hit 90 days now, you could apply for a certificate of eligibility and use your home loan benefit.
  • If you have served your 90 days and for some reason you got out and it wasn’t service connected and you don’t serve two years, then you may not be eligible.
  • You have to have 24 months of service if you’re a veteran depending on when you served. And so just remember that this, there’s a lot of different variables here.

• If you are in the active reserves or were in the reserves, you have to have served at least six years to be eligible for a certificate of eligibility with all of your participation points.
  • So you need to have at least 16 points of service to be able to get your certificate of eligibility. However, if you’re called up for active duty and you hit 90 days, now you’re eligible.

• National Guard, it’s the same as the reserve, six years getting all your participation points or you have served 90 days on title, 10 federal orders. Now you’re eligible as of this year, there is a new rule that allows for National Guardsmen and this is retroactive.
  • National Guardsmen if you’ve been called up for title 32 state orders and you served 90 days on state orders, so long as at least 30 of those days were consecutive, you are now going to be eligible to use the VA home loan benefit.

• Surviving spouses are also eligible
  • So if you are a surviving spouse of someone who died because of a service connected cause or they died while in service, if you are unremarried and you are receiving DIC, Dependent and Indemnity Compensation, you can be eligible to use the VA home loan benefit.
  • If you are a surviving spouse of somebody who was a POW or they were missing in action, then you may be eligible to use the VA Home loan benefit as well.

• If you are active duty you are going to have a DD 214. So the documentation that we need, the documentation that you will need to provide if we can’t get this electronically if you serve active, it would be a DD 214 member copy and if you are in Reserves we are going to need your point statements.
• The National Guard will need your NGB 22 and NGB 23. If we’re falling under Title 32 orders we’re probably going to need orders. This is brand new. So we may need some extra information there to verify your orders and whether you actually served for active duty members.

We get what’s called a statement of service and the statement of service goes on your command letterhead. We give you a template that says what they need to provide on this document. But basically it’s going to be your full name, your social security number, your date of birth, the date you entered into service, any lost time and your commands name and personnel person can sign it or the adjutant can sign that document. So there’s a lot of different moving parts to this when it comes to documentation and the qualifications.

But remember as I always tell everybody, the answer is no if you don’t ask. Find a lender that can order your certificate electronically. Those are the people that you want to work with. We’d be happy to help you with that.

This article talks about the VA jumbo loan more specifically how the VA jumbo loan compares to a conventional jumbo loan. So first, the definition of jumbo when it comes to VA is any loan amount that is above the conforming loan limit. So the conforming loan limits, they will change annually, usually around Nov. as this recording is happening right now, we’re at $548,250. So anything above that for this recording is jumbo.

When it comes to conventional financing, if you’re looking for a jumbo loan and you weren’t considering VA, you are going to most likely have to put 20% down on a conventional jumbo loan. That’s kind of how those work and the restrictions are much, much tighter than VA. Here’s what I’m going to tell you right up front, all things being equal. If you decided you were going to put a down payment for VA, which technically you are not required to, you will qualify for almost 50% higher purchase price if you’re buying a house or if you had 20% equity, you would qualify for almost 50% more loan amount. And that’s by virtue of the fact that the VA loan guidelines are very, very broad.

So here’s a quick comparison if you’re talking about the credit score, Fico score, if you want to think of another term, the credit score that you need on a conventional jumbo will be in the seven hundreds. On VA it can be in the low 600s and every lender has a different minimum credit score that they go by but conventional 700s, VA 600s. If you’re thinking about debt ratios and the debt ratio is how much your monthly payments are currently that we see on your credit report debts that you have the payments and your payment that will be generated from the loan amount including your taxes and insurance and homeowner association dues, if you have that. The conventional limit is going to be in the low 40% of your gross monthly income on VA because of the calculations we get to do.

There’s another calculation called residual income. That’s really our bible when it comes to qualifying people under VA. Conventional in the low 40s. VA is 50% and can even be higher, maybe 60% because of the calculation. So right there you can see that the conventional bucket is small and on VA it’s very, very large on how we can qualify.

As of January of 2020 with the Blue Water Vietnam Veterans Act, there is no longer a loan limit for VA. If you have full entitlement and full entitlement is if you’ve never used VA before. With that there is no loan limit. Now you can buy as much as you want with no money down for whatever amount that you qualify for financially.

We talked about the debt ratio if that’s how we’re calculating it. The lender however, is going to have a limit on how high they will go on loaning you the money. With our company right now our standard guidelines say we can loan up to $2 million with no money down if you’re buying a house. We can get exceptions to that, if we have good qualifications and parameters.

Here’s another big deal. With the conventional jumbo we need reserves. So if you have your principal interest, taxes and insurance payment on the house that you’re buying or the house that you’re financing plus whatever other homes that you have. You need to have that amount of money in a multiple in the bank when you close a loan. It could be nine months, it could be 12 months, it could be 18 months. Sometimes it varies based on your credit score on VA. With the VA guidelines, we don’t need any reserves when you’re done. Now, that doesn’t mean that that’s not the right way that you should go. In my opinion, you want to have some money in the bank. But if you’re required to have reserves over here and you’re not required to have any over here again, you can see that the VA bucket is much bigger for someone to fit in to qualify.

Another big deal with VA compared to the conventional is if you have had something derogatory happen on your credit. Derogatory would be if you had a bankruptcy, either a chapter 13 or a Chapter 7, or if you had a foreclosure on the property. So on conventional, the waiting period from something like that, depending on what it is, is four years or more and sometimes up to seven years of waiting from something bad happening to your credit. In VA, it’s as little as one year. If you’ve been in Chapter 13 for a year or more and you can get approval from the trustee, you could still do a long four years to seven years over here, as little as one year over here with VA.

And then the appraisal, here’s a big deal. When it comes to appraisals, on conventional jumbo, you do need an appraisal. With VA, you need an appraisal, but on the conventional jumbo, you might need two appraisals depending on the guidelines. So if you possibly need two appraisals over here and you only need one here, that’s a big benefit.

There’s another situation that is more beneficial in VA when it comes to appraisals and that has to do with Tidewater. So if we order the appraisal and the appraiser goes to look at the property and they’re trying to establish value and they look at it and believe that it is not going to come in at the contract price. So let’s say you’re buying a $2 million house and they look at the property and tell you that this might not come in at $2 million, it might come in at $1.9 million.

They invoke what’s called Tidewater. So they send a notification to us. We then notified the realtors. We have 48 hours to provide comparable properties back to the appraiser, so they make sure that they haven’t missed anything. Once we provide all that information, they establish their value. It’s not a guarantee that we are still going to get the value we need because value is based on comparable sales, but we have another bite at the apple to establish value.

If it doesn’t come in at value and we can ask the VA for reconsideration of value. That means that we have our staff appraisal reviewer, look at the appraisal. If everybody thinks on our end that it still doesn’t look right, we can request that the VA actually look at it and see if they will give us any more value.

So both conventional jumbo and VA jumbo are great options. But if you have military experience, you have another shot where you can actually qualify for more home easier by using VA than if you use conventional. So it’s worth a shot, your military experience, it’s very beneficial.The thing I tell people all the time is, the answer is no if you don’t ask, so just ask.

This article discusses the CARES Act provisions, skipping your mortgage payments through forbearance and the IRRRL.

Circular 26-20-25 that the VA put out on June 30th, 2020.

On June 30th, 2020, the VA put out Circular 26-20-25 outlining the provisions on how you can use the VA Interest Rate Reduction Refinance Loan (IRRRL) to make up your monthly payments, get out of forbearance and not have negative dings on your credit. 

In order for that to happen, you must provide reasons for missed payments. On any VA loan, they always want to make sure that if there has been a problem financially that we have made sure that you’re not having issues now. This is so that if you are required to start making payments, you’re not in the same situation as before, which may cause you to miss your payments.

Everything else is still the same. The loan still has to be seasoned, meaning that you have made at least 6 on-time monthly payments on the current loan within the month that the payment is due and that 210 days have passed since the first payment was due on the current loan that you are in. Your mortgage note will tell you the first date that the payment is due. 

If the loan has been seasoned, we can close a new loan for you under VA. But you must have had the seasoning prior to using forbearance, meaning before you missed a payment. If you pass that threshold, then we could do the Interest Rate Reduction Refinance Loan.

The other provisions for the IRRRL are that your interest rate must drop by at least 0.5% and whatever costs are associated with the loan (underwriting, processing, notary, title, and escrow fees) divided by your monthly savings have to break even in 36 months or less. 

The provision that VA put out in this circular states that your new loan amount can include whatever payments had been missed. In the past, we weren’t including past missed payments.

But for this new provision, we can take any missed payments, late charges, closing costs, discount points, VA funding fee, and energy-efficient home improvements and roll that into the new loan! 

This has caused a lot of worry among veterans.  They have gone into forbearance, especially if somebody’s in a conventional loan, thinking that they are going to save on their monthly payments, but are unsure about what will happen in the end. 

All of this presupposes that you have not gone into a loan modification, and most people were not at the point yet where anybody would have chosen a loan modification. So that’s not really gonna be an issue as we sit here today in July. 

If you want more information on this, you can go to the VA website to be able to click on the PDF document to download that. If you’re currently in a VA home loan, in forbearance, and are concerned about potential balloon payments and wondering how you are going to make them up, this is the option for you.