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Archive for the ‘VA Jumbo Loan’ Category

VA Jumbo Loans

Monday, December 20th, 2010

Currently, there exists a “perfect storm” of opportunity for qualified veteran and active duty military borrowers.  Between record low VA rates and rock-bottom home prices, those who have earned VA Loan Guarantee eligibility can still qualify for incredible financing opportunities.  While many VA borrowers are aware of the 100% financing benefits the loan guarantee program offers them on conforming loan amounts(</= $417,000 continental US, </= $625,500 in Alaska & Hawaii), many veterans are as yet unaware that there are financing options above and beyond conforming limits that still make VA loans a far superior alternative to conventional “Jumbo” loan options.  Here we will offer a brief comparison of the two as well as the more specific advantages and features of the VA Jumbo Loan Program.

While 100% financing is limited on VA Jumbo Loans, qualified veterans can still secure financing with smaller down payments and more flexible lending guidelines without having to carry mortgage insurance.

Most conventional jumbo loans require that the borrower bring at least 20% of the full purchase price to close.  By contrast, VA Jumbo loans generally require no more than 25% of the amount of the sales price over $417,000, or $625,000 in Alaska and Hawaii.

Let’s say a home sells for $700,000. Now subtract the maximum “zero down” VA loan amount of $417,000 and you get $283,000.  Simply take 25 percent of $283,000 and we determine that the down payment would be $70,750.  To sum up, for just over 10% down, qualified veteran borrowers can purchase VA homes in high cost counties with no mortgage insurance and with subsidized rate pricing.  By comparison, a conventional jumbo loan borrower would have to bring $140,000 to close and likely receive a much higher rate that a qualified veteran.

Currently however, in order to facilitate homeownership for qualified veteran borrowers in areas within the continental United States where the median home price exceeds the traditional $417,000 maximum (despite the recent home valuation trends of recent years), the Department of Veterans Affairs has extended loan guarantee benefits that allow for up to 100% financing.  Many of these “High Cost” areas are located in California or in high density, east coast states, like Maryland and Virginia.  To give one an example of the sorts of benefit loans available, consider the following counties loan limits, based on the 2010 updated figures.

  • Los Angeles VA loan limit: $593,750
  • San Diego VA loan limit: $437,500
  • Alameda VA loan limit:$962,500
  • San Francisco VA loan limit:962,500
  • Orange County VA loan limit:$593,750
  • Riverside County VA loan limit:$417,500
  • Fresno County VA loan limit:$417,500
  • San Bernardino County VA loan limit:$417,500
  • Sacramento County VA loan limit:$418,750
  • Santa Clara County VA loan limit:$633,750

While these areas have been designated as “High Cost” counties for the years 2009-2010, there is little indication as to the depth, extend or duration of how long these areas will be able to enjoy these benefits.  In fact, even despite what the VA has indicated they will currently guarantee, the extent to which lenders will honor or offer financing across these conditions exist on a case by case basis.  The best bet for any borrower looking to take advantage of these temporary benefits is to contact a VA approved loan officer who can navigate through the various opportunities available to you.

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What is a VA Jumbo Loan

Tuesday, June 15th, 2010

Many veterans have already taken advantage of the VA loan. With easier qualifications and more flexibility it has been the right choice for many to purchase and refinance their homes through this program. However, in most counties, the conforming loan limit with no money down is $417,000. What happens when your home costs more than this? There is a solution! The VA Jumbo loan.

A VA jumbo loan is any VA loan greater than $417,000. Qualifying veterans can apply to purchase or refinance their home for up to a value of $1,000,000 through this type of loan. The VA Jumbo mortgage just asks the veteran to make a down payment of 25% on any amount over the limit of $417,000. Basically the home is purchased for this down payment and the closing costs, which can be rolled into the loan and do not have to be paid out of pocket. Plus you get all the benefits of a VA loan!

For example, imagine you are a veteran and the home you intend to purchase is $650,000. In order to find out the down payment you would need, simply start by subtracting the conforming loan limit ($417,000) from the purchase price, which equals $233,000. Multiply this amount by 25%, which equals $58,250. This would be your down payment. This works out to about a 9% down payment. That’s less than the standard down payment on most homes. The VA program is hard to compare to a conventional loan when you look at it from this point of view.

VA Jumbo loans are only available to those that qualify for VA loans and their eligibility requirements.  It will allow you to choose a home that suits you and your family the best. Jumbo loans have all of the benefits of a VA loan, plus it allows you to obtain a larger loan amount if that is what you need. Definitely make sure you check out this amazing offer!

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VA Loan Types

Thursday, May 6th, 2010

Veteran Mortgage loans vary in form and length. The type of VA mortgage loan an individual selects will vary according to an individuals needs.

Here is a quick overview of some of the types of VA loans:

Fixed Rate- Fixed interest rate home mortgage loan offers a borrower to lock a certain interest rate for the life of their loan, unless the borrower chooses to refinance. The interest rate for the loan never changes no matter what is happening in the market. This gives a borrower a sense of comfort from a fluctuating market.

Advantages: Even if interest rates rise, you can keep your interest rate.

Disadvantage: If interest rates go down, your rate stays the same.

Term of Fixed Rate loans: Fixed VA mortgage rates are available for 40, 30, 25, 20, 15 and 10 years. Usually, the shorter the term of the loan the lower the interest rates. Longer term VA loans can be easier to get because a borrower does not need as much income. The most common fixed rate loan lengths are 30 and 15 year loans.

30 Year Loan: This is the most popular mortgage. Monthly payments are low since the life of the loan is long, but because of this their will be more interest over the life of the loan.

15 Year Loan: This loan life is shorter, resulting in a borrower owning their house quicker. A 15 year loan usually has a lower interest rate, but higher monthly payments.

Adjustable Rate (ARM) – Adjustable rate mortgages, VA Hybrid ARM, or Variable rate mortgages are loans where the interest rate adjusts based on indexes and or prime rates. With a variable rate the interest is tied into the lending institutions prime rate. Interest rates can vary from month to month. While the payment remains and only fluctuates slightly, the amount applied to the principle can change regularly. Typically lenders will set a cap for how high the interest can reach annually. Because of the flexibility, Adjustable Rate Mortgages often are less expensive than fixed rate mortgages.

Advantages: If you are going to be only staying in your home a short time an ARM is great since a borrower is able to exploit lower interest rates. Variable rate mortgages are also great if a borrower believes that interest rates will lower soon.

Disadvantages: It can be frustrating having your rate change sometimes month to month. If the market is bad, a borrower’s rate will be bad.

Terms of Variable Rate Mortgage or ARM- The term for ARM is usually 1, 3, 5, 7 year terms.

Hybrid Adjustable Rate Loan or Hybrid ARM- A hybrid ARM features an interest rate that is fixed after an initial period but then acts like an ARM thereafter. It hybrids together both a fixed rate and an Adjustable rate mortgage.

Advantages: Hybrids are the best of both worlds, getting a fixed rate at first but than later having more flexibility with the Adjustable Rate. Hybrids are particularly great if a borrower will not be staying in their home long.

Disadvantages: They have the disadvantages of both a fixed and an adjustable rate.

Term of Hybrid ARMS: Hybrid ARMS term is referred to first by the fixed amount rate and than the adjustable amount rate periods. For example ARM 3/1 is a fixed mortgage rate for 3 years and an adjustable rate for 1 year. The date the fixed rate switched to the adjustable rate is known as a reset date. A Hybrid ARM transfer some interest rate risk from the lender to the borrower allowing for lower interest rates.

VA Jumbo Mortgages- A jumbo mortgage is a mortgage that is higher than the typical loan amount. Jumbo loans may have a higher interest rate and different requirements for down payments than smaller home loans due to different underwriting requirements. Fannie Mae and Freddie Mac set standard for the maximum amount of a loan before it is considered Jumbo. The current limit is 417,000. Any home that costs more than 417,000 would be considered a Jumbo loan. With Jumbo loans Veterans will need to pay 25% on any amount over $417,000. Here is an example of how a jumbo loan works. A Veteran finds a home for 600,000. His maximum VA home amount is 417,000 with a $0 down payment. The Veteran pays 25% of 183,000 or 45,750. This amount acts in many ways similar to a down payment. Jumbo loans are required if you want to buy a more expensive home because lenders feel a greater risk.

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