VA Loan Questions and Answers

Can I get a VA loan if I have had a bankruptcy in the last few years?
VA credit standards state that a veteran with a bankruptcy less than 3 years ago would generally not be considered a satisfactory credit risk unless: the veteran or spouse has obtained items on credit since the bankruptcy and has paid the obligations in a satisfactory manner for a continued period; and the bankruptcy was caused by circumstances beyond the control of the borrower, which would have to be verified. A bankruptcy discharged 3 to 5 years ago must be given some consideration in the underwriting of the loan. A bankruptcy discharged more than 5 years ago may be disregarded. These are the minimum standards that mortgage companies must follow when making a VA loan. In 95% of the cases, companies make the decision to approve a loan without VA’s prior approval. Keep in mind that mortgage companies also have money at risk in giving you a VA loan, so they may have stricter credit standards than those mandated by VA.

How large of a loan can I get? If my guaranty entitlement is $36,000, does this mean I am limited to a $36,000 loan?
VA guaranteed loans are made by private lenders, such as banks, savings & loans. or mortgage companies to eligible veterans for the purchase of a home which must be for their own personal occupancy. To get a loan, a veteran must apply to a lender. If the loan is approved, VA will guarantee a portion of it to the lender. This guaranty protects the lender against loss up to the amount guaranteed and allows a veteran to obtain favorable financing terms. There is no maximum VA loan but lenders will generally limit VA loans to $417,000. This is because lenders sell VA loans in the secondary market, which currently places a $417,000 limit on the loans. For loans up to this amount, it is usually possible for qualified veterans to obtain no down payment financing. A veteran’s basic entitlement is $36,000 (or up to $89,912 for certain loans over $144,000). Lenders will generally loan up to 4 times a veteran’s available entitlement without a down payment, provided the veteran is income and credit qualified and the property appraises for the asking price.

Why do I have to pay a fee for a VA home loan? Since I paid a fee for my first loan, why is there a larger fee for my second loan?
The VA funding fee is required by law. The fee, currently 2 percent on no down payment loans, is intended to enable the veteran who obtains a VA home loan to contribute toward the cost of this benefit, and thereby reduce the cost to taxpayers. The funding fee for second time users who do not make a down payment is 3 percent. The idea of a higher fee for second time use is based on the fact that these veterans have already had a chance to use the benefit once, and also that prior users have had time to accumulate equity or save money towards a down payment. Second time users who make a down payment of at least 5 percent pay a reduced funding fee of 1.5 percent, the same as first time users making the same down payment. For a 10 percent down payment, the fee drops to 1.25 percent. The effect of the funding fee on a veteran’s financial situation is minimized since the fee may be financed in the loan.

May a veteran join with a non veteran who is not his or her spouse in obtaining a VA loan?
Yes, but the guaranty is based only on the veteran’s portion of the loan. The guaranty cannot cover the non veteran’s part of the loan. Consult mortgage companies to determine whether they would be willing to accept applications for joint loans of this type. Mortgage companies that are willing to make these types of loans will likely require a down payment to cover risk on the non guaranteed, non veteran’s portion of the loan. Unlike other loans, the mortgage company must submit joint loans to VA for approval before they are made. Both incomes can be used to qualify for the loan. However, the veteran’s income must be sufficient to repay at least that portion of the loan related to the veteran’s interest in (portion of) the property and the non veteran’s income adequate to cover the rest.

*The views, articles, postings and other information listed on this website are personal and do not necessarily represent the opinion or the position of American Pacific Mortgage Corporation.

5 Steps to a VA Loan

  1. Apply for a Certificate of EligibilityA veteran who doesn’t have a certificate can obtain one easily by completing VA Form 26-1880, Request for a Certificate of Eligibility for VA Home Loan Benefits and submitting it to one of the Eligibility Centers with copies of your most recent discharge or separation papers covering active military duty since September 16, 1940, which show active duty dates and type of discharge.
  2. Decide on a home to buy and sign a purchase agreement
  3. Order an appraisal from VA. (Usually this is done by the lender.) Most VA regional offices offer a “speed up” telephone appraisal system. Call the local VA office for details.
  4. Apply for a VA loan.
    While the appraisal is being done, the lender (mortgage company, savings and loan, bank, etc.) can be gathering credit and income information. If the lender is authorized by VA to do automatic processing, upon receipt of the VA or LAPP appraised value determination, the loan can be approved and closed without waiting for VA’s review of the credit application. For loans that must first be approved by VA, the lender will send the application to the local VA office, which will notify the lender of its decision.
  5. Close the loan and move in.

*The views, articles, postings and other information listed on this website are personal and do not necessarily represent the opinion or the position of American Pacific Mortgage Corporation.

Bankruptcy Questions and Answers

I am a cosigner for a debt, how does bankruptcy affect my obligation?
If the debt is a dischargeable debt then you will not have to pay it. However, the cosigner will become primarily responsible for the debt. Be sure to list the co-signer as a creditor in your schedules as they have a contingent claim against you.

Can I keep my house after bankruptcy?
Depending upon which exemption scheme is selected and your circumstances, you may exempt up to $100,000 in equity. When calculating your equity you should use a value that is based upon a forced liquidation as opposed to the best selling conditions to arrive at a value for your home. Once you know the value, subtract the amount owed plus selling and transfer costs from the value to calculate the equity. In a depressed market, liquidated properties are often valued less than what we like to think the property is worth.

Can I keep my credit cards after bankruptcy?
Under some circumstances you may keep your credit cards. There are many factors which must be considered. Some of those include the credit card balance at the time of the bankruptcy, what the credit card company is willing to do and your ability to pay the present and future credit card debt.

Will I lose my job?
No. Bankruptcy laws prohibits discrimination based upon a debtor filing for protection under the bankruptcy laws.

Can I go to jail if I file bankruptcy?
No. There are no debtor’s prisons in the United States.

Will my employer find out about my bankruptcy?
Under normal circumstances, unless your employer is a creditor, your employer will not know.

Will bankruptcy stop a wage attachment?
Yes.

Will bankruptcy stop a judgment?
Yes. Most civil judgments are stopped by bankruptcy.

Will a bankruptcy remove a lien?
Under some circumstances once the bankruptcy proceedings have started, special motion can be filed to remove certain liens. It will take a bankruptcy court order to remove them. This is a complicated area of the bankruptcy law and an attorney should be consulted.

Will bankruptcy stop an eviction action?
Perhaps. However, this will only delay the inevitable. The owner is entitled to possession of his property and at best you will be able to remain in the property until you have received your discharge from bankruptcy or the landlord obtains an order from the bankruptcy court. I must caution you that if the only reason you filed the bankruptcy is to stop an eviction then this might be considered an abuse of Chapter 7. If the bankruptcy court finds that this is true then the court can immediately dismiss the bankruptcy and impose other legal and monetary sanctions on you.

Will bankruptcy stop a foreclosure?
Yes. However, a home is an asset usually secured by a deed of trust. The mortgage company is entitled to apply to the court for relief from the automatic stay, the order preventing creditor action by virtue of the bankruptcy. Depending upon several factors, you may be able to prolong a foreclosure until you have received your discharge from bankruptcy. Usually, to keep a home that is in foreclosure you will have to make a deal with the note holder.

I am divorced, will bankruptcy wipe out my obligation to pay community debts?
In general, you will be discharged from all dischargeable community debts. However, you should discuss this with your family law attorney to understand the other implications of the filing of a bankruptcy during the pendency of a dissolution action (divorce case). Also, remember that if you are discharged from community debts, your spouse is responsible for the entire balance owing on the debt. Put another way, they shift the responsibility on to you.

Are there any debts that I can’t wipe out in bankruptcy?
Yes, there are certain debts that are NOT dischargeable in bankruptcy. Generally speaking, the following debts will not be discharged: Taxes; Spousal and Child Support; Debts arising out of willful misconduct and or malicious misconduct by the debtor; liability for injury or death from driving while intoxicated; non-dischargeable debts from a prior bankruptcy; student loans and criminal fines, penalties and forfeitures. Those debts which are secured will be discharged, however, expect the creditor to take the necessary legal steps to take back the property. In most cases if the debtor’s equity interest in the property is exempt, the debtor may retain the property by redemption or reaffirmation.

Disclaimer:
Bankruptcy Disclaimer: This information deals with Chapter 7 consumer bankruptcy. Each state has its own bankruptcy laws. You need to check with your state for details. Information dealing with Chapter 13 bankruptcy and consumer debt restructuring is not discussed in the above. The information contained in the following is provided for general information purposes only and is not intended to be a legal opinion nor legal advice nor is it intended to be a complete discussion of all the issues related to the area of Chapter 7 consumer bankruptcy. Every individual’s factual situation is different and you should seek independent legal advice regarding specific information.

Note: American Pacific Mortgage Corporation is not a credit repair company; this information is for information purposes only. We are not licensed credit repair specialists or counselors.

*The views, articles, postings and other information listed on this website are personal and do not necessarily represent the opinion or the position of American Pacific Mortgage Corporation.

Bankruptcy and Bill Collectors

One of the major benefits of filing for protection under Chapter 7 is that many creditor actions are stayed. This means that debt collection efforts and foreclosure is halted.

Once a creditor or bill collector becomes aware that you have filed for bankruptcy protection, he or she must stop all efforts to collect the debt. After your bankruptcy is filed, the court mails a notice to all the creditors listed in your schedules. This usually takes a couple of weeks. If this is not soon enough, then you should have your representative inform the creditor immediately. If a creditor continues to use collection tactics once informed of the bankruptcy they may be liable for court sanctions and attorney fees for this conduct.

After your bankruptcy is filed, the court mails a notice to all the creditors listed in your schedules. This usually takes a couple of weeks. If this is not soon enough, then you should have your representative inform the creditors immediately. Your attorney deals with your creditors. It may be the only time you ever have the luxury of saying “you’ll have to talk to my lawyer.”

Bankruptcy Disclaimer: This information deals with Chapter 7 consumer bankruptcy. Each state has its own bankruptcy laws. You need to check with your state for details. Information dealing with Chapter 13 bankruptcy and consumer debt restructuring is not discussed in the above. The information contained in the following is provided for general information purposes only and is not intended to be a legal opinion nor legal advice nor is it intended to be a complete discussion of all the issues related to the area of Chapter 7 consumer bankruptcy. Every individual’s factual situation is different and you should seek independent legal advice regarding specific information.

Note: American Pacific Mortgage Corporation is not a credit repair company; this information is for information purposes only. We are not licensed credit repair specialists or counselors.

*The views, articles, postings and other information listed on this website are personal and do not necessarily represent the opinion or the position of American Pacific Mortgage Corporation.

About The Bankruptcy Process

When making financial decisions during the process, you should consult your attorney. In particular there are three items worth mentioning:

  • Under bankruptcy law, certain luxury purchases over $1000 within 60 days of the bankruptcy filing are presumed non dischargeable.
  • Under bankruptcy law, cash advances aggregating $1000 within 60 days of the bankruptcy filing are presumed non dischargeable.
  • Debts involving materially false financial statements are non dischargeable under certain circumstances.

If you file the bankruptcy yourself, you must fill out the forms. There are several forms. There could be between 30 and 60 pages in your petition, schedule and other papers filed at the time of your bankruptcy. You must follow the local and federal bankruptcy court rules in completing the forms. Preparing these forms requires an understanding of both bankruptcy law and local state law in order to enter the information correctly and accurately. The forms have to be typed and a certain number of copies must be included with the filing. Today, most attorneys use a computer system to prepare these forms because of there complexity and voluminous nature.

About 30 to 40 days after you file the bankruptcy you will have to attend a hearing presided over by the bankruptcy trustee. This hearing is called the First Meeting of Creditors. At this hearing the trustee will ask questions under oath regarding the content of your bankruptcy papers, assets, debts and other matters. After the trustee is done, your creditors will be permitted to question you. Do not worry, your attorney will be there to represent you and your attorney will help you prepare for the hearing. Sometimes, after your hearing is over, various creditors will approach you to discuss the status of secured property or your desire to retain a credit card. Your attorney will negotiate with them, with your knowledge and approval.

After this hearing you will normally not need to return to court. However, if a creditor files a motion or an adversary action, most likely you will have to return to court. This is the exception and only your attorney can determine if this is likely to happen.

Under normal circumstances, the bankruptcy court will automatically issue the discharge 60 to 75 days after the First Meeting of Creditors.

You can reestablish credit though and be back in “A” credit two years after the discharge of Bankruptcy. The bankruptcy is a judgment and will be listed for a period of up to 10 years after the discharge. You must wait 6 years to file again or if your bankruptcy was dismissed you must usually wait for 180 days to refile.

Bankruptcy Disclaimer: This information deals with Chapter 7 consumer bankruptcy. Each state has its own bankruptcy laws. You need to check with your state for details. Information dealing with Chapter 13 bankruptcy and consumer debt restructuring is not discussed in the above. The information contained in the following is provided for general information purposes only and is not intended to be a legal opinion nor legal advice nor is it intended to be a complete discussion of all the issues related to the area of Chapter 7 consumer bankruptcy. Every individual’s factual situation is different and you should seek independent legal advice regarding specific information.

Note: American Pacific Mortgage Corporation is not a credit repair company; this information is for information purposes only. We are not licensed credit repair specialists or counselors.

*The views, articles, postings and other information listed on this website are personal and do not necessarily represent the opinion or the position of American Pacific Mortgage Corporation.

Second Mortgage Rates

If you have a fixed-rate loan, the interest rate is set for the life of the loan. However, many companies offer variable rate mortgages, also known as adjustable rate mortgages or ARMs. These provide for periodic interest-rate adjustments. If your loan contract allows the mortgage company to adjust or change the interest rate, be sure you understand when the company has the right to change the interest rate, whether there are any limits on how much the interest or payments can change, and how often the company can change the rate. You also should know what basis the company will use to determine a new rate of interest.

*The views, articles, postings and other information listed on this website are personal and do not necessarily represent the opinion or the position of American Pacific Mortgage Corporation.

Second Mortgage Costs

We may charge you a fee for lending you money. The fee is usually a percentage of the loan and is sometimes referred to as “points.” One point is equal to one percent of the amount you borrow. For example, if you were to borrow $10,000 with a fee of eight points, you would pay $800 in “points.” The number of points charged varies.

*The views, articles, postings and other information listed on this website are personal and do not necessarily represent the opinion or the position of American Pacific Mortgage Corporation.

Home Equity Credit Lines

If you need to borrow money, home equity lines may be one useful source of credit. Initially at least, they may provide you with large amounts of cash at relatively low interest rates and they may provide you with certain tax advantages unavailable with other kinds of loans. (Check with your tax advisor for details.)

At the same time, home equity lines of credit require you to use your home as collateral for the loan. This may put your home at risk if you are late or cannot make your monthly payments. Those loans with a large final (balloon) payment may lead you to borrow more money to pay off this debt, or they may put your home in jeopardy if you cannot qualify for refinancing. If you sell your home, most plans require you to pay off your credit line at that time. In addition, because home equity loans give you relatively easy access to cash, you might find you borrow money more freely.

Remember too, there are other ways to borrow money from a lending institution. For example, you may want to explore second mortgage installment loans. Although these plans also place an additional mortgage on your home, second mortgage money usually is loaned in a lump sum, rather than in a series of advances made available by writing checks on an account. Also, second mortgages usually have fixed interest rates and fixed payment amounts.

You also may want to explore borrowing from credit lines that do not use your home as collateral. These are available with your credit cards or with unsecured credit lines that let you write checks as you need the money. In addition, you may want to ask about loans for specific items, such as cars or tuition.

*The views, articles, postings and other information listed on this website are personal and do not necessarily represent the opinion or the position of American Pacific Mortgage Corporation.

Relocation Issues for Kids

by Shelley Seale, RPSRelocation.com

Every year, one out of five American families move. One of the most important issues to anyone with kids is their reaction to the news that they’re moving and their adjustment to the new home. Being informed is very important to children. One of the worst mistakes we can make as adults is to assume that kids don’t care or won’t understand the details. Keeping them “in the loop,” consulting them about choices whenever possible, and including them in the family game plan will work wonders toward their adjustment.

Other factors depend on the child’s age:

Preschool Children
Kids under the age of six may worry about being left behind, or being separated from their parents. If you go on an orientation or house hunting trip beforehand without the children, it’s important to reassure kids this age that you will be back. Bring something unique back to them from the new town. It’s very important for them to express their feelings and fears about the move. Give them a job to do — have them be responsible for boxing up their favorite toys, and “labeling” their boxes with crayons and stickers.

Ages 6 to 12
Elementary age kids are usually most concerned with how the everyday routines of their lives are going to change. Showing them pictures, videos and magazines of their new home will help a lot, especially if you can find new places in advance for the things they like to do. If your children take dance lessons, find and share information about the new dance studio they can go to. If they take karate, or play soccer…even if their favorite thing to do is go to the park or the pizza parlor, find these places in your new neighborhood and get brochures, pictures or videos.

Teenagers
These kids are most concerned with fitting in. They may react angrily to the move, even insist they’re not going. This is usually due to the total lack of control they have over everything important in their lives, friends, school and jobs, being disrupted. These children can be very worried about making new friends, and what will be different in the new school. They are curious about the clothing, hairstyles, bicycles, cars, etc. that kids in the new city will have. Pictures of all these things are very helpful, so if you take an orientation trip be sure to take many detailed photos/videos of the schools they will be attending.

Other Tips for Making the Transition

  • Give young children an entertaining travel kit for the move.
  • Give older children a diary for recording the trip and move.
  • Give children of all ages a special address book and stationary set for keeping up with old friends.
  • Take videos of the new home if the kids won’t get to see it before the move.
  • Arrive well before the movers so kids can explore and become acquainted first.
  • Give children a chore to do, such as working on their room (younger), supervising little siblings (middle), and painting or arranging furniture (older kids).
  • Take a break with the family as soon as possible to explore the museums, sights and recreation in your new city.
  • Arrange a visit to new schools and a meeting with the teacher before the actual first day of attendance.
  • Encourage the children to bring new friends home.

*The views, articles, postings and other information listed on this website are personal and do not necessarily represent the opinion or the position of American Pacific Mortgage Corporation.

Top Ten Relocation Headaches

by Shelley Seale, RPSRelocation.com

  1. Not Having Enough Details & Demographics About Your New Hometown
    Gather as much information as possible about your new destination, from sources such as the internet, Chamber of Commerce newcomer packages, location magazines and your real estate professional.
  2. Not Having Your Home Priced and Ready to Sell
    Check your home thoroughly for all needed repairs before listing it for sale. Pay attention to details such as gapped caulking, chipped tiles, paint, etc… It’s often these little things that potential buyers will notice. Also, have the home professionally cleaned, including carpets. If you haven’t had your home appraised in the last two years, do it before putting the home up for sale. Also, have one or two real estate professionals give you a comparable market analysis. This will show what other comparable homes in your neighborhood have sold for recently. Over-pricing your home at the outset will result in slow showings and a delay in selling.
  3. Poor Research of What Your Money Can Buy in Your New City
    Many factors such as differing salary, cost of living, taxes and housing prices affect what the same dollar can buy in different parts of the country. Resources such as the local Chamber of Commerce, real estate professionals and neighborhood reports can give you this information.
  4. Not Getting a Mortgage Prequalification Letter Before House Hunting
    While prequalifying with us doesn’t provide final loan approval, it does give you a realistic price guideline and shows sellers that you are a serious and qualified buyer.
  5. Not Protecting Yourself with the Best Home Inspection Possible
    This goes for both the home you’re selling as well as the one you’re buying, although who pays for the inspection (buyer or seller) is negotiable in each separate contract. A good inspector should be a member of the ASHI (American Society of Home Inspectors); bonded; licensed; insured; and able to provide references, an up front quote of his/her fees and what is included (are termite inspections extra, for example). Your real estate professional or mortgage originator can recommend a certified inspection company.
  6. Setting Up the Best Interim Housing Between Destinations
    When you first arrive in your new town, you’ll most likely need to have temporary housing arrangements until you can close and move into a new home or find a permanent rental. This may be anywhere from a few days to a few months. If you foresee needing interim housing for less than 30 days, the easiest option is a suite hotel geared for extended stays. For a month or longer, corporate apartments or homes are much roomier, more comfortable, and usually 20-60% less than paying a daily or weekly hotel rate.
  7. Moving Your Household and Safely from Point A to Point B
    Depending on the size of your household and the distance of the move, you may want to consider hiring a moving company. Obviously, doing it yourself can save quite a bit of money; however, the time factor, experience of professional movers and the insurance they provide your contents may make hiring the better choice. Moving companies can give you either a binding or non-binding estimate. Binding means that the cost is held to exactly the estimate they give; this means that they will actually physically inspect your home before giving the estimate. A non-binding estimate is only an approximation and no guarantee that the final billing won’t be more. However, federal law sets a ceiling of no more than 10% additional charges over the estimate. You will also want a moving company that can guarantee the pickup and delivery dates.
  8. Having a Trailing Spouse Who Needs to Relocate into a New Job
    In the year 2000, 65% of all households had two incomes, creating a significant burden when losing one income as a result of relocation. 27% of companies provide spouse employment assistance; if yours is one of them, take advantage of it. If not, try to begin establishing a network before you arrive, contacting any friends or acquaintances in your new city; subscribing to the newspaper; contacting recruiters, placement firms and career counselors; contacting the chamber of commerce and employment commission; and joining organizations, especially networking ones. If a job still hasn’t been landed by move time, consider volunteering or joining a temporary agency. Great full time careers have been started from both.
  9. Finding the Best New Schools for Your Children
    Concerns about family and children is the second most frequently cited reason for reluctance to move. There are many ways to find out all the information you need to make a wise decision. If you haven’t decided on a particular area of town, the chamber of commerce can give you a wealth of statistics on all local school districts, as well as private schools. Using the internet can also provide excellent information. If you have decided on a particular area, your real estate professional can get you a school district information package.
  10. Concerns Over Your Children Making a Smooth Transition
    In addition to educational concerns, we also worry about the emotional effects of a major move on our children. They may be resisting the move; may even be angry. Will they adapt well? Will they make new friends? Probably the best way to ease the way is to involve the kids in the move. Provide them with the same information about your new town that you have. Rent or buy videos about your destination to watch as a family. There are also many excellent books geared to children of all ages.

*The views, articles, postings and other information listed on this website are personal and do not necessarily represent the opinion or the position of American Pacific Mortgage Corporation.