All Forum Posts by: Shawn Devoid

Good morning @Kenneth 

@Kenneth McKeown!  I'm happy to hear you're moving forward :)  I wish you you the best of luck in your negotiations; I hate that you have competition!  Hopefully, your better price will beat out the cash.  Let us know how it goes!

Oops, I also meant to correct a mistake.  In the example, 25% of $26,000 is $6,500.

Good morning, again, @Kenneth McKeown! So I called a lender today out of Phoenix, Jimmy Vercellino. He's a veteran himself, specializes in VA Loans, and teaches VA Loans certify agents in Military Relocation. He didn't really interpret the verbiage I find cryptic, but he did say that you could absolutely refinance a VA into a conventional & get your entitlement back. Yay! He says he does it all the time. I had planned on doing the very same thing. When I'm ready for that, I'll call the VA Entitlement folks, just to be sure.

That's great, Kenneth!  I'm glad you were able to get such a good rate without losing flexibility.  So, the current limit is $424,000.  If you use $200,000, you have $224,000 left. If you want to purchase for $250,000, that leaves $26,000.  But you don't need $26,000, you just need 25% of that.  In this case, a $6,000 downpayment, to make up the difference, with no mortgage insurance.  

Conventional Refinance

You know, I looked at it again, & it's very difficult to understand.  Perhaps someone else could chime in, if they've successfully refinanced a property they didn't reside in and were able to restore their entitlement. 

here's the verbiage:

"6. Restoration of Previously Used Entitlement

Change Date

a. Basic Restoration

April 6, 2012, Change 19• This section has been updated to make minor grammatical edits.

Entitlement previously used in connection with a VA home loan may be restored under certain circumstances. Once restored, it can be used again for another VA loan. Restoration of previously used entitlement is possible if

• the property which secured the VA-guaranteed loan has been sold, and the loan has been paid in full, or
• an eligible veteran-transferee has agreed to assume the outstanding balance on a VA loan and substitute his or her entitlement for the same amount originally used on the loan. The assuming veteran must also meet occupancy, income, and credit requirements of the law.

  In addition to the basic restoration criteria outlined above, a veteran may obtain restoration of the entitlement used on a prior VA loan under any of the following circumstances:

the prior VA loan has been paid in full and the veteran has made application for a refinance loan to be secured by the same property which secured the prior VA loan. This includes refinancing situations in which the prior loan will be paid off at closing from a VA refinancing loan on the same property,

OR

the prior VA loan has been paid in full, but the veteran has not disposed of the property securing the loan. The veteran may obtain restoration of the entitlement used on the prior loan in order to purchase a different property, one time only. Once such restoration is effected, the veteran's COE will indicate the one-time restoration. It will also advise that any future restoration will require disposal of all property obtained with a VA loan."

I find the last two paragraphs very confusing and I'm usually able to comprehend and interpret government manuals pretty well. I plan to put a call into a lender in Phoenix who does VA loan training to all the real estate professionals here. I'll let you know what I find out.

You do.  It's a state-regulated thing, so I looked up Iowa.  Here's the link. State regulation of Real Estate is in place to protect the consumer; in the case of property management, both the property owner, as well as the renter.  I know, property management may seem simple, but there is a lot of financial liability involved.  Brokers, and the salespersons working under them, have a fiduciary responsibility to their clients & need to ensure all laws, local, state, and federal, are followed.  BTW, I'm originally from Clarion, where are you?

Kenneth McKeown, regarding your question of joining the VA with the Hero Assist. I ran the numbers before and the monthly payment came to $1036, around $60/month more than the straight VA ($975) with no assist. I have no idea if you can IRRL the loan in a year to bring down the interest rate to actual market levels. That's a question you'd have to ask the lender. I suspect you'll always be paying an extra 1% for the privilege of getting the down payment assistance. Even if you could, it's a big gamble. There's a very good chance interest rates will be higher. My advice is, have your lender run through all the numbers WITH you. They should be able to answer all your questions. There are also fees associated with these programs; you could easily pay over $1,000 for the privilege. Ask them the downsides to all these programs (limitations). For example, with the Texas Vet 3.77% interest rate, you have to occupy the home for the first three years. Do you want to give up the option of moving? There's a Mortgage Interest Tax Credit program (MCC, also available to you), up to $2,000/year, but you have to pay back if you sell before 9 years. I also advise you to shop around different lenders- they have different origination fees, interest rates, etc, as well as varying amounts of knowledge. Make sure they know you're comparison shopping- they may offer you better better terms. I know this sounds like a lot, but, it's your money & you should know where it's going. In my experience, nothing is free in life :). Good luck & let us know how it's going!

Good morning again Kenneth McKeown! Ian Rosado's info on the Texas Vet loan was great! I just wanted to clarify a couple things. You absolutely CAN have more than one VA loan out at a time (it's in that Lender's Handbook I mentioned before. It's all about your entitlement. So, in this case, you'll have used $200,000 of entitlement. Let's say in two years you wish to do this again. You should have about $220,000 left of entitlement. Now, there's two tiers of entitlement, there's the first, in which there is no lower ceiling on the borrowing requirement. If the loan is for approximately $155,000 or more, the second tier of the entitlement is tapped into (all the way up to approx. $420,000. So, if your original property was $300,000, you wouldn't be able to use the remainder of your entitlement. Sorry, this is kind of long. The second point of clarification is regarding the regaining your entitlement by refinancing. I,too, was under the impression that you could refinance into a conventional & get your entitlement back, but sadly this is not the case (VA must be on to us!). I just learned on BP the other day that the entitlement stays with this house, even if you PAY OFF the loan! I didn't think this seemed right, so I looked it up & yep, the only way to get your entitlement back is to actually sell the house! They do allow a once-a-lifetime exception to this rule. You do have to be occupying the home in order to do a VA cash-out refinance(100% LTV). But the good news is that you would still have enough entitlement to buy another multiplex with no money down. You can also opt to purchase a more expensive property and just pay 25% of the difference between your remaining entitlement and the price (as long as your remaining entitlement is greater than $155,000).

I would try a combination of the above posts; serve the 10 day notice AND off er to move them out (or cash for keys). You want to make sure all your bases are covered.

Good Morning @Kenneth McKeown. It makes me happy to see a fellow veteran taking action. To be honest, I have no idea if you have "a good deal". But I saw some flags with your proposed financing, so I did a little research. In my experience, local homebuyer assistance is usually a trade-off; money for downpayment or closing costs in exchange for a higher interest rate. I looked up the Texas Heroes program and it fits the usual model. You'd be paying 5% on a thirty year loan, rather than the current rate (4%) or probably lower for a VA.

Additionally, it looks like you were planning to go FHA, as the interest rate for a 4% grant with conventional financing is even higher at 5.25%, plus private mortgage insurance). I've never seen a deal where FHA worked out better than a VA. Disclosure- I'm not a lender, just a real estate agent who likes to help her clients get the most for their money and understanding financing is a big part of that!

So, here's the numbers:

FHA w/Hero Assist:

$200,000 purchase price

  - $6000 out-of-pocket downpayment

  - $7760  Hero Assist

$186,240 Total Loan

x   1.0175 FHA Upfront Funding Fee

$189,499 Final Mortgage Amount

Monthly Payment

$1,017.27  30 year fixed rate at 5%

 + $85.36 FHA MIP at .55 (new lower rate starting Jan. 27, 2017, but could go back up any time)

$1,102.63  Total P&I monthly payment

Plus you've spent your $6,000

VA Loan with no Hero Assist

$200,000 Purchase Amount

 x 1.0215 VA Funding Fee (assuming first-time use and no disability)

$204,300 Total Mortgage Amount at 4% interest (may be lower)

Total P&I Monthly Payment=

$975/month

Plus, you still have $6,000 in your pocket!

If you pay the upfront funding fee out-of-pocket, the payment would go down to $950/month.

Conclusion: I wouldn't use the Hero Assist (I worked the numbers with a VA loan, too, and you always end up with a higher payment). Several commenters suggested negotiating. If you were my client, I'd advise you to offer full asking ($200,000) with 4% closing costs. So, essentially, the seller comes out with $192,000. You'd get your funding fee paid ($950 payment), plus it would help a bit with your other closing costs. Plus, you'd still have your $6,000 which you could put in reserves. All he can do is say no!

Hi @Austin Sanne, I just looked up NIFA, as it sounded like it may be similiar to first-time home buyer programs we have here in Tucson.  I have a couple of questions for you.  Have you already moved out?  What's your plan, regarding where you plan to live (owned vs rent)?  Basically, what's your motivation for wanting to rent the house out?  The NIFA guidelines clearly state that you may not rent the home out.  I would get with a NIFA lender and discuss your options.  Basically, you traded the freedom to rent out your home for a lower interest rate and perhaps down payment assistance when you purchased the home.  I hope this helps!