Eligible U.S. Veterans and active duty home buyers I talk to are often surprised to discover there are still options for true zero down VA mortgage loans here in Washington State. That’s right, zero down mortgage loans…and yes, this post is being written after the mortgage meltdown(s) of 2008, 2009, 2010, and 2011 (hopefully, not to be continued into 2012).
SIDE NOTE: If you are a disabled U.S. Veteran, you are exempt from VA funding fees for life…Uncle Sam’s way of saying thank you for your service, and we’re sorry you got hurt. Not sure if you qualify as a disabled Veteran? If you receive a disability check or direct deposit from the VA for disability every month, you are most-likely eligible for a funding fee waiver? Still not sure, call me. I’ll be happy to help you figure it out.
Ok, here’s the rundown on the VA Double Zero:
VA = 100% (100% does not necessarily mean true zero down)
What about closing costs and prepaid items? You know, like the appraisal, taxes and insurance for the next 6 -12 months, title insurance…)
The best way to structure the VA Double Zero is to ask the seller to pay all the buyer’s closing costs and prepaid items on the financing contingency of the purchase and sale agreement. (At the time of this post, the VA will allow 4% in “interested party contributions” – which should cover all of those costs and then some in most cases).
The buyer should still plan to pay out of pocket for a home inspection (usually $350-500) – as well as earnest money (most offers I see include a $1,000 deposit – which is creditable to the buyer’s bottom line at closing…i.e. if the seller is paying everything – and there is nothing owed by the buyer at closing, the buyer can get their $1,000 deposit back at closing).
Sometimes, sellers have their houses priced to sell fast – and are not willing to reduce their profit margin – or maybe they are not making a profit. In these cases, as long as the house will appraise – the sale price can be inflated above the list price (by the amount of the closing costs/prepaids). Then, since the seller will be making 4% more than they were planning on, they can take the additional money and put it toward their buyer’s closing costs and prepaids.
If you have further questions on how to structure your “Double Zero VA Loan” – please don’t hesitate to call or email me anytime.
Tom Pessemier, MLO 117989
253.307.7907 or 425.780.6374 (mobile)
Double Zero VA Loans?
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