VA Loans

VA loans

A VA loan in Arizona is perhaps the most powerful and flexible lending option on the market today. Rather than issue loans, the VA instead pledges to repay about a quarter of every loan it guarantees in the unlikely event the borrower defaults. This guarantee gives VA-approved lenders greater protection when lending to military borrowers and often leads to highly competitive rates and terms for qualified veterans.

Far and away, the most significant benefit of a VA loan is the borrower’s ability to purchase with no money down. Aside from the government’s USDA’s Rural Development home loan and Fannie Mae’s Home Path, it’s all but impossible to find a lending option today that provides borrowers with 100 percent financing.

Today’s VA Loan Rate

VA loans come with less stringent underwriting standards and requirements than conventional loans.  These loans also come with no private mortgage insurance (PMI), a monthly expense that conventional borrowers are required to pay unless they put down at least 20 percent of the loan amount.

VA loans offer a few other bells and whistles:

  • Down payment as low as 0%
  • Competitive interest rates routinely lower than conventional rates
  • No prepayment penalties
  • Higher allowable debt-to-income ratios than other traditional loans
  • Streamlined refinancing loans which require minimal underwriting
  • Credit leniency – perfect credit not required
  • Limited Closing Costs

AZ Mortgage Broker, LLC Tip:  Are you VA eligible and have a previous bankruptcy or foreclosure?  You may be eligible for a VA loan 2 years after a discharge of a Chapter 7 bankruptcy, short sale or foreclosure.  Each scenario is different and a foreclosure on a VA loan may impact entitlement.  Ask us how this may impact YOUR approval. 

VA Closing Costs:

The VA limits the amount of fees a lender may charge and also restricts fees to be charged to the Veteran.

Common VA fees charged to the Veteran:

  • VA Funding Fee -This fee goes directly to the VA and is used to cover the cost of the VA program.  This fee is often financed into the loan and not all Veterans are obligated to pay a Funding Fee.
  • VA caps the lender origination charge to 1% of the loan amount.  Fees such as underwriting and processing may not be charged if the 1% Fee is charged to the Veteran.

Did you know AZ Mortgage Broker, LLC does not charge a loan processing fee, an underwriting fee or the 1% lender origination charge on VA loans.  This is our way of saying thank you to our Veterans.  

  • Discount fees may be charged to the Veteran as long as it goes to the buying down of the interest rate on the Veteran’s behalf.  This can not be a fee to compensate the lender for services rendered.
  • VA appraisal – this is the appraisal required when purchasing a home and will be ordered directly through the VA website.  VA streamline refinances waive the appraisal requirement.
  • Title insurance -there are two typical title report policies in Arizona purchase transactions.  The lenders policy which protects the lender and the owner’s policy which protects the future home owner.  It is typical the seller pays the owner policy and the buyer pays the lender’s title policy.  It is important when writing the Purchase Contract that the contract defines who is paying each title policy fee.  Refinance transactions only require lenders policy.
  • Recording – this is the public record recording from the county where you purchase your home.
  • Credit report – this is required on all mortgage transactions.  AZ Mortgage Broker, LLC does not charge a credit report fee to Veterans.
  • Flood Zone Certification – believe it or not, there are flood zones in Arizona.  A flood zone check is required to confirm the property is not located in a flood zone.  If the property is in a flood zone, you will be required to purchase flood zone insurance, which may be expensive.
  • Flood Insurance – as mentioned above, if your purchase is located in a flood zone, you will be required to provide flood insurance, insuring the property against flooding.  One year flood zone insurance is required to be paid at closing, and may vary greatly depending on flood zone and value of property.
  • Home Insurance – Standard insurance protecting against many of the unplanned (not flood’s) events in life.  A full year premium will be due at close and part of your mortgage payment will include the 1/12 of yearly home insurance payment per year.
  • Property Taxes – In Arizona, property taxes are due in arrears.  For instance, tax year 2018 will be disbursed in two installments in October of 2018 and April of 2019.  Like home insurance, part of your mortgage payment will include the 1/12 of yearly property taxes due to the county each year.

Fees NOT Charged to Veteran

  • Escrow/Settlement Fee -The VA does not allow the Veteran to pay the Settlement Fee.  The escrow company is responsible for handling the settlement of the transaction on behalf of the buyer, seller, lender, real estate agents, and any other party to the transaction.  They also record the Deed of Trust with the property county.
  • Closing Protection Letter -Not allowed to be charged to the Veteran. The CPL makes the title insurance company responsible for escrow distributing monies properly.
  • Document Preparation Fees – The Veteran is not responsible for this fee charged by Escrow.  Many of the Escrow/Title companies we work with at AZ Mortgage Broker, LLC do not charge this fee.  However, if escrow is opened at a company which charges this fee, the Veteran cannot pay it.
  • Lock In Fees – We do not charge for lock in fees for your interest rate.  If you come across a company requiring this fee, we encourage you to shop around immediately.
  • Courier/Notary/Postage – Once again, many escrow/title companies will not charge this fee.  If there is a courier/notary or postage fee on the transaction, the Veteran will not pay it.
  • Mortgage Broker/Application Fee – We do not charge mortgage broker or application fees for any of our transactions at AZ Mortgage Broker, LLC.   If you speak to a mortgage broker or lender who require this fee up front, it is against VA policy.

The above is not an all inclusive list of allowable/non-allowable VA fees.  It does cover the most common fees in Arizona and we are happy to review your specific situation with no obligation.

If you are a Veteran or currently active military, we at AZ Mortgage Broker, LLC thank you for your service.  We are grateful for your service and it would be our honor to show you how our experience can help you find the best VA loan for YOU.

Lower rates. Lower fees.  Better service.

Until Next Time,

Craig