VA Loan or Conventional Loan?

[briansd1]

Ok, so my friend closed on his house. Less than 30 escrow. I didn’t want to post earlier until the deal was done.

3.75% is a killer deal. Rates have since moved to up to about 4.25% on a VA loan.

He got the loan in Philadelphia from http://www.phfa.org
They apparently originate loans through brokers but keep the loans in their portfolio and do the servicing.

He had checked with USAA also but they were way more. The fee and interest rate were not even competitive.

For zero percent down, the upfront premium was about $5,500 or 2.15% which was added to the loan. I think those are the points to the broker.

Here are the VA guidelines for down payments and funding fees:
None – 2.15%
5% or more (up to 10%) – 1.50%
10% or more – 1.25%

—-
Out of pocket closing costs were about $9,500 including:

Transfer taxes of 2% $5,100
The transfer taxes in PA are very high at 4%. Seller and buyer pay 1/2.

Title Services and Title Insurance $1,900

Taxes, Recording, Homeowner’s Insurance and Misc. $2,500
—–

This worked to to be a great deal for a brand new house about $255,000 in an average neighborhood (something like North Park or Normal Height, I suppose, if we could even compare) of the city about 1.2 miles from City Hall, with parking. Same house next door listed in late 2008 and closed in early 2009 for $300,000.

$1,200 monthly mortgage payments and $450 annual property taxes (10-year tax abatement on new house), no PMI. Comparable rent is $2,000.

Anybody who is a veteran should look at buy vs. rent, maybe not in San Diego but in cheaper locales.

In the winter of 2011, prices might be down from 2010 with rates slightly higher. If you qualify for zero down on a VA loan, that might be the opportunity to buy at the bottom (which I think will be spread out, up and down, over a couple years, depending on the area)

[moneymaker]

Good for your friend, I just found out recently that VA loans also cover earthquake insurance, another words it’s included in the loan. Probably not a big deal for your friend but a nice touch here in CA. I didn’t know this when I was considering it, if someone could verify that it is the case, I’m sure some might be swayed that way.

[moneymaker]

Good for your friend, I just found out recently that VA loans also cover earthquake insurance, another words it’s included in the loan. Probably not a big deal for your friend but a nice touch here in CA. I didn’t know this when I was considering it, if someone could verify that it is the case, I’m sure some might be swayed that way.

[moneymaker]

Good for your friend, I just found out recently that VA loans also cover earthquake insurance, another words it’s included in the loan. Probably not a big deal for your friend but a nice touch here in CA. I didn’t know this when I was considering it, if someone could verify that it is the case, I’m sure some might be swayed that way.

[moneymaker]

Good for your friend, I just found out recently that VA loans also cover earthquake insurance, another words it’s included in the loan. Probably not a big deal for your friend but a nice touch here in CA. I didn’t know this when I was considering it, if someone could verify that it is the case, I’m sure some might be swayed that way.

[moneymaker]

Good for your friend, I just found out recently that VA loans also cover earthquake insurance, another words it’s included in the loan. Probably not a big deal for your friend but a nice touch here in CA. I didn’t know this when I was considering it, if someone could verify that it is the case, I’m sure some might be swayed that way.

[briansd1]

threadkiller, your post got me curious. I’m interested in the technical details so I looked it up.

It looks like you’re talking about Cal Vet. But Cal Vet has higher interest rates, in the high 5% to 6%.
http://www.cdva.ca.gov/CalVetLoans/Interest.pdf

It also looks like VA loan rates are all over the place, depending on the lender.

CalVet uses a Contract of Sale as the financing instrument for our loans. What that means is that CalVet purchases the home you selected and takes legal title to the property at close of escrow, and then sells the property to you using a contract of sale. When the loan is paid in full, either when the last payment is made or if you refinance or sell, we issue a grant deed to transfer legal title to you. A document called a Memorandum Agreement of Sale is recorded to show that the contract exists, and you hold what is referred to as the equitable title to the property which gives you all the rights of ownership. One of the major advantages of a Contract of Sale is that CalVet is able to obtain Fire and Hazard insurance, and Disaster Insurance and provide superior insurance coverage at group rates. The technicality of holding legal title also assists us in obtaining the best possible bond ratings for the bonds that we sell to finance the program. For the very small number of veterans who default on their CalVet Home Loan, the Contract of Sale makes it easier for us to recover the property and minimize losses to the program.

http://www.cdva.ca.gov/CalVetLoans/FAQs2.aspx#pb11

[briansd1]

threadkiller, your post got me curious. I’m interested in the technical details so I looked it up.

It looks like you’re talking about Cal Vet. But Cal Vet has higher interest rates, in the high 5% to 6%.
http://www.cdva.ca.gov/CalVetLoans/Interest.pdf

It also looks like VA loan rates are all over the place, depending on the lender.

CalVet uses a Contract of Sale as the financing instrument for our loans. What that means is that CalVet purchases the home you selected and takes legal title to the property at close of escrow, and then sells the property to you using a contract of sale. When the loan is paid in full, either when the last payment is made or if you refinance or sell, we issue a grant deed to transfer legal title to you. A document called a Memorandum Agreement of Sale is recorded to show that the contract exists, and you hold what is referred to as the equitable title to the property which gives you all the rights of ownership. One of the major advantages of a Contract of Sale is that CalVet is able to obtain Fire and Hazard insurance, and Disaster Insurance and provide superior insurance coverage at group rates. The technicality of holding legal title also assists us in obtaining the best possible bond ratings for the bonds that we sell to finance the program. For the very small number of veterans who default on their CalVet Home Loan, the Contract of Sale makes it easier for us to recover the property and minimize losses to the program.

http://www.cdva.ca.gov/CalVetLoans/FAQs2.aspx#pb11

[briansd1]

threadkiller, your post got me curious. I’m interested in the technical details so I looked it up.

It looks like you’re talking about Cal Vet. But Cal Vet has higher interest rates, in the high 5% to 6%.
http://www.cdva.ca.gov/CalVetLoans/Interest.pdf

It also looks like VA loan rates are all over the place, depending on the lender.

CalVet uses a Contract of Sale as the financing instrument for our loans. What that means is that CalVet purchases the home you selected and takes legal title to the property at close of escrow, and then sells the property to you using a contract of sale. When the loan is paid in full, either when the last payment is made or if you refinance or sell, we issue a grant deed to transfer legal title to you. A document called a Memorandum Agreement of Sale is recorded to show that the contract exists, and you hold what is referred to as the equitable title to the property which gives you all the rights of ownership. One of the major advantages of a Contract of Sale is that CalVet is able to obtain Fire and Hazard insurance, and Disaster Insurance and provide superior insurance coverage at group rates. The technicality of holding legal title also assists us in obtaining the best possible bond ratings for the bonds that we sell to finance the program. For the very small number of veterans who default on their CalVet Home Loan, the Contract of Sale makes it easier for us to recover the property and minimize losses to the program.

http://www.cdva.ca.gov/CalVetLoans/FAQs2.aspx#pb11

[briansd1]

threadkiller, your post got me curious. I’m interested in the technical details so I looked it up.

It looks like you’re talking about Cal Vet. But Cal Vet has higher interest rates, in the high 5% to 6%.
http://www.cdva.ca.gov/CalVetLoans/Interest.pdf

It also looks like VA loan rates are all over the place, depending on the lender.

CalVet uses a Contract of Sale as the financing instrument for our loans. What that means is that CalVet purchases the home you selected and takes legal title to the property at close of escrow, and then sells the property to you using a contract of sale. When the loan is paid in full, either when the last payment is made or if you refinance or sell, we issue a grant deed to transfer legal title to you. A document called a Memorandum Agreement of Sale is recorded to show that the contract exists, and you hold what is referred to as the equitable title to the property which gives you all the rights of ownership. One of the major advantages of a Contract of Sale is that CalVet is able to obtain Fire and Hazard insurance, and Disaster Insurance and provide superior insurance coverage at group rates. The technicality of holding legal title also assists us in obtaining the best possible bond ratings for the bonds that we sell to finance the program. For the very small number of veterans who default on their CalVet Home Loan, the Contract of Sale makes it easier for us to recover the property and minimize losses to the program.

http://www.cdva.ca.gov/CalVetLoans/FAQs2.aspx#pb11

[briansd1]

threadkiller, your post got me curious. I’m interested in the technical details so I looked it up.

It looks like you’re talking about Cal Vet. But Cal Vet has higher interest rates, in the high 5% to 6%.
http://www.cdva.ca.gov/CalVetLoans/Interest.pdf

It also looks like VA loan rates are all over the place, depending on the lender.

CalVet uses a Contract of Sale as the financing instrument for our loans. What that means is that CalVet purchases the home you selected and takes legal title to the property at close of escrow, and then sells the property to you using a contract of sale. When the loan is paid in full, either when the last payment is made or if you refinance or sell, we issue a grant deed to transfer legal title to you. A document called a Memorandum Agreement of Sale is recorded to show that the contract exists, and you hold what is referred to as the equitable title to the property which gives you all the rights of ownership. One of the major advantages of a Contract of Sale is that CalVet is able to obtain Fire and Hazard insurance, and Disaster Insurance and provide superior insurance coverage at group rates. The technicality of holding legal title also assists us in obtaining the best possible bond ratings for the bonds that we sell to finance the program. For the very small number of veterans who default on their CalVet Home Loan, the Contract of Sale makes it easier for us to recover the property and minimize losses to the program.

http://www.cdva.ca.gov/CalVetLoans/FAQs2.aspx#pb11

[moneymaker]

Good catch briansd1, it was the CalVet loan, keep getting the 2 confused, not sure why as they are very different loans. Good thing I don’t do loans for a living.

[moneymaker]

Good catch briansd1, it was the CalVet loan, keep getting the 2 confused, not sure why as they are very different loans. Good thing I don’t do loans for a living.

[moneymaker]

Good catch briansd1, it was the CalVet loan, keep getting the 2 confused, not sure why as they are very different loans. Good thing I don’t do loans for a living.

[moneymaker]

Good catch briansd1, it was the CalVet loan, keep getting the 2 confused, not sure why as they are very different loans. Good thing I don’t do loans for a living.

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