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@Anonymous wrote:
Update: Certificate of Eligibility shows total entitlement charged is $65K with basic entitlement of $0. Lender thinks this means I am not eligible for a VA loan however, I discussed this w the VA loan center and was informed I had approx $40K remaining in 2nd tier entitlements. The base price of the home I want to buy is $185,990 which means I would need a down payment around $7K. Lender is requiring that I obtain a letter from the VA stating my remaining entitlement for the purchase of the home with all calculations. Anyone ever received such a letter from the VA? As for Purchase price I looked at the Guaranty examples on the VA website but am unsure if this price includes or excludes fees/closings, etc—assumption is that it is simply the base price with nothing else included. Is this a correct assumption? Any thoughts on this situation would be appreciated. Thanks
That is correct - if you have $0 basic entitlement and $40k remaining in 2nd tier then that provides a 25% guarantee on a $160k loan amount, anything exceeding that sales price would require a 25% down payment on the additional amount (ex. $250 down on $1k increase in price)... but one needs to have a total loan amount which exceeds $144k in order for that 2nd tier entitlement to kick in. Purchase price always is the purchase price from the seller, nothing more (energy improvement items, fees, etc).
The letter from VA is a requirement of many lenders, and VA should be able to provide you a letter. Contact the RLC that covers your state.
The thing with USDA though is that one would also have to meet the income requirements, we were told that we made too much to qualify for an USDA mortgage.
@Anonymous wrote:The thing with USDA though is that one would also have to meet the income requirements, we were told that we made too much to qualify for an USDA mortgage.
Yeah it's not for everyone - there are two income limits though, the "Direct" version is a lot lower than the "Guaranteed" version.
Hi Shane,
You mentioned that, in October 2011, guaranteed USDA loans will have a .03% monthly fee added to the loan, can you elaborate more on this? Would it be in my interest then, to make sure and get my loan before then in order to avoid these extra fees?
-Anthony
@Anonymous wrote:Hi Shane,
You mentioned that, in October 2011, guaranteed USDA loans will have a .03% monthly fee added to the loan, can you elaborate more on this? Would it be in my interest then, to make sure and get my loan before then in order to avoid these extra fees?
-Anthony
Yes I created a post on it at http://ficoforums.myfico.com/t5/Mortgage-Loans/USDA-GRH-fees-are-changing-Guaranteed-only-not-Direct/td-p/860144
If someone qualifies for the "Direct" and "guaranteed" loan, what is the advantage of one over the other?
Thanks!
The primary advantage of the Guaranteed loan is you go through a mortgage lender, which is quicker than going directly to USDA, that's about it.
The advantages of the Direct program is that they have a construction loan program, it's easier to get financing on manufactured homes, they have a payment subsidy option if your debt to income ratio is too high (has tax implications though), there is no Guarantee fee, and there is no monthly USDA fee either.
Interest rates should be the same for both versions, in the 4.5% to 4.75% range.
We're in the middle of a USDA Direct purchase. It's a nightmare. I'd swear to emphasis how much of a nightmare but I find vulgarity to be generally unneccessary. Just know that the hassles are worthy of a swear.
We're going on our fourth month under contract. Every single step along the way has been painful. Much more painful than it's needed to be. We keep telling ourselves it will be worth it in the end when we can have that nice lower subsidzed payment. But right now...we're ready to just rent forever.
Shane...what are those tax implications you were talking about in regards to that subsidy? I know about the recapture, but what kind of implication will we expect on our yearly tax return?
Yeah it's the recapture tax - sorry I am not certain what kind of impact it'll have on the income tax refund/amount you owe, you'd have to talk to your tax preparer and run the scenario by them.