Orange County FHA, VA & First Time Buyer Loan Information: May 2010

This week VA made an important announcement regarding Condo Approval's that will have a positive effect for Orange County, CA VA loan borrowers. Although the VA is calling this a "clarification", it seems to be an actual rule change for the better. In a nutshell, VA financing is allowed on FHA approved condo projects. For those who have not kept up with the recent condo approval guidelines set forth by FHA, and how VA felt about it, this may not seem like anything. 

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What Orange County Condo Projects are VA Approved

Prior to the recent FHA condo approval guidelines changes, VA had allowed financing on condo projects even if they were not on the VA approved list. This changed when FHA changed their condo approval guidelines. VA, while not being very clear about their position on this, said they no longer would accept FHA approved condo's. This meant the project had to be on the VA Condo approved list, which in Orange County is fairly limited.

How VA Circular Letter 26-09-19 - (5-17-10) Affects VA Loans in Orange County

This latest VA Circular (a VA Circular is similar to an FHA Mortgagee Letter) announced, or "clarified" their position on FHA approved condo projects.

• VA can accept HUD/FHA/USDA condominium approvals if the project approval was dated prior to December 7, 2009.
• VA cannot accept HUD/FHA/USDA condominium approvals if the project approval was dated on or after December 7, 2009.
• VA cannot accept phases annexed into the project approved by HUD/FHA/USDA if the annexation occurred on or after December 7, 2009...If this is the case, a full review of the legal documents for the entire project must be performed by VA.

This really opens the door for Orange County Veterans looking for condo's who are planning to use the VA loan eligibility. The VA loan program, which does not require a down payment up to a purchase price of $593,750, and has no Monthly Mortgage Insurance like FHA does, is a great program that helps those who served our country. 

How to Find FHA and VA Approved Condo Projects in Orange County.

Both FHA and VA have websites that allow for searching for approved condo projects. Unfortunately it is not as easy as typing an address in and getting a result. And the condo names shown on the VA and FHA websites do not list the address. But it is fairly easy type in a zip code and get a list of the approved projects within that zip code. This is where the help of an experienced Orange County real estate agent and/or Orange County VA lender can really come in handy.

Orange County VA loan eligible home buyers should talk to an Orange County VA loan expert before looking for a home. The lender can get the VA loan home buyer Prequalified and PreApproved (including help with obtaining the Certificate of Eligibility). Once PreApproved, the home buyer can confidently know they are ready to make an offer on a home.

Authored by Tim Storm, an Orange County, CA Loan Officer - Please contact my office at Trust One Mortgage for more information about an Orange County, CA home loan.  877-786-4243 x 7.

www.OCFHALoans.com

Contact us for your Orange County VA Mortgage:

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

*Trust One Mortgage Corporation is licensed and supervised by the California Department of Real Estate ("DRE"), License # 01087829

Orange County first time home buyers need to be aware of what things they can and cannot do once they have an accepted offer on a home. Even when someone is "PreApproved" by an Orange County Lender, the approval can fall apart quickly if the home buyer is not careful.

4 Things Orange County Home Buyers Should Not Do While in Escrow

1. Do not make any large purchases. Do not purchase a car or boat. Don't even buy furniture or appliances for your new home.
2. Don't apply for new credit cards or installment loans. Inquiries during the loan process could lower the FICO score, which could cause problems if credit is run prior to closing.
3. Do not make any large or unusual deposits into your checking or savings account that can't be properly documented. Even a $500 deposit may be questioned by an undewriter if it didn't come from an employer or obviously verifiable source. Cash deposits cannot be documented and will cause problems if deposited into an account the lender is using to document funds to close.
4. Don't go on vacation or leave town during escrow closing period. While this is not a deal killer, it can cause delays. It typically takes 30 to 45 days to close a transaction, sometimes even longer. If the borrower is not available to get needed documentation or sign disclosures, the resulting delays could cause problems at the closing.

And of course, don't get laid off from your job! That, of course is out of your control but it does happen from time to time.

Fannie Mae will Soon Require a Second Credit Report Be Pulled At Closing

Fannie Mae has announced that effective June 1, 2010, lenders will be required to pull a second credit report at funding.  The lender needs to make sure no new payments are appearing on the credit that would increase the debt to income ratios beyond an approvable level. They will be looking for new inquiries that did not appear on the initial credit report. While this could lead to deals falling out at the last minute, what is still unclear is whether lenders will adjust loan pricing at the last minute based on a drop in FICO score. For example, a borrower with less than 40% down payment and a 720 FICO score could end up with an additional .5 point fee ($2,000 on a $400,000 loan) if there FICO drops 1 point, to 719. There should be more clarity on this issue in the next week.

It is more important than ever that Orange County home buyers be very careful with their spending and credit while in escrow to purchase a home. Make sure to ask your local Orange County loan lender is what things to be careful about and don't keep any secrets.

Authored by Tim Storm, an Orange County, CA Loan Officer - Please contact my office at Trust One Mortgage for more information about an Orange County, CA home loan.  877-786-4243 x 7.

www.OCFHALoans.com

Contact us for your Orange County FHA Mortgage:

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

*Trust One Mortgage Corporation is licensed and supervised by the California Department of Real Estate ("DRE"), License # 01087829