Closing Costs VA Loan Borrowers Must Know About

Closing costs are one of the major costs associated with taking a VA home loan in Texas or any other state in the U.S. Typically, the VA loan closing costs vary in the range of 1-3 percent of the loan amount. The actual amount depends on many factors such as the property’s value, lender fees, and HOA fees. To lessen the burden of home loan borrowers, VA allows sellers to pay a part of the closing costs. If you too are looking for a Texas VA home loan, it is important for you to know about these costs. Here’s a list of some of the most important allowable and non-allowable VA loan closing costs. Take a look.

VA loan

Allowable Costs

Loan Origination fee

Lenders charge a loan origination fee of 1 percent of the total loan amount to cover the costs associated with processing the loan. Some common administrative costs associated with processing a loan are- application fee, notary fee, document preparation fee,  and tax service fee.

Appraisal fee

It is common for lenders to order a property appraisal before approving a home loan. The aim of this exercise is to ensure the property’s worth is not less than the value claimed by the buyer. The average VA appraisal fee is around $400-$450 for a single family residence. The fee is non-refundable, even if the loan is not approved.

VA Funding fee

VA funding fee is charged by the VA to offset losses that arise when a borrower defaults. VA funding fee varies in the range of 1.25 percent to 3.3 percent of the total amount depending on the service type, and the down payment amount. Veterans drawing a disability compensation or widows of veterans who died in the line of duty are exempted from paying this cost.

Non-allowable Costs

Attorney fee

Hiring an attorney to help with the interpretation of the sales contract or a timely closure, attracts an attorney fee of around $400. The VA, however, does not allow VA loan borrowers to pay an attorney fee except the title work.

Notary fee

The notary will validate the transaction between you and the seller by verifying the signatures of parties involved. Notary fees usually varies between $2-$20. The actual amount will depend on the regulations of the state where you get the sale deed notarized.

Tax Service fee

Tax service fee is charged to ensure that buyers pay the due property taxes. In case of conventional loans, the cost has to be paid by the buyer, however, VA does not allow veterans to pay this cost.

Conclusion

Closing costs form a major part of the home buying costs. Buyers can negotiate with the seller to pay a part of their closing costs as the VA allows sellers to pay up to 4 percent of the home loan as a part of the closing costs. Veterans can also finance closing costs into the loan,however, that would mean a higher monthly payment obligation.

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5 Essential Tips for First Time Home Buyers

Home buying is a daunting task, and if it’s the first time you are buying a home, the task becomes even more challenging. There are a lot of things that you need to do simultaneously, for example, finding the right home, landing a good real estate agent, applying for the most suitable loan option available and more. All these tasks can be very confusing and may even force you to procrastinate your home buying decision. However, to make your home buying decision easy and help you avoid committing the same mistakes most first time home buyers do, here are a few tips you should follow.

1. Decide Your Budget

To make your search more effective you must start by knowing how much you can afford or how much do you want to spend in buying a home. For calculating the amount that you want to spend, make a note of your monthly earnings as well as the monthly expenditure. While calculating your expenditure take into account the yearly payments such as car insurance, health insurance, and others, to get an exact idea of your spending.

2. Compare Home Loan Options Available

Comparing loans involve much more than comparing the monthly payments that one makes to the lenders. In addition to the monthly payments, there are a lot of other factors that you need to look at to get a fair idea of which loan works better for you. For example, if you are looking to buy a property in Texas and don’t have enough money for down-payment or your credit score does not qualify your for other home loans, Texas first-time home buyer is a great option for you to easily get a loan at competitive interest rates.

3. Consider Down-payment Cost

One of the costs that first-time home buyers usually struggle with is the down-payment. Most first-time home buyers do not have the corpus to make a down-payment as high as 20 percent of the home value. However, there are many home loan options available that can reduce your down-payment requirement. For example, a VA loan for veterans and their dependents does not even need a down-payment. However, as not everybody would fall into that category, there are other loan options also such as the Texas first-time home buyer loans, USDA loans, and others that have relaxed down-payment requirements.

4. Include all Additional Costs

When buying a home, there are many additional costs associated with it. Make sure you don’t forget to include costs such as closing costs, homeowner’s insurance, monthly insurance premiums, property taxes, any dues that may be applicable. It is important to calculate these costs to avoid any surprises at a later stage. Also, there are options available where you may not be required to pay certain costs such as closing costs, monthly insurance premiums, and others.

5. Consider Long Term factors

When buying a home, there are a lot of factors that you need to consider from a long-term perspective. Do you have a school nearby if you are planning to have kids, is there a hospital in the vicinity for your elderly parents who might stay with you in future, does the resale value of the property look promising in case you plan to sell it off and buy another property. You must consider all these and a lot of other such factors when buying a home.

Conclusion

To help first time homebuyers with suitable borrowing options, the federal government, and the states offer various first-time homebuyer loans to the borrowers. These loans come with attractive interest rates, low down payment, relaxed credit score requirements and more. If you are looking for help with home loans, get in touch with a home loan expert who guides you through the pros and cons of the loans available in the market.

Things You Most Likely Never Knew About Your VA Loan

VA loans are one of the ways Americans thank their servicemen for defending our freedoms and democracy. The loans are extended to military veterans and represent one of the most powerful lending programs in the market. VA loans are available at flexible rates and ensure support to eligible veterans in areas where private financing is otherwise not available or easily accessible. The loan scheme is extremely popular among veterans, however, not all know about the benefits and perks that the program offers. The blog discusses some of the advantages.

Pre-payment does not invite a penalty

Unlike other loan schemes, VA loans don’t carry a prepayment penalty. You can make extra payments as and when you desire to avoid accumulated interest over the loan’s life cycle. You can also ask the provider to deduct a little extra amount of money towards installment payments.

You don’t need to pay mortgage insurance

Mortgage insurance premium is the amount you need to pay every month if you’re not making a downpayment of at least 20% of the total amount when availing a loan under conventional programs. The VA program eliminates the need to make any such payments, which helps you save a substantial amount of money throughout the loan’s life.

VA loans are for particular type of homes only

The VA will offer loans to finance the purchase of properties in “move-in-ready” condition such as single family homes, condos, and modular housing. If you’re mulling seeking finance for a property other than the ones mentioned above such as a farmhouse, or a fixed upper, VA loans are not for you.

You need to pay a mandatory fee to refinance your loan

You need to pay a processing fee when purchasing and refinancing a VA loan (normally 2 percent of the total loan amount). The fund that the VA collects by charging this fee helps run the program. The fee can be completely waived-off for those who have sustained service-related disabilities.

VA loans place limits on co-borrowers

You may need to make a down payment if your wife or a veteran is not your co-borrower and will live in the home. Very few lenders offer such types of joint loans and you should educate yourself on the terms and conditions of the contract before getting into an agreement.

Veterans can avail a loan even after declaring bankruptcy

Under the VA loan program, even veterans filing Chapter 7 or Chapter 13 bankruptcy can take out a loan. For those filing for Chapter 7 bankruptcy, the loans are available two years after the discharge, whereas those seeking protection under Chapter 13 bankruptcy can be eligible 12 months removed from their filing date. Veterans facing foreclosure on their properties are also eligible to apply.

Conclusion

The blog enumerated some lesser-known facts about VA loans. If you’re a veteran and mulling going for a VA loan, ensure that you know the current rates for your location. Just use the keywords describing your location to Google the prevailing rates. For example, if you’re located in Texas, the useful search-phrase can be ‘VA loan rates Texas’ or ‘Texas VA home loans’. Additionally, you need to work on your credit score before filing your application, as a weak credit rating is the most significant impediment in taking out a VA loan.

Looking for a VA Approved Lender? Here are the Factors to Consider

VA loans have many advantages over conventional loans, which makes them popular among veterans looking for loan options with low-interest. Individuals who qualify for VA loan either need to make either no or a minimum five percent down payment and there’s no need to take monthly mortgage insurance. When looking for a VA loan, it is important to seek help from the right vendor so that the process is smooth and you get a low-interest rate. The blog provides a list of things to consider when deciding upon a VA loan lender:

VA approved lenders

How VA Approved Lenders Differ from Others

Many borrowers are not aware of the fact that all mortgage lenders are not approved by the U.S. Department of Veteran Affairs. Avoid a lender who is not approved by the VA as there are chances that such companies may not understand the intricacies of the VA program. In addition, the distinctions of a VA approved lender include:

Authority

VA approved lender has authority to accept the loan application, order the appraisal and underwrite the loan according to the VA standards. The whole process takes place in-house without the interference of any third-party.

Experience

Give preference to a lender with substantial experience in the industry. There are some warning signs indicate that the lender may not be experienced in government based loans; the red flags include:

  • If the lender doesn’t ask about your military service
  • If the lender doesn’t use jargons like “eligibility” and “entitlement”
  • If the lender is not aware of the VA loan guidelines
  • If the lender isn’t able to give a satisfactory answer for basic questions related to the benefits of the loan

Choosing a VA Approved Lender

No two VA loan lenders have similar experience and expertise in handling and approving VA loan applications. Choose a lender who knows about repeat use of home loan benefits or has experience in assisting clients with frequent relocation issues due to Permanent Change of Station (PCS). Check the ratings of lenders on Better Business Bureau and other organizations.

An experienced VA lender provides the customers excellent customer service and helps them make the right decision. If the lender offers honest advice on making financial decisions and is able to give satisfactory answers to all the questions, there is a high possibility that you have made the right choice. Look around for reference, compare quotes and use your judging skills before finalizing a name. A little hard work and time investment at the start could payback in terms of a more secure future and financial gains.

Are You a First-time Homebuyer? Here are 4 Critical Aspects to Keep in Mind

Sound financial standing is not always an accurate indication of people’s readiness to purchase their first home. Buying a house involves a meticulous process starting from learning about suitable mortgage programs to finding an ideal location. First-time home buyers, no matter whether they are in Texas or another state, need to keep several key aspects in mind to materialize their home buying dream without having to face any hassles. To help, in this post, we list four major aspects borrowers need to consider when planning to apply for a mortgage. Let’s take a look.

First time homebuyers

1. Getting a Pre-approval

Getting pre-approved is one of the major requisites for homebuyers to fulfill. It is both time-consuming and challenging as lenders verify various documents including your credit report to provide a good faith estimate (GFE) during this process. Unlike pre-qualification, pre-approval is mandatory and requires a fee. Though, the process helps first-time homebuyers narrow down their property search and learn about how much mortgage loan lenders are willing to provide them.

2. Finding an Experienced Realtor

Taking the help of a realtor makes sense for most first-time homebuyers, as they can help both in obtaining ideal mortgage plans as well as finding properties in a competitive price range in your preferred location. Seeking an experienced realtor or banking officer, however, may take a little research. Begin by asking your friends or family members if they have worked with an experienced realtor. You may also check with lending institutions. When you find one, though, remember to check their track record.

3. Learning about Mortgage Options

If you are a veteran or active member of the armed forces in the US, you may be already familiar with the VA loan program and its benefits. However, there are various other loan programs that first home buyers should learn about to find their best bet. The veterans land loans program in Texas and other states, for example, provides financial support to people, who want to borrow money to purchase land. It requires only a minimum of five percent down payment and is a decent option for those who want to purchase a plot and then construct a house.

4. Finding the Perfect Option

The definition of “perfect home” is a matter of personal choice. Ideally, it is better to invest in a decent home that requires little repairs, placed in a good location rather than a flawless property in an underdeveloped area. The reason, the former is financially more beneficial. Regardless, what you prefer, finding your first perfect home is time-consuming and may prove to be stressful. Regardless of your property choice, make sure to carry out a home inspection before making the final buying decision.

The Bottom Line

First time home buyers, whether in Texas or any other part of the US, need to be disciplined to ensure that their home buying process is seamless. Besides finding out a near accurate amount of mortgage they can afford, they should also learn about various specialty mortgage plans and their eligibility criteria. Therefore, it is not only important to submit all the essential documents during the pre-approval process, but also, find out a mortgage consulting firm has years of experience with first time home buyers.

Here’s What You Need to Know About Texas VA Loans

The U.S. Department of Veteran Affairs has designed the VA loan program for veterans and current servicemen who find it difficult to obtain conventional mortgages. The basic eligibility for a VA loan requires applicants to be an active or retired military service personnel. There are even state-specific VA mortgages such as Texas Veteran Home Loan that eligible military servicemen in the state can obtain to buy a home. There are, however, many borrowers who are unaware of the common features of VA mortgage and Texas Veteran Home Loans. So, to clear the smokescreen, let’s take a look at the finer lines.

Reusability

VA home loans allow you to use your full VA entitlement multiple times, as long as you pay off the loan every time. You can even secure an additional loan, in case you have lost the previous loan due to foreclosure or an existing VA loan.

Eligible Property Types

You can apply for a Veteran Affairs loan if you are buying a property that is in a move-in condition. These properties include condos, single-family homes, modular housing, and multi-family homes. Avoid applying for a VA loan if you plan to buy a working farm, a fixer-upper or a downtown deli, or even land.

Government Guarantee

The U.S Department of Veteran Affairs guarantees every qualified mortgage loan. This guarantee gives confidence to the lenders on the credibility of the service members and helps borrowers obtain competitive interest rates on VA Loans. This guarantee, however, does not automatically qualify veterans to receive a VA loan. They still need to qualify based on their assets, income, and credit profile.

Availability despite Bankruptcy or Foreclosure

Military veterans even with a history of foreclosure or bankruptcy are eligible for a VA home loan. If you have an existing VA loan, and later faces bankruptcy or foreclosure, can continue using their VA loan benefits.

No Need for Mortgage Insurance

The guaranty that comes with a Texas Veteran Home Loan eliminates the need for any mortgage insurance. Borrowers can, therefore, save on additional expenses that they would have otherwise paid as mortgage insurance premium every month.

Funding Fee

There is a mandatory funding fee that comes with every  VA home loan. It ranges from zero up to 3.15 percent of the entire loan amount. Funding fee can easily be rolled into a VA loan. Veteran Affairs loans can, therefore, total up to 103.15 percent of the sale price. Additionally, VA loans free you from having to bear any prepayment penalty.

Texas Veteran Loans Vs. VA Loans

Despite fundamental similarities between Texas Veteran Home Loans and VA mortgage, there are some differences that you need to know. The interest rates are one of the key difference between these two loan programs. The Texas Veterans Land Board decides the rates for Texas Veteran Loans, whereas the lenders of VA Loans set interest rates of VA Mortgages. Besides, Texas Veteran Loans can only be used for home purchases and not for refinance. They can be originated under the guidelines for a VA, FHA or Conventional loan.

Conclusion

VA Loans work as a great option for military veterans to buy or build a home in the state of Texas. Knowing the above features of Texas VA home loan and its difference from VA mortgage is sure to help potential borrowers choose and qualify for a suitable option. When in doubt, it is always advisable to consult an expert. Hope this read helps.

Texas Veterans Land Loans: All You Need to Know

The Veterans Land Board was formed in 1946 after the  World War II, through the creation of Texas Legislature. The purpose of the program has been to help war veterans purchase a land or home in Texas, allowing loans of up to $100,000 at lower rates compared to other types of mortgages. In addition, The Department of Veterans Affairs guarantees the loan, so that if borrowers default on their payment, lenders don’t end up losing money. This guarantee also encourages lenders to offer more competitive interest rates to borrowers.

Eligibility Requirements

The basic eligibility criteria to receive a loan through the Texas Veterans Land Loans Program, applicants need to be minimum 18 years of age, and on the date of application, an applicant should be a bona fide and legal resident of Texas.

They also need to meet one of the following service criteria:

  • The applicants need to be active duty military member.
  • A Texas National Guard member.
  • A member of the reserve component military who has completed 20 years that qualify them for retirement.
  • Applicants should have served at least 90 days of active duty days. The only exception would be the veterans who were discharged because of a service-related disability.
  • A surviving spouse of a Veteran whose death was service-connected or a veteran who is missing in action.

It is also important to remember that, applicants need to pay upfront appraisal and application fees. The loan interest rate may vary, which is regularly published. There are additional reductions in interest rates for veterans with disability or spouses who lost a husband or wife while on service.

Land Requirements

Texas Veterans Land Loans are available for any piece of land that qualifies the following requirements:

  • The land must be within the state of Texas.
  • The land must have at least one acre of area, excluding any area that is subject to frequent inundation, dedicated to a public roadway, or falls beneath a navigable waterway.
  • The land must have legal, usable* access to a public road that meets the minimum requirement of 60 feet or the road width requirement of a public county road, whichever is greater.
  • The land must not fall into “Strictly for commercial use” category.
  • The land must not have been owned by veterans or their spouse within the last three years.

*The term “usable” implies that the access road must be commutable using any standard passenger vehicle.

All these requirements may seem confusing to the applicants; this is why they need to consult a specialty mortgage company. Such a firm guides and facilitates through the mortgage application process and makes the process seamless for veterans.

Last Few Words

It is true that nothing can repay the sacrifice military veterans make for the nation; however, the Texas Veterans Land Loan Program is one of the nation’s sincere gestures to thank and honor its war heroes for their selfless services. Contact a specialty mortgage consultant to get more information on Texas Veteran Land Loans.