Whether you’re a first-time home buyer or downsizing for retirement, the home loan process can be overwhelming. Here are some tips and tools to help you make the right decisions for you and your family.
The home loan process takes time. Please be sure to bring the following items with you when you meet with your Mortgage Loan Officer as these may be critical to your loan being completed in a timely manner.
Payment calculators can be a helpful tool during the mortgage process. Please enjoy the use of the calculators listed below.
Click terms to view definition.
Total yearly cost of the loan which includes the interest rate and other prepaid finance charges.
The meeting between the buyer, seller, and lender where the property and funds legally change hands. Closing is also called a settlement.
The fees incurred when purchasing a home or refinancing the mortgage on a property. Costs vary by transaction, and may include lender or third-party fees or prepaid expenses, like taxes, insurance and interest.
This is the up-front money you need for a home purchase that is not financed by the mortgage. Getting financial help with a down payment–or using gift monies toward it–may be possible depending on the loan program. Ask your loan officer for more information.
Refers to a neutral third party who carries out the instructions of both the buyer and seller to handle all the paperwork of settlement or closing. Escrow may also refer to an account held by the lender into which the homebuyer deposits money for tax or insurance payments.
The charge for borrowing money, paid over a specific period of time.
Protects your home against loss and may include Flood Hazard Insurance if your home is located in a Special Flood Hazard Area.
Protects the lender against loss and is generally required with a down payment of less than 20%. Different types of MI include FHA/MIP, Private Mortgage Insurance (PMI) and VA Guarantee Fee.
A percentage of the loan amount, paid at closing, to reduce the interest rate on the loan. One point equals 1% of the loan amount.
The meeting between a home buyer, seller and lender where the property and funds legally change hands. Also referred to as closing.
Protects your home against loss arising from problems connected to the title to your property.
Click questions to view answers.
A. It is a process by which some or all of your debts are consolidated into a larger one, and you pay one monthly payment.
A. No. Debt consolidation works by combining multiple loans into one, thereby reducing and eliminating interest, penalties, and late fees.
A. You make one monthly payment, which is lower than all the combined payments you make to all your creditors. The interest rate you pay is lower, resulting in more of your payment going directly to the principal. In addition, combing all your high interest bills into one easy payment takes the hassle out of multiple bill payments.
A. This will depend on how much you are currently paying and how long you plan to take in repaying the new loan. With this said, reductions in monthly payments can be as much as 75%.
A. There are a variety of factors which dictate how much you can borrow. While your income and, for secured loans, the equity available in your property are important, the most important factor is your ability to repay the loan.
A. This is entirely up to you and will depend on how much you can afford each month. You should remember your original goal-to get out of debt! The longer you take to repay the loan, the more you end up paying in interest.
A. Yes. Consolidating your existing credit allows you to free up money for other things. You can borrow extra for that new car, boat, or caravan. You can even pay for your dream holiday or that home remodel project. The choice is yours, as long as you do not over-borrow.
A. You can always get optional accident, sickness, and unemployment coverage if you want the added peace-of-mind this brings. Life insurance is also a good option.
Click questions to view answers.
A. You can apply for a VA loan with any mortgage lender that participates in the VA home loan program. At some point, you will need to get a Certificate of Eligibility from the VA to prove to the lender that you are eligible for a VA loan.
A. Complete an 1880: You can apply for a Certificate of Eligibility by submitting a completed VA Form 26-1880, Request for a Certificate of Eligibility for Home Loan Benefits, to the Winston-Salem Eligibility Center, along with proof of military service. In some cases it may be possible for the VA to establish eligibility without your proof of service. However, to avoid any possible delays, it’s best to provide such evidence.
A. Yes, it’s called ACE (automated certificate of eligibility). Most lenders have access to the ACE (automated certificate of eligibility) system. This Internet based application can establish eligibility and issue an online Certificate of Eligibility in a matter of seconds. Not all cases can be processed through ACE - only those for which the VA has sufficient data in our records. However, veterans are encouraged to ask their lenders about this method of obtaining a certificate.
A. If you are still serving on regular active duty, you must include an original statement of service signed by, or by direction of, the adjutant, personnel officer, or commander of your unit or higher headquarters which identifies you and your social security number, and provides your date of entry on your current active duty period and the duration of any time lost.
If you were discharged from regular active duty after January 1, 1950, a copy of DD Form 214, Certificate of Release or Discharge From Active Duty should be included with your VA Form 26-1880. If you were discharged after October 1, 1979, DD Form 214 copy 4 should be included. A PHOTOCOPY OF DD214 WILL SUFFICE.....DO NOT SUBMIT AN ORIGINAL DOCUMENT.
If you are still serving on regular active duty, you must include an original statement of service signed by, or by direction of, the adjutant, personnel officer, or commander of your unit or higher headquarters which shows your date of entry on your current active duty period and the duration of any time lost.
If you were discharged from the Selected Reserves or the National Guard, you must include copies of adequate documentation of at least 6 years of honorable service. If you were discharged from the Army or Air Force National Guard, you may submit NGB Form 22, Report of Separation and Record of Service, or NGB Form 23, Retirement Points Accounting, or it's equivalent. If you were discharged from the Selected Reserve, you may submit a copy of your latest annual points statement and evidence of honorable service. Unfortunately, there is no single form used by the Reserves or National Guard similar to the DD Form 214. It is your responsibility to furnish adequate documentation of at least 6 years of honorable service.
If you are still serving in the Selected Reserves or the National Guard, you must include an original statement of service signed by, or by the direction of, the adjutant, personnel officer, or commander of your unit or higher headquarters showing the length of time that you have been a member of the Selected Reserves. Again, at least 6 years of honorable service must be documented.
A. Standard Form 180, Request Pertaining to Military Records, is used to apply for proof of military service regardless of whether you served on regular active duty or in the selected reserves. This request form is NOT processed by VA. Rather, Standard Form 180 is completed and mailed to the appropriate custodian of military service records. Instructions are provided on the reverse of the form to assist in determining the correct forwarding address.
A. Yes, your eligibility is reusable depending on the circumstances. Normally, if you have paid off your prior VA loan and disposed of the property, you can have your used eligibility restored for additional use. Also, on a one-time only basis, you may have your eligibility restored if your prior VA loan has been paid in full but you still own the property. In either case, to obtain restoration of eligibility, the veteran must send VA a completed VA Form 26-1880 to our Winston-Salem Eligibility Center. To prevent delays in processing, it is also advisable to include evidence that the prior loan has been paid in full and, if applicable, the property disposed of. This evidence can be in the form of a paid-in-full statement from the former lender, or a copy of the HUD-1 settlement statement completed in connection with a sale of the property or refinance of the prior loan.
A. In this case the veteran’s eligibility can be restored only if the qualified assumer is also an eligible veteran who is willing to substitute his or her available eligibility for that of the original veteran. Otherwise, the original veteran cannot have eligibility restored until the assumer has paid off the VA loan.
A. In either case, although the veteran’s debt was waived by VA, the Government still suffered a loss on the loan. The law does not permit the used portion of the veteran’s eligibility to be restored until the loss has been repaid in full.
A. Yes, depending on the circumstances. If a veteran has already used a portion of his or her eligibility and the used portion cannot yet be restored, any partial remaining eligibility would be available for use. The veteran would have to discuss with a lender whether the remaining balance would be sufficient for the loan amount sought and whether any down payment would be required.
A. The unmarried surviving spouse of a veteran who died on active duty or as the result of a service-connected disability is eligible for the home loan benefit. If you wish to make application for the home loan benefit as a surviving spouse, contact our Winston-Salem Eligibility Center. In addition, a surviving spouse who obtained a VA home loan with the veteran prior to his or her death (regardless of the cause of death), may obtain a VA guaranteed interest rate reduction refinance loan. For more information, contact our Winston-Salem Eligibility Center.
[NOTE: Also, a surviving spouse who remarries on or after attaining age 57, and on or after December 16, 2003, may be eligible for the home loan benefit. However, a surviving spouse who remarried before December 16, 2003, and on or after attaining age 57, must apply no later than December 15, 2004, to establish home loan eligibility. VA must deny applications from surviving spouses who remarried before December 16, 2003 that are received after December 15, 2004.]
A. No, the children of an eligible veteran are not eligible for the home loan benefit.