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Things to Remember on VA Loans
1. GET CONFIRMATION OF ELIGIBILITY
The VA program requires a Certificate of Eligibility (COE) from the VA before a new VA loan can be originated. Many times our office can get the COE within minutes with our online connection to the VA. Other times, it takes some backup documentation or a trip to the local VA clinic. Either way, the important thing to remember here is to inform your veteran buyer to get his or her VA Certificate of Eligibility as early as possible in the process. We will not send a file into Underwriting without one and if there is a problem, there needs to be time to get it resolved. Send your client here for eligibility determination. The Texas Veterans Housing Assistance Program requires a Notice of Eligibility (NOE) from the Texas Veterans Land Board (TVLB) before a new Texas Vet loan can be originated. This is just as important as the COE from the VA. We do all NOE submission requests to the TVLB on behalf of our clients, they just need to complete the applicable forms. 2. MAKE SURE CONDOS ARE ON THE VA LIST
Before assisting your veteran client to make an offer on a condominium, make sure it is on the VA approved-condo list. Click here to use the VA search engine. It's a little tricky, so please let us know if we can help. Also, you can click here to download a list of VA-approved condos in Austin. It is possible to add a condominium property to the VA list, but the process can take quite a bit of time and still not be approved in the end. Stick to the list and you'll be much better off! 3. USE SELLER CONTRIBUTIONS
If you've asked for "seller contributions" in your sales contracts, then you know this can be a confusing matter for your buyers and your sellers. With VA loans we always recommend at least $1000 to be paid by the seller toward the buyer's closing costs, prepaids, and escrows. There are buyer costs that the VA labels as "non-allowable" which means the buyers cannot pay them, and therefore, the costs are passed to the seller. Prior to having a final, approved HUD-1 closing statement, it is difficult to determine what will be considered "non-allowable". Even though the VA has a list of these items, it is interpreted differently by every lender. Even different closers with the same company can have a different interpretation. There may be no non-allowables, and there may be $1200 worth, so go with at least $1000, or even $1,500 to be safe. This will ensure that the seller has no surprises at closing and will know his or her "net" proceeds at the time of the contract. Regardless of the amount of seller contributions, they will always be applied to the VA non-allowables first, and then the balance will go to the buyer's other closing costs, prepaids, and escrows. Please be sure to call Chad if you have any questions about this topic. Whereby many conventional programs have limits of 3% to 6% of the sales price when it comes to seller contributions, the VA program does not. Although we have seen some lenders say 4% is the limit, it's really not. In most cases, the seller, or any other third party, can pay all of the buyer's customary closing costs, prepaids, and escrows. The only true limiting factor is the VA appraisal. If the final contract sales price is for $150,000, and it includes $5,000 in seller contributions (netting the seller $145,000), the property must appraise for at least $150,000. So if the appraisal came in lower than $150,000, the seller contributions would need to be reduced or the seller would need to accept a lower "net". Call Chad if you have any questions whatsoever.
4. KNOW WHAT ASSUMPTIONS TO PUT IN THE CONTRACT
Some real estate agents have not done a VA or Texas Vet loan in a long time, so they don't mind my suggestions when it comes to the "finance parts" of the sales contract. Just keep in mind that I am a licensed Mortgage Broker in the State of Texas, NOT a licensed Real Estate Agent. These are only suggestions. Click here for the "financing example" I give to my realtor-partners when they are putting in an offer for a veteran buyers. This is for VA or VA-Texas Vet financing. FYI... 90% of the Texas Vet Housing Loans are done in conjunction with the VA program. 5. GET A TERMITE INSPECTION
Just remember almost every VA loan will need a new termite inspection. One of the few exceptions is for a condominium that is above the first floor or a brand-new home that was already treated by the builder. The best time to do this is usually when your client has the home inspected. Depending on what the termite inspector includes in the report, a termite treatment may also be required before closing. Septic systems and water wells must also be inspected for VA loan approval, if applicable. 6. DON'T WORRY ABOUT THE APPRAISAL
Over the years we have heard a lot of concerns about getting VA appraisals, but they came from people who did them years ago, when the process was not like it is today. VA appraisals don't take any longer to do and although the VA does require some things that are not required on conventional appraisals, we very rarely have required repairs. (Unless you start with a property that obviously has damage or safety issues.) Regardless of what is in the property inspection report, only the issues spelled out in the VA appraisal will be required by the lender. Any "required repairs" will need to be paid for by the seller and will need to be completed before closing.
Call or email Chad anytime with your VA and Texas Vet questions!
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