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Nikitas Kouimanis' Blog

By Nikitas Kouimanis | Mortgage Broker
or Lender in Parsippany, NJ

VA Loans

VA Loan Guidelines
 
2012 VA Loan Eligibility Questions
2012 Underwriting Guidelines
2012 VA Loan Funding Fee’s Exemptions
2012 VA Loan Funding Fee Exemptions
2012 VA Loan Closing Costs Exemptions
2012 VA Loan Compliance Inspections
2012 VA Loan Sellers Concessions

 
Military Service Requirements for VA Loan Eligibility
 
Note: Applications involving other than honorable discharges will usually require further development by VA.  This is necessary to determine if the service was under other than dishonorable conditions.
 
Wartime - Service During:
 
WWII: 9/16/1940 to 7/25/1947
Korean: 6/27/1950 to 1/31/1955
Vietnam: 8/5/1964 to 5/7/1975
 
You must have at least 90 days on active duty and been discharged under other than dishonorable conditions.  If you served less than 90 days, you may be eligible if discharged for a service connected disability.
 
 
 
Peacetime - Service during periods:


7/26/1947 to 6/26/1950
2/1/1955 to 8/4/1964
5/8/1975 to 9/7/1980 (Enlisted)
5/8/1975 to 10/16/1981 (Officer)
 
You must have served at least 181 days of continuous active duty and been discharged under other than dishonorable conditions.  If you served less than 181 days, you may be eligible if discharged for a service connected disability.
 
Service after 9/7/1980 (enlisted) or 10/16/1981 (officer)
 
If you were separated from service which began after these dates, you must have:
 
Completed 24 months of continuous active duty or the full period (at least 181 days) for which you were ordered or called to active duty and been discharged under conditions other than dishonorable, or


Completed at least 181 days of active duty and been discharged under the specific authority of 10 USC 1173 (Hardship), or 10 USC 1171 (Early Out), or have been determined to have a compensable service-connected disability;


Been discharged with less than 181 days of service for a service-connected disability.  Individuals may also be eligible if they were released from active duty due to an involuntary reduction in force, certain medical conditions, or, in some instances for the convenience of the Government.
 
Gulf War - Service during period 8/2/1990 to date yet to be determined
 
If you served on active duty during the Gulf War, you must have:
 
Completed 24 months of continuous active duty or the full period (at least 90 days) for which you were called or ordered to active duty, and been discharged under conditions other than dishonorable, or

Completed at least 90 days of active duty and been discharged under the specific authority of 10 USC 1173 (Hardship), or 10 USC 1173 (Early Out), or have been determined to have a compensable service-connected disability, or

Been discharged with less than 90 days of service for a service-connected disability.  Individuals may also be eligible if they were released from active duty due to an involuntary reduction in force, certain medical conditions, or, in some instances, for the convenience of the Government.

VA Loan Fees A Borrower Might Pay
 
When buying a home with a VA mortgage, there are a range of fees and expenses a borrower should expect to pay, and then there are fees that could be paid depending on the type of home loan, the state or housing market that loan is issued in, etc.
    The VA has some requirements that govern these types of expenses; one good example of that is when a third party renders a service as part of the VA loan. The only amount the borrower may...

Is Now The Time To Apply For A VA Home Loan?
 
Ever since 2008 and the housing market crisis that started that year, some veterans and currently serving military members have felt leery of applying for a home loan. While it’s true that some choose to buy in spite of housing market woes, those who held back may well be considering 2012 or early 2013 as the time to commit.
 
 Part of that motivation is due to recent headlines like the one published on October 3, 2012 at Money.CNN.com; “Economists: Housing recovery finally here”.
 
That’s a fairly...
VA Loan Fees and The Appraisal Process
 
The appraisal process for VA home loans seems to be a mystery to many borrowers; there are many frequently asked questions about this critical stage of buying a home using VA loan benefits.
 
 VA appraisals are required by federal regulations; the home you want to buy with a VA loan must meet VA minimum property requirements for safety, structural integrity, and other issues.
 
Some assume these rules are to protect the borrower from buying a home with shoddy workmanship or one that is located in an area...

Questions about who is eligible for a VA loan and reuse of eligibility for another VA loan
 
Q: How do I apply for a VA guaranteed loan?
 
A: You can apply for a VA loan right here by using either my Purchase Assistant  or my Refinance Advisor. Just by doing so you will be tellin me more about your situation so I can get back to you and see if it is the right loan program for your specific home loan needs.

Q: How do I get a Certificate of Eligibility?
 

A: You can obtain information on how to get a Certificate of Eligibility by going on to this site here. http://www.benefits.va.gov/homeloans/docs/Veteran_registration_coe.pdf).  A Certificate of Eligibility for Home Loan Benefits, to the Veteran Loan Administration Eligibility Center, along with proof of military service. In some cases it may be possible for VA to establish eligibility without your proof of service. However, to avoid any possible delays, it's best to provide such evidence.
 
Q: Can my lender get my Certificate of Eligibility for me?
 
A: Yes, it's called Web LGY. Only VA Approved lenders have access to the Web LGY system. This Internet based application can establish eligibility and issue an online Certificate of Eligibility in a matter of seconds. Not all cases can be processed through Web LGY - only those for which VA has sufficient data in our records. However, veterans are encouraged to ask their lenders about this method of obtaining a certificate.
 
 
 
Q: What is acceptable proof of military service?
 
A: If you are still serving on regular active duty, you must include an original statement of service signed by, or by direction of, the adjutant, personnel officer, or commander of your unit or higher headquarters which identifies you and your social security number, and provides your date of entry on your current active duty period and the duration of any time lost.
 
If you were discharged from regular active duty after January 1, 1950, a copy of DD Form 214, Certificate of Release or Discharge From Active Duty should be included with your VA Form 26-1880. If you were discharged after October 1, 1979, DD Form 214 copy 4 should be included. A PHOTOCOPY OF DD214 WILL SUFFICE.....DO NOT SUBMIT AN ORIGINAL DOCUMENT.
 
If you are still serving on regular active duty, you must include an original statement of service signed by, or by direction of, the adjutant, personnel officer, or commander of your unit or higher headquarters which shows your date of entry on your current active duty period and the duration of any time lost.
 
If you were discharged from the Selected Reserves or the National Guard, you must include copies of adequate documentation of at least 6 years of honorable service. If you were discharged from the Army or Air Force National Guard, you may submit NGB Form 22, Report of Separation and Record of Service, or NGB Form 23, Retirement Points Accounting, or it’s equivalent. If you were discharged from the Selected Reserve, you may submit a copy of your latest annual points statement and evidence of honorable service. Unfortunately, there is no single form used by the Reserves or National Guard similar to the DD Form 214. It is your responsibility to furnish adequate documentation of at least 6 years of honorable service.
 
If you are still serving in the Selected Reserves or the National Guard, you must include an original statement of service signed by, or by the direction of, the adjutant, personnel officer, or commander of your unit or higher headquarters showing the length of time that you have been a member of the Selected Reserves. Again, at least 6 years of honorable service must be documented.
 
Q: How can I obtain proof of military service?
 
A: Standard Form 180, Request Pertaining to Military Records, is used to apply for proof of military service regardless of whether you served on regular active duty or in the selected reserves. This request form is NOT processed by VA. Rather, Standard Form 180 is completed and mailed to the appropriate custodian of military service records. Instructions are provided on the reverse of the form to assist in determining the correct forwarding address.
 
Q: I have already obtained one VA loan. Can I get another one?
 
A: Yes, your eligibility is reusable depending on the circumstances. Normally, if you have paid off your prior VA loan and disposed of the property, you can have your used eligibility restored for additional use. Also, on a one-time only basis, you may have your eligibility restored if your prior VA loan has been paid in full but you still own the property. In either case, to obtain restoration of eligibility, the veteran must send a completed VA Form 26-1880 to our Eligibility Center. To prevent delays in processing, it is also advisable to include evidence that the prior loan has been paid in full and, if applicable, the property disposed of. This evidence can be in the form of a paid-in-full statement from the former lender, or a copy of the HUD-1 settlement statement completed in connection with a sale of the property or refinance of the prior loan.
 
Q: I sold the property I obtained with my prior VA loan on an assumption. Can I get my eligibility restored to use for a new loan?
 
A: In this case the veteran’s eligibility can be restored only if the qualified assumer is also an eligible veteran who is willing to substitute his or her available eligibility for that of the original veteran. Otherwise, the original veteran cannot have eligibility restored until the assumer has paid off the VA loan.
 
Q: My prior VA loan was assumed, the assumer defaulted on the loan, and VA paid a claim to the lender. VA said it wasn’t my fault and waived the debt. Now I need a new VA loan but I am told that my used eligibility can not be restored. Why?
 

Or,
 
Q: My prior loan was foreclosed on, or I gave a deed in lieu of foreclosure, or the VA paid a compromise (partial) claim. Although I was released from liability on the loan and/or the debt was waived, I am told that I cannot have my used eligibility restored. Why?
 
A: In either case, although the veteran’s debt was waived by VA, the Government still suffered a loss on the loan. The law does not permit the used portion of the veteran’s eligibility to be restored until the loss has been repaid in full.
 
Q: Only a portion of my eligibility is available at this time because my prior loan has not been paid in full even though I don’t own the property anymore. Can I still obtain a VA guaranteed home loan?
 
A: Yes, depending on the circumstances. If a veteran has already used a portion of his or her eligibility and the used portion cannot yet be restored, any partial remaining eligibility would be available for use. The veteran would have to discuss with a lender whether the remaining balance would be sufficient for the loan amount sought and whether any down payment would be required.
 
Q: Is the surviving spouse of a deceased veteran eligible for the home loan benefit?
 

A: The unmarried surviving spouse of a veteran who died on active duty or as the result of a service-connected disability is eligible for the home loan benefit. If you wish to make application for the home loan benefit as a surviving spouse, contact our Eligibility Center. In addition, a surviving spouse who obtained a VA home loan with the veteran prior to his or her death (regardless of the cause of death), may obtain a VA guaranteed interest rate reduction refinance loan. For more information, contact our Eligibility Center.
 
[NOTE: Also, a surviving spouse who remarries on or after attaining age 57, and on or after December 16, 2003, may be eligible for the home loan benefit. However, a surviving spouse who remarried before December 16, 2003, and on or after attaining age 57, must apply no later than December 15, 2004, to establish home loan eligibility. VA must deny applications from surviving spouses who remarried before December 16, 2003 that are received after December 15, 2004.]
 
Q: Are the children of a living or deceased veteran eligible for the home loan benefit?
 
A: No, the children of an eligible veteran are not eligible for the home loan benefit.
 
 
VA Loan Fees A Borrower Might Pay

When buying a home with a VA mortgage, there are a range of fees and expenses a borrower should expect to pay, and then there are fees that could be paid depending on the type of home loan, the state or housing market that loan is issued in, etc.
The VA has some requirements that govern these types of expenses; one good example of that is when a third party renders a service as part of the VA loan. The only amount the borrower may be charged for such services is the actual cost of those services--no surcharges or extra fees can be tacked on by the lender.
 
Some other types of expenses a borrower should anticipate “just in case” include the following:
 
Title Examination and Title Insurance
 
The borrower may be required to pay a fee for title examination and title insurance, if warranted. VA loan rules explain this in VA Pamphlet 26-7, Chapter Eight.
 
Mortgage Electronic Registration System (MERS) Fee
 
VA loan rules state, “The veteran may pay a fee for MERS.  MERS is a one-time fee for the purpose of electronically tracking the ownership of the beneficial interest in a loan and its servicing rights.”
 
Special Mailing Fees for Refinancing Loans
 
For refinancing loans only, VA loan rules permit the borrower to be charged for costs associated with using Federal Express, Express Mail, or a similar service, “when the saved per diem interest cost to the veteran will exceed the cost of the special handling.”
 
“Other” Fees Authorized By The Department of Veterans Affairs
 
VA loan rules for “other” or “additional” fees are addressed in Chapter Eight of VA Pamphlet 26-7, which states clearly, “Additional fees attributable to local variances may be charged to the veteran only if specifically authorized by VA. The lender may submit a written request to the Regional Loan Center for approval if the fee is normally paid by the borrower in a particular jurisdiction and considered reasonable and customary in the jurisdiction.”
 
The phrase “reasonable and customary” is key in that paragraph. While that may be open to interpretation, the VA has the final say when it comes to that interpretation as it applies to the rules in Chapter eight.

Is Now The Time To Apply For A VA Home Loan?
 
Ever since 2008 and the housing market crisis that started that year, some veterans and currently serving military members have felt leery of applying for a home loan. While it’s true that some choose to buy in spite of housing market woes, those who held back may well be considering 2012 or early 2013 as the time to commit.
 
Part of that motivation is due to recent headlines like the one published on October 3, 2012 at Money.CNN.com; “Economists: Housing recovery finally here”.
 
That’s a fairly bold headline--and one that might push some doubters into giving the market another chance. Consider the article’s opening line. “It's been a long time coming, but economists surveyed by CNNMoney believe the nation's housing market has finally turned the corner.”
 
That article goes on to say that fourteen economists were surveyed about home prices, with nine respondents indicating they feel home prices have either started trending upwards or will do so in 2013. Three months prior to that survey, fifty percent of the economists polled by CNN Money stated a turnaround in home prices was likely in 2013.
 
There are other indicators that the time to consider a VA home loan is now--there have been three months of improvements in the numbers on the S&P/Case-Shiller home price index, plus, as CNN Money reports, "a pick-up in sales of existing homes and home construction and a big jump in the price of new home sales.”
 
Qualified VA borrowers currently have very low interest rate options open to them, and with house prices beginning to rise once more, there is a good opportunity for borrowers--depending on the housing market--to find competitive prices on new purchase homes, short sales, and even VA loan assumptions.
 
If you’re considering a VA loan for the end of 2012 or early 2013, it’s a very good idea to pre-qualify for a VA loan amount, discuss your options with a loan officer, and start planning for a look at your favorite neighborhoods for a new home.

VA Loan Fees and The Appraisal Process
 
The appraisal process for VA home loans seems to be a mystery to many borrowers; there are many frequently asked questions about this critical stage of buying a home using VA loan benefits.
 
VA appraisals are required by federal regulations; the home you want to buy with a VA loan must meet VA minimum property requirements for safety, structural integrity, and other issues.
 
Some assume these rules are to protect the borrower from buying a home with shoddy workmanship or one that is located in an area unsuitable due to high risk of natural disasters or other problems. But there is another reason for the detailed rules that govern VA appraisals; when it comes time for the VA borrower to sell the home later down the line (assuming he or she chooses to do so); the sale of that home is not tarnished by such conditions as pointed out in the VA rulebook as being unacceptable.
 
In other words, the VA appraisal protects the buyer at purchase time, but also when it’s time to put the home up for sale.
 
The VA appraisal costs money--the borrower is responsible for paying the VA appraiser’s fee, which varies depending on the housing market and state. There is no one set fee for VA appraisal work; only what is considered “reasonable and customary” in that housing market.
 
Another area that confuses some borrowers--the need to pay for any required compliance inspection. When a VA fee appraiser does the job at a specific home and finds things which require correction, repair, or other attention in order for the VA loan to be approved, there may be a compliance inspection required in order to make sure those repairs actually get done, and to the satisfaction of the VA.
 
Compliance inspections must also be paid for by the borrower--it’s an expense that should be considered a typical part of buying a home. Sometimes they are needed, sometimes they are not. But a VA loan applicant should always budget for such things just in case--don’t be caught unprepared for the expense should it be required.
 
Finally, it should be noted that appraisal fees and compliance inspection fees are issued for services rendered--NOT for the results of those services. The borrower does not pay for a positive outcome in either case--just that the work gets done and a determination is made. It’s the service, not the outcome that is being paid for.

VA Loan 2012 Underwriting Guidelines for New VA Loan Home Purchase
 
No down payment is required by VA unless the purchase price exceeds the reasonable value of the property. The VA Loan lender may require a down payment if necessary to meet secondary market requirements if the home is being purchased above the value given by the VA Loan Appraiser.
 
The veteran must certify that he or she intends to personally occupy the property as his or her home.
 
Interest rate and points are negotiated between the VA approved VA Loan Lender and veteran.

The veteran and seller may negotiate for the seller to pay all or some of the points.
Points must be reasonable and must be approved by the Veterans Administration.
 
Points may not be financed in the loan except with Interest Rate Reduction Refinancing Loans (IRRRLs).
Flexible VA Loan standards. The veteran must have:
 
Satisfactory credit, and
Satisfactory repayment ability
Stable income
Residual income (net effective income minus monthly shelter expense) in accordance with regional tables, and

Acceptable ratio of total monthly debt payments to gross monthly income (A ratio in excess of 41% requires closer scrutiny and compensating factors.).

2012 VA Loan Funding Fee’s

The veteran must pay a funding fee to help defray costs of the VA home loan program.
The VA home loan program involves a veteran’s benefit.VA policy has evolved around the objective of helping the veteran to use his or her home loan benefit.Therefore, VA regulations limit the fees that the veteran can pay to obtain a loan.
Lenders must strictly adhere to the limitations on borrower-paid fees and charges when making VA loans.
In order to defray the cost of administering the VA home loan program, each veteran must pay a funding fee to VA at loan closing.
Congress may periodically change the funding fee rates to reflect changes in the cost of administering the program, or to assist a certain class of veterans


Purchase and Construction Loans

Note:The funding fee for ALL subsequent use loans closed on or after October 1, 2006, and before October 1, 2007, is 3.35 percent.This applies to all purchase loans where no down payment of 5 percent or more is made as well as cash-out refinances where the fee would have been 3.3 percent.Effective October 1, 2007, the subsequent use fee reverts back to 3.3 percent.
 

Type of Veteran
Downpayment Percentage for First time Use Percentage for Subsequent Use
Regular
Military
None
5% or more (up to 10%)
10% or more
2.15%
1.50%
1.25%
3.3% *
1.50%
1.25%
Reserves/
National Guard
None
5% or more (up to 10%)
10% or more
2.4%
1.75%
1.5%
3.3% *
1.75%
1.5%
 
Cash-Out Refinancing Loans
 

Type of Veteran
Percentage for First Time Use Percentage for Subsequent Use
Regular Military 2.15% 3.3%*
Reserves/National Guard 2.4% 3.3%*
 
*The higher subsequent use fee does not apply to these types of loans if the veteran’s only prior use of entitlement was for a manufactured home loan.
 

Type of Loan
Percentage for Either Type of VeteranWhether First Time or Subsequent Use
IRRRLs .50%
Manufactured Home Loans (NOT permanently affixed) 1.00%
Loan Assumptions .50%
 
Lenders must remit the VA funding fee via the VA Funding Fee Payment System (FFPS); within
15 calendar days of loan closing.
 
Lenders paying the fee more than 15 days after loan closing will automatically be assessed a four percent late fee.Fees paid more than 30 days late will automatically be assessed an interest charge in addition to the late fee.
 
2012 VA Loan Funding Fee Exemptions
 
The following persons are exempt from paying the VA Loan funding fee:
 
Veterans receiving VA compensation for service connected disabilities.
Veterans who would be entitled to receive compensation for service connected disabilities if they did not receive retirement pay.
Veterans who are rated by VA as eligible to receive compensation as a result of pre-discharge disability examination and rating.
Veterans entitled to receive compensation, but who are not presently in receipt because they are on active duty.
 
Surviving spouses of veterans who died in service or from service-connected disabilities (whether or not such surviving spouses are veterans with their own entitlement and whether or not they are using their own entitlement on the loan).
 
A VA Loan lender must:
 
Verify the status of any veteran who may be exempt from paying the funding fee;
Determine the amount of funding fee owed by any non-exempt borrower;
Collect the appropriate fee from all non-exempt borrowers at loan closing;
Electronically remit the funds to VA in a timely manner through the VA Funding Fee Payment System (FFPS);
Print proof of payment of the funding fee; and
Submit proof that the funding fee has been paid or that the veteran is exempt from paying the funding fee to VA with the closed loan package.
 
 
 
Note: The funding fee may be paid from loan proceeds or cash from borrower.
 
The lender must verify exempt status by obtaining one of the following:
 
A properly completed and signed VA Form 26-8937, Verification of VA Benefits, indicating the borrower’s exempt status,
For a veteran who elected service retirement pay instead of VA compensation, a copy of the original VA notification of disability rating and documentation of the veteran’s service retirement income, or
Indications on the Certificate of Eligibility (COE) that the borrower is entitled as an unmarried surviving spouse.
 
If the veteran’s exempt status cannot be verified prior to loan closing, the funding fee must be remitted as if the borrower was not exempt.
 
Indicate in the closing package that the veteran claims exempt status. VA will determine the borrower’s status and refund the funding fee if appropriate. If the veteran has a pending disability compensation claim at the time of loan closing, the funding fee must be remitted as if the borrower was not exempt.
 
Advise the veteran to contact the VA RLC to request a refund if it is later determined that the veteran is entitled to compensation retroactively to a date prior to loan closing.

2012 VA Loan Closing Costs Exemptions (Closing Costs a VA Loan Can NOT Be Charged)
 

The VA home loan program involves a veteran’s benefit. VA policy has evolved around the objective of helping the veteran to use his or her home loan benefit. Therefore, VA regulations limit the fees that the veteran can pay to obtain a loan.
 
VA Loan Lenders must strictly adhere to the limitations on borrower-paid fees and charges when making VA loans which are why so many Veterans and Active Duty Service Members are “steered” away from a VA Loan and told that any “Civilian loan” is better.
 
The approved VA Loan lender’s maximum allowable flat charge of one percent of the loan amount (or greater percentage in the case of construction loans) is intended to cover all of the lender’s costs and services which are not reimbursable as “itemized fees and charges.” The lender may pay third parties for services or do as it wishes with the funds from the flat charge, as long as the lender complies with the Real Estate Settlement Procedures Act (RESPA).
 
 
 
The lender may not charge the borrower for attorney’s fees. However, reasonable fees for title examination work and title insurance can be paid by the borrower. They are allowable itemized fees and charges.
 
VA does not intend to prevent the veteran from seeking independent legal representation. Therefore, the veteran can independently retain an attorney and pay a fee for legal services in connection with the purchase of a home. Closing documents should clearly indicate that the attorney’s fee is not being charged by the lender, but is being paid by the veteran as part of an independent arrangement with an attorney.
 
Fees or commissions charged by a real estate agent or broker in connection with a VA loan may not be charged to or paid by the veteran-purchaser.
 
 
 
While use of “buyer” brokers is not precluded, veteran-purchasers may not, under any circumstances, be charged a brokerage fee or commission in connection with the services of such individuals. Since information on property available for purchase and financing options is widely available to the public from a variety of sources, VA does not believe that preventing the veteran from paying buyer-broker fees will harm the veteran.
 
 
 
A veteran obtaining a VA refinancing loan cannot use loan proceeds to pay penalty costs for prepayment of an existing lien.
 
 
 
A veteran purchasing a property with a VA loan cannot pay penalty costs required to discharge any existing liens on the seller’s property.
 
 
 
In proposed construction cases in which the dwelling was constructed under the Department of Housing and Urban Development (HUD) supervision, the cost of any inspections or re-inspections must be borne by the builder or sponsor and are not chargeable to the veteran-purchaser. This includes:
 
 
 
Re-inspections by VA or HUD of onsite or offsite work for which an escrow agreement was established, and any additional re-inspections deemed necessary by VA to assure conformity with VA regulations.
 
The following list provides examples of items that cannot be charged to the veteran as “itemized fees and charges.” If it IS a VA Loan, “Civilian” Loans like Conventional and FHA Loans you WILL be charged. Instead, the lender must cover any cost of these items out of its flat fee:
 
Loan Closing Lender Fees
 
Lender Document Preparation Fees
 
Conveyance fees
 
Attorney’s services other than for title work
 
Photographs
 
Interest Rate Lock In Fees
 
Postage and other mailing charges, stationery, telephone calls, and other overhead
 
Amortization schedules pass books, and membership or entrance fees
 
Commitment fees or marketing fees of any secondary purchaser of the mortgage and preparation and recording of assignment of mortgage to such purchaser
 
Trustee’s fees or charges
 
Loan application or processing fees
 
Fees for preparation of truth in lending disclosure statement
 
Fees charged by loan brokers, finders or other third parties whether affiliated with the lender or not, and tax service fees.

Appraisals and Veterans Administrations Compliance Inspections
 
The veteran MUST pay the fee of a VA appraiser and VA compliance inspectors.
The veteran can also may have to pay for a second appraisal if he or she is requesting reconsideration of value.
 
The veteran cannot pay for appraisals requested by parties other than the veteran or an approved VA Loan Lender

2012 VA Loan Sellers Concessions
 
For the purposes of this topic, a seller concession is anything of value added to the transaction by the builder or seller for which the buyer pays nothing additional and which the seller is not customarily expected or required to pay or provide.
 
Seller concessions include, but are not limited to, the following:
 
Payment of the buyer’s VA funding fee
Prepayment of the buyer’s property taxes and insurance
Gifts such as a television set or microwave oven
Payments of extra points to provide permanent interest rate buy downs
Provision of escrowed funds to provide temporary interest rate buy downs, and
Payoff of credit balances or judgments on behalf of the buyer.
 
Seller concessions do not include payment of the buyer’s closing costs, or payment of points as appropriate to the market.
 
Example:  If the market dictates an interest rate of 7½ percent with two discount points, the seller’s payment of the two points would not be a seller concession.  If the seller paid five points, three of these points would be considered a seller concession.
 
In some localities, builders or sellers offer concessions as a competitive tool.  In extreme cases, the concessions may entice unwary and unqualified veterans into home mortgages they cannot afford.  The concessions may disguise the veteran’s inability to qualify for the loan.
 
Any seller concession or combination of concessions which exceeds four percent of the established reasonable value of the property is considered excessive, and unacceptable for VA-guaranteed loans.
 
Do not include normal discount points and payment of the buyer’s closing costs in total concessions for determining whether concessions exceed the four percent limit.

Comments

By James P. Furlong,  Tue Dec 4 2012, 04:04
Again, another informative article from this contributor - Thank You Again.
By Nikitas Kouimanis,  Tue Dec 4 2012, 04:22
No problem, thanks again from my website.
By Nikitas Kouimanis,  Tue Dec 4 2012, 04:25
So I see that you are in MA we actually have an office in Boston. Your also in Boston our office is in 585 Tremont Street Boston MA 02118.

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