Author Topic: Help me figure out VA loan fiasco  (Read 3118 times)

tomorrowsomewherenew

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Help me figure out VA loan fiasco
« on: April 14, 2016, 12:49:52 PM »
My husband is in the military. He is transitioning out. His separation date is 10/10/16. With vacation time saved, and advanced leave, he is leaving shortly. He has a job offer, and we put in an offer on a house near his work.

The mortgage company says that he is not eligible for a VA loan because he is within 12 months of ETS. (Well duh!). We provided his offer letter showing he will be making 50% more salary than he is now. This is the statement I got from the mortgage processor:

 "If he is not remaining in the military for at least 12 months and has the transfer orders, we can not proceed as a VA loan. "

This does not sound at all right. Any experts out there that can provide me with helpful information?

dz1087

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Re: Help me figure out VA loan fiasco
« Reply #1 on: April 15, 2016, 03:03:28 PM »
That is a VA loan - "Veteran's Administration."  That is not an "Active Duty Administration" loan.  I would proceed to another bank if you want to use that benefit because obviously this bank does not understand what 'veteran' means.

FWIW, a VA loan simply allows you to not pay anything down on the house (it also allows assumption of the loan from another VA qualified veteran -- there's that 'veteran' word, again).  It also costs money to use, ~ 2-3k for the first loan.  So you will be underwater the instant you purchase your house.  Most on this forum would rather not do anything that would wind up costing them more money than needed, and a typical VA loan does just that.  I have two VA loans from my pre-MMM life and the 3-year old loan (loan #2) is still sitting at more than I 'purchased' the house for.

As far as I know, a loan being VA or not does not affect the interest rate.  When I got my loans, I shopped interest rates first, then told them I was VA and I don't remember getting any points knocked off because of that.  What is your goal by utilizing the VA loan?  Is it to not pay anything down?  Is it to avoid payment insurance?  Have you been told it would lower your interest rate?

Nords

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Re: Help me figure out VA loan fiasco
« Reply #2 on: April 16, 2016, 02:26:58 PM »
My husband is in the military. He is transitioning out. His separation date is 10/10/16. With vacation time saved, and advanced leave, he is leaving shortly. He has a job offer, and we put in an offer on a house near his work.

The mortgage company says that he is not eligible for a VA loan because he is within 12 months of ETS. (Well duh!). We provided his offer letter showing he will be making 50% more salary than he is now. This is the statement I got from the mortgage processor:

 "If he is not remaining in the military for at least 12 months and has the transfer orders, we can not proceed as a VA loan. "

This does not sound at all right. Any experts out there that can provide me with helpful information?
This is very common, although frequently re-discovered on Facebook military-transition groups.

As you might already know, the VA loan doesn't actually come from the VA.  It's just a federal insurance policy (funded by the VA) that guarantees 25% of the loan principal for the lender.  It's the equivalent of mortgage insurance, although from an insurer who has access to a lot more funding.

Short answer:  stop talking to mortgage companies and work with a mortgage broker.  They understand this issue and will work with lenders who will either have a better deal than a VA loan or who will use looser underwriting terms. 

Long answers:
Another solution would be a larger down payment, although the lenders will still be very concerned about your spouse's apparent lack of employment (despite the offer letter). 

If the sellers aren't getting other offers then you could see if they're interested in financing the sale (but you should keep working with that mortgage broker).

One option the mortgage broker might pitch (because they get paid by lenders for creating loans) is to take a "less attractive" mortgage which will get you into the house.  It'll probably have a variable interest rate, a low down payment, and perhaps some pretty unattractive caps on raising the rates.  After you've been in the home for a few months (and steadily employed) then the broker might be able to refinance into a VA loan-- or any other loan with better terms than the one which got you into the property.

A fourth option (not so good) would be to rent in the area for a few months before buying the home.  The only advantages are that you'll have an employment history and you'll be much smarter on the local neighborhoods. 

Finally another reason to wait on buying the home is that your spouse may have a VA disability rating shortly after you separate.  The disability rating may make you eligible to waive the VA funding fee, which will help with the loan approval.