An Energy Efficient Mortgage (EEM) has been a very popular product and one thousands of veterans take advantage of each year. There are numerous ways home buyers and current home owners can take advantage of this type of VA Loan. As their name suggests, EEMs are used soley with energy-efficient homes. However, many borrowers don't realize they can get an EEM to buy a new home in addition to the standard VA refinance to make energy-efficient improvements to a residence. The exciting benefit, of course, is it will absolutely save money in the long run by cutting your monthly utility costs. Additionally, homebuyers and home owners can increase their homes' marketability with such improvements. Saving money on utilities each month creates a productive cycle where borrowers save money that they can put toward their mortgage or other bills.
VA Loan News and Information
This comes directly from the IRS:
Members of the military and certain other federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and qualify for the credit. Thus, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2011. If a binding contract is entered into by that date, the taxpayer has until June 30, 2011, to close on the purchase. Members of the uniformed services, members of the Foreign Service and employees of the intelligence community are eligible for this special rule. It applies to any individual (and, if married, the individual’s spouse) who serves on qualified official extended duty service outside of the United States for at least 90 days during the period beginning after Dec. 31, 2008, and ending before May 1, 2010.
This is a much deserved benefit given to military families. All that qualify should take advantage of the First time home buyer tax credit before it is no longer available.
To get pre-qualified for a VA Loan and take advantage of the extended First Time Home Buyer Tax Credit, Inquire Here>>>
There are quite a few searches online for the term "Military Loan". This can refer to many different types of loans, like Military Pay Day Loans, Military Personal Loans, VA Loans, Military Business loans....well, you get the idea. You might see where that could get confusing. They all have their purpose but without really considering the benefits, a person might make a bad decision.
I'm not going to claim to be an expert on Military Loans, unless you're referring to VA Loans. However, after doing some research. I can tell you that I can see where the allure for Military "Personal" loans might be evident. They make it extremely easy to get a loan...almost too easy.
Military Loans are mainly available to military service members and can be used for a variety of reasons:
- Cash or financial assistance
- Auto repairs
- Debt consolidation
- Travel or vacations
- PCS moves
- Home repairs or improvements
- Moving expenses
- Uncovered medical or dental expenses
- Business expenses
- New computer
- Or for hundreds of other reasons that fit your needs.
The main overall purpose of a Military "personal" Loan is for quick cash. I would expect that the main target customer would be those service members and maybe even some veterans that may or may not have a home with equity and simply need a smaller loan quicker. That being the case, I have nothing bad to say about Military personal loans.
A VA refinance could be a very good alternative. However, the downside to doing a VA Refinance and pulling cash out is the funding fee (IF you do not have a service connected disability). The other possible downside is that you are limited to 90% of the value of your home which may lower the amount of cash you can pull out or eliminate the possibility all together. Obviously fees are a non-issue on a VA loan, of course, if you use www.valoanlending.com to find your VA lender for you.
Thousands of military personnel and veterans are taking advantage of the lower rates and using VA loans as the better alternative for pulling out more money. With the longer term, you're not putting quite the strain on your wallet as a shorter term personal loan might have.
Either way you go, don't jump into a quick loan without weighing out your options and comparing the pros and cons of each.
Secret about Two VA Loans at Once
There's a little known secret about VA loans that even lenders don't know about. Millions of veterans have used their entitlement to purchase a home and have since sold the home, thus restoring their entitlement. Of those, there are countless ones that don't realize they can use their entitlement again to purchase another home, or even refinance into a VA loan. In fact, as long as they continue to restore their entitlement, they can continue to get VA loans.
That's not the secret I'm referring to though. What so many don't know, including lenders, is that veterans can have two VA loans at once. It's called "2nd Tier Entitlement". The main point to keep in mind if you are looking to qualify for a 2nd VA loan at the same time is this - Your 2nd VA loan MUST be more than $144,000.
How do I calculate 2nd Tier Entitlement?
You probably want to know how figure the maximum VA loan amount you can borrow if you already have a VA loan, right?
Lenders that truly know how to figure this number will give you a calculation that might make your head spin. At the very least it should have the same affect as a sleeping pill.
It would probably look like this:
$484,350 (assuming this is the loan limit for your county) X 25% = $121,087.50 - $36,000 (base entitlement) = $85,087.50 (2nd tier entitlement) + $21,853 (assuming this is the remaining entitlement on your COE) = $106,940.5 X 4 = $427,762.50 (maximum 2nd tier loan amount)
Of course, this is just an example. Your situation would more than likely be different. Once someone knows how to calculate, it's fairly easy. In fact, check out what comes from a reverse calculation. I can determine what the actual original loan amount was on the current home:
$36,000 (basic entitlement) - $21,853 (the assumed remaining entitlement) = $14,147 (actual entitlement used) x 4 = $56,588 (the original VA loan amount on the current home).
You're probably asking, why would you do that? What purpose would that serve?
Because there is a more TOP SECRET, secret to knowing how to calculate the maximum VA loan if you already have a VA loan...or even if you may have foreclosed on a VA loan and never restored the entitlement. It is absolutely amazing that even today, there are so many Loan Officers that don't even know this. This is dangerous for the veteran.
Working with the Right VA Loan Specialist
So imagine, you're trying to buy a house and have gone almost all the way through the process of truly getting two VA loans at once. You've signed the purchase contract, put a huge earnest money deposit down, paid for an appraisal and the loan just went to underwriting. The whole time you've put your life in the hands of this seemingly too-smart-for-school VA "Specialist" and believed that he or she has calculated the maximum 2nd tier entitlement correctly. Then the bomb drops. The calculation was off. Now you have to bring an extra $5,600 to the table that you hadn't budgeted for or simply don't have.
That's not a position I would expect any veterans want to be put into. In fact, pretty much all veterans and current military have higher standards than that and expectations that their VA Specialist delivers exactly what they promise with no surprises.
That's why the more error-free (and Top Secret) solution should always be used....
What's the Secret?
I bet the curiosity level is pretty high right now. Unfortunately, I'm going to keep it Top Secret. However, if you are a veteran or currently on active duty and are wanting to have two VA loans at once, and you want to know what the Top Secret calculation is or just want to be sure you have a VA Specialist that knows how to use the calculation correctly to calculate (every time), the maximum 2nd Tier VA loan amount, I will point you in the right direction...due south of this paragraph you'll get everything you need to help you get your 2nd VA loan...and you won't have to pay a dime for the information or the loan. Some might call that a no-brainer. I call it helping those that have helped us all.
Best of luck in your search for your new home!
VA home loan useful, but watch for snags
For eligible service members and veterans, the Veterans Affairs Department’s home loan guarantee program can be a curse or blessing in today’s housing market. Among the advantages:
• It is among the few mortgage programs now available that does not require a down payment.
• In most locations, lenders will allow purchases of a home worth up to $417,000 without a down payment — and more than $1 million in some high-cost areas.
• Credit underwriting is a little easier with VA loans than with other mortgages. A buyer’s credit scores don’t have to be as high, and loans are possible with as few as six months of work history — not the minimum two years required for most mortgages.
• An inspection of the home is required to ensure it is safe and livable, which provides extra protection for first-time buyers.
But there are disadvantages:
• Not all lenders are willing to work with VA loans.
• A percentage of the loan fee (funding fee), charged by VA to offset the risk of having no mortgage insurance, could be wrapped into the mortgage, ranging from 0 percent for veterans with a service connected disability to 3.3 percent for second time or more use. I corrected this from the original post.
• There are limits on what fees can be charged to the buyer at closing; some sellers don’t want to be part of a sale that could force them to pay more closing costs. This becomes a non-factor when a veteran works with a VA lender that charges Zero fees.
• A strict home inspection and appraisal process often can make it impossible to buy a home “as is.” If the seller won’t agree to repairs, either done in advance of settlement or by putting money into an escrow account, a VA loan may not be approved. Of course, this should be in the advantage category really, as it is there to protect the veteran from purchasing a "lemon" or "money pit" home that could cost thousands. Conventional loans don't have this kind of protection. I personally found out the hard way when I got a conventional loan to purchase my house and since have put in THOUSANDS of dollars in repairs that the inspector my realtor recommended didn't catch. I'll talk more about this in a separate post.
• Many sellers and their agents believe VA loans involve more red tape than other loans. Many sellers and agents don't understand VA loans either. This is up to your lender to step in and help them understand the steps involved and relieve them of the mis-guided anxiety they may feel. VA loans should take no longer than a conventional loan if you have the right VA lender working for you.
• Generally, VA home loans are more likely to be accepted in housing markets where troops, veterans and military retirees are a sizable part of the market. This seems like a very one sided comment. It is true but I'm not sure where I see this as a disadvantage.... or an advantage. VA loans are accepted throughout the country, regardless of demographics. Just make sure if you are building a home, you are working with a reputable builder that is approved by VA. Again, I'll talk more about this in a separate post.The Article, originally written by Rick Maze and Michelle Tan - Staff writer of militarytimes.com, has been edited to include the important points and keep out names. Some corrections were made to the facts.