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d_damiano
555 Posts |
 Posted - 05/29/2008 : 10:28:42 PM
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I have not done a VA deal before and was approched today to see which would be a better scenerio for a VET
Doing a VA loan or doing an FHA with a DPA for the down payment.
Any comments would be helpful,
Thanks |
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dkendall1979
11120 Posts |
Posted - 05/29/2008 : 10:34:44 PM
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I can't imagine the incidence when an FHA loan would be better than a VA loan, if they were both available on the purchase.
VA is 100% with no monthly MI and the vet pays NOTHING. |
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d_damiano
555 Posts |
Posted - 05/29/2008 : 10:45:39 PM
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quote:
Originally posted by dkendall1979
I can't imagine the incidence when an FHA loan would be better than a VA loan, if they were both available on the purchase.
VA is 100% with no monthly MI and the vet pays NOTHING.
Thanks David |
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EquitySmart
1240 Posts |
Posted - 05/29/2008 : 11:00:55 PM
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In my experience, there are 6 scenarios when VA makes more sense than FHA:
1. The borrower is disabled (so the VA funding fee will be waived).
2. The borrower currently has VA loan and wants rate/term refinance.
3. The borrower needs 100% LTV and the seller cannot afford 3% DPA.
4. The borrower owns house under 12 months and wants 90% cashout.
5. The loan will be a purchase and the seller will pay for closing costs.
6. You are setup to originate VA loans, but not setup for FHA loans.
The first 5 reasons are putting the borrowers interest first - the last reason only applies to selfish brokers, since the borrower may be able to get a better loan if they work with a broker that is setup for FHA loans instead of getting the VA loan from you.
VA rates are typically priced 0.25% worse (in fees) than FHA rates, and VA limits cashout loans to 90% LTV (while FHA will allow 95% LTV if the borrower has owned the property at least 12 months) so you should usually go with FHA instead of VA when refinancing a conventional loan (if FHA or VA is a better option than a new conventional loan).
I may have possibly missed some scenarios, but my point is this: there is a finite list of scenarios when VA loan is better choice than FHA loan, and you should make your own list so you know when to recommend VA loan instead of FHA loan for your client.
A good place to start is reading through the FHA and VA manuals on the Taylor Bean website - they do have a few minor lender-specific guidelines, but they are very well written and Taylor Bean is quite good at following FHA and VA guidelines without imposing too many additional lender restrictions, so these are a good starting point:
http://www.taylorbeanonline.com/RateSheets/Newsletter/CreditManual/FHACPM.pdf
http://www.taylorbeanonline.com/RateSheets/Newsletter/CreditManual/VACPM.pdf
Someone please speak up if there are any obvious scenarios missing from my list... |
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dkendall1979
11120 Posts |
Posted - 05/29/2008 : 11:24:46 PM
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Not to go into too much more detail since it's so late, but I was specifically stating that on a purchase where FHA and VA were both available to the client, I don't see a case in which FHA benefits would outweigh VA.
Refinances and purchases above the 417k VA limit, or where the seller isn't willing to absorb the veterans cost, etc... there are many different scenarios to compare, but I'm specifically talking about this post when I offer my 2 cents. |
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EquitySmart
1240 Posts |
Posted - 05/29/2008 : 11:30:24 PM
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My reply was more general. More than 80% of my branch loans are refinance (most of which the borrower currently has a conventional loan) so we tend to lean more towards FHA, but it makes sense that VA would be the better option for a lot of purchases
This is why you really have to study the underwriting guidelines for both FHA and VA and make your own list to determine which is better fit for each loan you are working on |
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d_damiano
555 Posts |
Posted - 05/29/2008 : 11:53:28 PM
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Sam awesome post thank you!
David thank you as well, you have both saved me hours of reading (something to probably do over a weekend), but at least I can now sound reasonable knowledgabe enough to get the client and then do the research.
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