What does that crazy loan acronym mean for someone who has an existing VA mortgage where they live now or on a home they retain and did live in? It means a streamline refinance might be a good idea and you won’t have to fork out funds for an appraisal. When I used to underwrite them they were a feel good loan for me. Why? Because they actually require that there be a net tangible benefit for the borrower. That means that mathematically it has to make sense with no exception. Yes, they are a little tricky to calculate but the borrower always ends up in a better position that will pay off over time. Who doesn’t love that?
Here are some parameters:
- Credit score of 640 or better
- 1 unit properties only
- Must have been lived in by the veteran at some point, but may currently be a primary residence, second home or investment property
- Funds can only be used to cover closing costs, prepaids and payoff of the loan – no cash out
- Subordinate financing is ok, so long as they will re-subordinate
- Requires a COE – Certificate of Eligibility is required with a few exceptions
- Requires a mortgage only credit report with credit score and a clean mortgage history for the last 12 months
- Source of income must be disclosed but income is not verified unless the payment increases by 20% or more and then the usual verification will be required subject to ratios.
- No asset verification
- There is a VA Funding fee (this is rolled in)
- Energy Efficient Mortgages: EEM may be added to roll in the cost of certain energy saving improvements – up to $6,000 – specific parameters apply. See mortgage professional for details
The VA loves our veterans and this program is a gift to many. There are also other programs that benefit veterans – home improvement, purchase money and regular refinances as well. Would love to assist in providing that gift to those who qualify.
Thanks to all of the veterans and their families for their many sacrifices.
Have helped buyers of all types and financial levels and worked on 1000's of loans.
There is always something new!
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