Presented By: Bill Ladewig 866.204.9733 EMAIL SITE

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MORTGAGE MENTOR Presented By: Bill Ladewig 866.204.9733 EMAIL SITE VA Made Easy Everything You Need to Know Class Presented on 03-27-09 - Rev 01-02-12

MORTGAGE MENTOR Presented By: Bill Ladewig 866.204.9733 EMAIL SITE Presented By:Bill Ladewig866.204.9733Bill@YourFhaGuru.comHttp://www.YourFhaGuru.com

MORTGAGE MENTOR Presented By: Bill Ladewig Call: 866.204.9733 Email Website Presented By: Bill Ladewig 866.204.9733 EMAIL SITE VA was established in 1945And, along with FHA, VA is responsiblefor the high percentage of American Home Ownership.

MORTGAGE MENTOR Presented By: Bill Ladewig Call: 866.204.9733 Email Website Presented By: Bill Ladewig 866.204.9733 EMAIL SITE VA Asks Lenders to Seek Common Sense Ways to Approve Veteran Borrowers Quoted From VA Underwriting Guidelines:“This topic in the “VA Lender's Handbook” is intended to encourage underwriters to find ways to approve loan applications which ought to be approved but may not appear approvable upon direct application of the credit standards.”

MORTGAGE MENTOR Presented By: Bill Ladewig 866.204.9733 EMAIL SITE The first Question Most buyers should be asked…“Have You or Your Spouse served in the Armed Services?”

MORTGAGE MENTOR Presented By: Bill Ladewig 866.204.9733 EMAIL SITE Benefits of A VA Loan • No Down Payment, 100% Financing. • No Monthly Mortgage Insurance Premiums. • Leniency on Credit and Employment history. • No Reserve Requirements (1 unit only). • Seller can pay all Closing Costs • Seller can pay off debt for borrower. • 100% Gift Funds allowed. • 100% Cash-Out Refinance. • VA Loans do not take longer to close than other loan types.

MORTGAGE MENTOR Presented By: Bill Ladewig 866.204.9733 EMAIL SITE VA Funding Fee The Funding Fee is a charge to Veterans for the VA to Guarantee 25% of the VA loan to the lender. • The VAFF percentage is calculated on the loan amount. • The VAFF is typically financed in the loan but can be paid in cash by Buyer or Seller. • The following Veterans are exempt from paying VAFF. • Veterans receiving VA compensation for service connected disabilities. • Veterans who would be entitled to receive compensation for service connected disabilities if they did not receive retirement pay. • Surviving spouses of Veterans who died in service or from service related disabilities.

MORTGAGE MENTOR Presented By: Bill Ladewig 866.204.9733 EMAIL SITE VA Funding Fee Veteran % 1 st Time Use Down Pmt % 2 nd + Use Purchase and Construction Loans Regular Military None 2.15% 3.30% 5% to 10% 1.50% 1.50% 10% or more 1.25% 1.25% Reserves / None 2.4% 3.3% 5% to 10% 1.75% 1.75% National Guard 10% or more 1.5% 1.5% Cash Out Refinancing Loans Regular Military N/A 2.15% 3.3% Reserves / N/A 2.4% 3.3% National Guard Interest Rate Reduction Refinance 0.5%

MORTGAGE MENTOR Presented By: Bill Ladewig 866.204.9733 EMAIL SITE Borrower Eligibility nEligible borrower is a Veteran who: • Served with acceptable character of service, or: • Is the unmarried spouse of a deceased Veteran who died while in service or of service connected issues. • Two unrelated VA eligible borrowers can purchase together. • The Only a non-veteran co-borrower is the spouse the Veteran. • No other non-veteran person may coborrow, i.e. brother, sister, parent, aunt, uncle, significant other, etc.

MORTGAGE MENTOR Presented By: Bill Ladewig 866.204.9733 EMAIL SITE Borrower Eligibility

MORTGAGE MENTOR Presented By: Bill Ladewig 866.204.9733 EMAIL SITE Maximum Loan Amounts • Maximum 100% Loan Amounts vary in each county up to $1,000,000 in three California Counties. • Maximum Loan includes VA Funding Fee. • Loans are available above the maximum allowable Veteran must pay 25% down on balance over maximum allowable VA loan amount. • Example: $650,000 Purchase San Diego. • Maximum VA loan is $593,750. • 650,000 – 593,750 = 56,250. • 56,250 X 25% = $14,062 Down or 2% • VA Funding Fee must be paid cash when loan is above VA maximum. • Maximum VA loans can be found at: • http://www.homeloans.va.gov/docs/2009_county_loan_limits.pdf

MORTGAGE MENTOR Presented By: Bill Ladewig 866.204.9733 EMAIL SITE Refinance CashOut Or, Rate & Term Refinance 100% of Appraised Value • Plus • The cost of energy efficiency improvements up to $6,000, • VA funding fee. Eligible veterans can use a VA loan to refinance other loan types.

MORTGAGE MENTOR Presented By: Bill Ladewig 866.204.9733 EMAIL SITE Streamline Refinance • Used to refinance an existing VA loan to a lower interest rate or improve loan terms. • No appraisal or underwriting is required. • Closing costs may be financed in the loan. • Any reasonable discount points can be charged, but only 2 discount points can be financed in the loan. • No cash to the borrower. • Note: A fixed rate loan to refinance a VA ARM may be at a higher interest rate.

MORTGAGE MENTOR Presented By: Bill Ladewig 866.204.9733 EMAIL SITE VA Loan Types • 15 Year Fixed • 30 Year Fixed • 3/1 ARM and 5/1 ARM • Caps: 1% Initial, 1% Periodic and 5% Lifetime • Index: 1 Year US Treasury • Margin: Set by Lender

MORTGAGE MENTOR Presented By: Bill Ladewig 866.204.9733 EMAIL SITE Occupancy nOwner Occupied only, except: • VA Streamline Refinance, Veteran does not need to currently occupy the property, but must have occupied the property in the past. n Occupancy by Veteran’s spouse in the case when a Veteran is stationed in a distant location satisfies the occupancy requirement.

MORTGAGE MENTOR Presented By: Bill Ladewig 866.204.9733 EMAIL SITE Entitlement and Certificate of Eligibility n A COE does not expire. It can be reused again and again if it is properly restored. n If a Veteran holds a valid COE, you can assume she/he has appropriate length and character of service. Sometimes, the COE is annotated for individuals currently servicing in active duty. n It is possible for the Certificate of Eligibility to show an amount that is less than $36,000. In these cases, refer to the VA Lender Handbook, Chapter 2, for more details on this issue.

MORTGAGE MENTOR Presented By: Bill Ladewig 866.204.9733 EMAIL SITE CAIVRS n CAIVRS (Credit Alert Interactive Voice Response System) is a HUD system to determine if the borrower has defaulted on any federally assisted loan. • A CAIVRS inquiry must be performed on all borrowers. • HUD offers online access for CAIVRS to current FHA lenders, and to VA lenders with registration. https://vip.vba.va.gov (Veterans Information Portal).

MORTGAGE MENTOR Presented By: Bill Ladewig 866.204.9733 EMAIL SITE Property Eligibility • SFR, Condo*, PUD, 14 Units. • Units 2-4 require 6 months reserves. • Manufactured Homes Check with lender. • Condos must be on the VA approved condo list before any unit in the project can be eligible for VA loan guaranty. • Condo Lookup: http://condopudbuilder.vba.va.gov/2.2/frames.html

MORTGAGE MENTOR Presented By: Bill Ladewig 866.204.9733 EMAIL SITE Allowable Closing Costs nThe Veteran can pay: • Appraisal, • Recording, • Credit report, • Origination Fee (maximum 1%) • Reasonable discount points. • Flood certificate. • Prepaid items, taxes, assessments and insurance. • Hazard Insurance Premium • Veteran cannot pay • Escrow or Settlement Fees • Lender Fees (Doc, Admin etc.) • Termite report and repairs, • Notary fees.

MORTGAGE MENTOR Presented By: Bill Ladewig 866.204.9733 EMAIL SITE Cash to Close • Verify all liquid assets to the extent they are needed to close the loan. VOD’s two months bank statements, gift letters and receipt, etc. • Reserves are not required on 1 unit but are helpful in determining overall credit analysis. • VOD’s two months bank statements, gift letters • Seller concessions are 4% nSeller may pay off debt for Veteran, provided it is within the 4% maximum concession.

MORTGAGE MENTOR Presented By: Bill Ladewig 866.204.9733 EMAIL SITE Credit History • VA Credit Guidelines are not score driven but lenders impose their own guidelines. • CAIVRs Inquiry is required on all borrowers. • RMCR or MCR (3 files merged) reports are acceptable. • Current Rent and/or Mortgage history. • Absence of Credit History, use alternative credit • Adverse credit history of nonpurchasing spouse is not considered against veteran. Monthly obligations are considered due to community property state. A credit report is required on all nonpurchasing spouses. • Collections may not necessarily be required to be paid, upon review of explanation and any supporting documentation by borrower, this is considered on a case by case basis. Seller can pay collections.

MORTGAGE MENTOR Presented By: Bill Ladewig 866.204.9733 EMAIL SITE Credit History Continued n Judgments must be paid in full, or subject to repayment plan with timely payments (12 months). • Consumer Credit Counseling 1 year payments made with no with lates • Bankruptcy discharged more than 2 years are disregarded. Less than 2 years, must have established new and positive credit with a length of timely payments (12 months), and the bankruptcy was caused by circumstances beyond the control of the borrower. • 1 year into Chapter 13 pay out. • Foreclosure or DeedinLieu, follow BK guidelines above.

MORTGAGE MENTOR Presented By: Bill Ladewig 866.204.9733 EMAIL SITE Income and Employment nWages: require 2 year history, less than 2 years considered case by case. • Overtime income and 2nd job income generally needs 2 year history, less than 2 years is considered case by case. • Commission: 2-year history, unless previous related employment or specialized training - 1040s required. • Self Employment: averaged 24 months, 1040’s required. • Alimony and Child Support must be verified. • Seasonal jobs and unemployment may be averaged with 24 month history of both. n Other Income, pension, retirement, disability, etc. must be verified.

MORTGAGE MENTOR Presented By: Bill Ladewig 866.204.9733 EMAIL SITE Income and Employment n Active Military income - consider base pay as stable & reliable unless applicant is within 12 months of release of active duty. Leave and Earnings Statement is required (LES). If reenlisting, letter from commanding officer, or if leaving military, job offer letter from new employer. n Military quarters allowance can be considered income need form DD form 1747, status of Housing Availability - non taxable. n Other Military allowances - obtain verification of type and amount and length of receipt. n Income from Reserves or National Guard can be considered if the length of total service indicates a strong probability of continuance.

MORTGAGE MENTOR Presented By: Bill Ladewig 866.204.9733 EMAIL SITE Ratios and Residual Income n Total Debt to Income Ratio (DTI) - 41% n May exceed maximum DTI if loan is run through DU with “Approve/Eligible”, or LP with, “Accept”. n Additional, residual income (balance available for family support) is calculated, with a set guide for varying family sized, according to regions across the country. n When the DTI is > 41%, the residual income should be at least 20% over the stated guideline. Loans not meeting this, require very strong compensating factors.

MORTGAGE MENTOR Presented By: Bill Ladewig 866.204.9733 EMAIL SITE VA Residual Income Guideline Table of Residual Income by Region Loan Amounts of $80,000 and Above Family N East Midwest South West Size 1 $450 $441 $441 $491 2 $755 $738 $738 $823 3 $909 $889 $889 $990 4 $1025 $1003 $1003 $1117 5 $1062 $1039 $1039 $1158 Over 5 Add $80 for each addl. member up to (7) When DTI exceeds 41% multiply required reserve by 120%

MORTGAGE MENTOR Presented By: Bill Ladewig 866.204.9733 EMAIL SITE Income Tax Deductions n Determine the appropriate deductions for Federal income tax and Social Security/Medicare by using “Employer’s Tax Guide” charts. • Determine the appropriate deductions for state and local taxes using California Withholding charts, or applicable state materials. • State and Federal taxes at PaycheckCity.com http://www.paycheckcity.com/netpaycalc/netpaycalculator.asp

MORTGAGE MENTOR Presented By: Bill Ladewig 866.204.9733 EMAIL SITE Income Qualification Family of 4 Gross Monthly Family Income: $6,000 Housing Expense – (P.I.T.I) CA State & Federal Withholding Maintenance and Utilities Monthly Obligations Total Family Expenses Monthly Residual Income Required Residual Income (From Chart) DTI = 44.54 Rule: when DTI >41 actual residual income must be 120% of minimum required residual $1,117 X 120% = $1,304 =< $1,613 OK $2,172 $1,435 $280 500 4,387 1,613 1,117

MORTGAGE MENTOR Presented By: Bill Ladewig 866.204.9733 EMAIL SITE Compensating Factors n Compensating factors include, but are not limited to: • Excellent credit history. • Conservative use of consumer credit. • Minimal consumer debt. • Long-term employment. • Significant liquid assets. • Sizable down payment • Little or no increase in shelter expense. • High residual income. • Low debttoincome ratio.

MORTGAGE MENTOR Presented By: Bill Ladewig 866.204.9733 EMAIL SITE Thank You for Attending Your questions and comments on this class are appreciated. Current updates are at: http://www.YourFhaGuru.com Services: • Loan Officer – Closing Loans since 1970 • Your Advantage is My Experience. • All Loan Applications taken Personally. • Borrowers are Counseled so they always understand their loan. • Lending Instruction • Realtors: Classes can be structured to meet your office’s specific needs • Lenders: Loan Officer Classes A to Z 866.204.9733 858.451.1481 Bill@Mortgage-Mentor.com http://www.Mortgage-Mentor.com

Presented By: Bill Ladewig 866.204.9733 EMAIL SITE