Tag: FAQ

Louisville Kentucky VA Refinancing IRRL – Frequently Asked Questions


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Louisville Kentucky VA Refinancing

 

 

Do you have an existing Louisville Kentucky VA Home Loan or conventional loan that you are interested in refinancing? While interest rates are still low, there are many advantages to refinancing now in order to get a lower interest rate, take cash out of the equity in your home, consolidate credit, or make home improvements. If you are interested in refinancing with a Kentucky VA Loan, the VA has programs that can assist you. Below are some questions other people have asked about the Louisville Kentucky VA Refinancing programs. Follow the headers to find information about Louisville Kentucky VA Refinancing. If you cannot find an answer here, a VA Loan Specialist can be contacted online or by phone to answer all your refinancing questions.

What is an IRRRL?

An IRRRL is the VA’s Interest Rate Reduction Refinancing Loan, also known as a VA Streamline Refinance. An IRRRL is a loan that refinances your existing VA Loan into a new VA Loan with a lower interest rate, or from an adjustable rate mortgage (ARM) into a fixed rate mortgage. A Certificate of Eligibility is not required for an IRRRL.

Do I have to be eligible for a lower interest rate in order to qualify for a VA IRRRL?

Not necessarily. In order to qualify for an IRRRL, the VA requires you to obtain a lower interest rate if you are going from a one fixed rate mortgage to another fixed rate mortgage, but if you are going from an adjustable rate mortgage to a fixed rate mortgage, the VA will allow you to refinance to a higher interest rate.

If it is called an Interest Rate Reduction Loan, why does the VA allow me to refinance my ARM to a higher interest rate?

Since you are refinancing your adjustable rate mortgage into a fixed rate mortgage the interest rate may be higher initially, but you will save money over time. With adjustable rate mortgages you may get a lower interest rate than a fixed rate mortgage for the first few years, but after that your interest rates increase and you are paying higher rates than you would with a fixed rate mortgage. This is why the VA allows you to refinance into a higher fixed rate of interest on your mortgage before your adjustable rate on your current mortgage increases.

Can I refinance with the VA if I am already using my Loan Guarantee entitlement with my current mortgage?

Yes. As long as you are refinancing your VA-guaranteed mortgage, then you can use this program to get more favorable loan terms and save money over the long run. If you’re ready to get started with your VA Refinance, contact a VA Refinance Specialist now.

What out-of-pocket expenses will I have when refinancing?

None. The VA allows you to finance all closing costs associated with refinancing into your new mortgage. Your lender may have some fees, but you will need to consult them to find out what they expect you to pay up front, if anything.

Do I have to use my current lender to refinance?

No. If you want a new lender, you can choose from any mortgage lender on the VA-approved lender’s list. Make sure that you shop around for your refinancing loan. By going to several lenders, you will get more offers and you can choose the best loan terms for you and your family. Be careful of lenders that try to deceive you into thinking they are the only lender that can finance a VA IRRRL. The VA has a long list of approved lenders, and you should shop around.

Do I have to go through the credit check and appraisal process again when refinancing?

The VA does not require another credit check and appraisal because it has already approved you for the loan guarantee in the first place. However, lenders usually do require a credit check and appraisal when refinancing because they need to make sure you are still credit worthy and the property still has a higher market value than their maximum loan amount. For more information about this, check out VA Appraisal, Qualification and Approval FAQ’s.

Do I have to get another Certificate of Eligibility?

No. You have already been approved by the VA for your home loan guarantee, and refinancing does not require a Certificate of Eligibility.

Keys with a VA Loan

What fees does the VA charge for an IRRRL?

The VA only requires a 1.5% funding fee of the value of your new loan. There are no other fees involved with the VA. If a lender tries to tell you that the VA charges extra fees you should contact the VA to see if something has recently changed and, if not, you should find a new, ethically responsible lender.

Does the VA have any requirements for me to get an IRRRL?

The VA has the following eligibility requirements for an IRRRL:

  • You must be refinancing an existing VA Loan into a new VA Loan in order to use this program.
  • You need to certify that you have been occupying the property. For your original loan you had to sign an agreement stating you would be the primary occupant of the home, and now you will have to sign an additional agreement saying that you have been the primary occupant.
  • You cannot take more out on your new loan than what you currently owe. The loan can be more only as a result of fees and closing costs being financed into the mortgage.

Can I include the cost of home improvements in my IRRRL?

You are allowed to include up to $6,000 in your refinancing loan for the purpose of energy efficient home improvements. Any other home improvements are not eligible.

Can I take cash out of an IRRRL?

No. An IRRRL from the VA is only for the purposes of obtaining a better interest rate on your mortgage loan in order to save you money over time.

What is a VA Cash Out Refinancing Loan?

This is the type of refinancing loan the VA offers for those Veterans who want to take cash out of the equity in their homes. You must be refinancing an existing VA Loan in order to use the VA Cash Out Refinancing Program.

What can I use the cash I take out of my home for?

Anything you want. Make sure you consult your lender to see if they have any restrictions on what you can use the money for.

Can I consolidate debt with a Cash Out Refinance Loan?

Yes. As a matter of fact, many lenders prefer that you do consolidate all of your debt into your new loan because it makes you less of a credit risk for them.

How much cash can I take out of my home equity?

Your home’s value is on a Certificate of Reasonable Value, and you are allowed to take up to 90% of this amount. On top of this you are also allowed to finance the VA funding fee and include up to $6,000 for energy efficient home improvements.

I am delinquent on my current mortgage. Can I still get a VA Cash Out Refinance Loan?

This depends on your lender. The VA allows it, and many lenders will also allow you to refinance as long as you are financially able to make the new payments. If you are a delinquent on your current mortgage because of excess debt, the lender will probably require you to consolidate that debt into your new mortgage loan in order to lower you interest rates on your unsecured debt and give you a more affordable monthly payment.

How much does the VA guarantee my loan for with a VA Cash Out Refinance?

The highest amount the VA will guarantee a Cash Out Refinance mortgage for is $36,000.

Still have questions?

More information on refinancing options is available through the Department of Veterans Affairs or by contacting your VA Regional Loan Service Center.

2011 Welcome Home Program


Welcome Home Program-2011-Clink on Image for info

 

2011 Welcome Home Program

        

2011 Welcome Home Program

Frequently Asked Questions

Q. How are funds reserved?

A.

A homebuyer applies for a mortgage through one of the Federal Home Loan Bank of

Cincinnati’s (FHLBank) Members. The Member will then submit an online

Welcome Home Reservation Request, loan application, and pertinent income

documentation to the FHLBank. Funds are reserved on a first-come, first-served

basis.

Q. What is the maximum amount of grant funds a homebuyer and Member can

receive?

A.

A homebuyer may receive Welcome Home grant funds up to $5,000 to be used for

down payment and closing costs. A Member may utilize a maximum of $200,000 for

the Welcome Home round.

Q. How long does it take to get an approval for a Reservation Request?

A.

Please allow a minimum of four to six weeks from the time the Reservation Request

was submitted. If it has been more than four weeks and you have not received an

answer, please contact us via email at

welcomehome@fhlbcin.com. Please state the

homebuyer’s full name and the date you sent the request.

Q. If I put my name and contact information on the Reservation Request form, why

are the approval letters not coming to me?

A

. Each Member may only have one contact person. We use the information on the first

Reservation Request received, unless instructed otherwise. If the Member wants a

particular person to be the contact, please let us know via email at

welcomehome@fhlbcin.com

 

.

   

Q. Can Welcome Home funds be used in conjunction with other local, state, and

federal funding sources?

A

. Yes. However, Welcome Home funds may not be used with an existing or future

award through the FHLBank’s competitive Affordable Housing Program (AHP).

Q. Where can I find the Mortgage Revenue Bond limit for my county?

A.

The MRB income limits can be found on our website at http://www.fhlbcin.com or at the

State Housing Finance Agencies. Remember: Welcome Home income limits are

80% of the MRB income limits.

Q. How long do I have to close my loan?

A.

All Welcome Home approvals are valid until December 1, 2011.

Page 2 of 3

Q. What if the property address changes or the grant amount needed changes after

I send in my Reservation Request or after I have received an approval letter?

A

. A Reservation Request and approval are only valid for the property originally

submitted and the grant amount originally submitted. To make any changes, the

Member should withdraw the original Reservation Request and submit a new online

Reservation Request with the updated property address or requested grant amount.

The four to six week review period will begin again upon resubmission.

Q. Are non-occupant co-borrowers or co-signors permitted?

A.

No. Welcome Home funds are intended to only assist homebuyers who qualify for

the first mortgage based on their current household income, not relying on others, and

not relying on any expected but uncertain change in job status or income.

Q. When and how are the grant funds disbursed?

A.

The Welcome Home funds are disbursed to the Member after the loan has closed.

The Member must provide the funds to the borrower at time of closing and then send

an online Funding Request, a copy of the fully executed HUD-1, the final signed

Truth-in-Lending for all repayable mortgages, and a copy of the warranty deed

containing our 2011 retention language to the FHLBank. Please allow four to six

weeks for it to be reviewed and for funds to be disbursed.

Q. What if I do not need the whole amount I was approved for?

A.

If you do not need the entire amount of the approved grant, you may apply the

difference to the first mortgage loan as a principal reduction. Be sure to show it on

the HUD-1. No cash back may be given to the homebuyer and no earnest money may

be returned!

Q. Why wasn’t my disbursement for the full amount I requested?

A.

The HUD-1 may have shown payoff of debt, return of the earnest money deposit, or

cash back at closing. All of these issues will cause the grant disbursement to be

reduced.

Q. Does the applicant have to be a first-time homebuyer?

A

. No. However, at least one-third of Welcome Home funds must be reserved for firsttime

homebuyers.

Q. Will the FHLBank send me confirmation that my fax or email was received?

A.

No. It is the Member’s responsibility to set their fax machine or email to print a

confirmation. Do not call the FHLBank asking if your information was received

unless it has been at least four weeks since you sent it. A status report will be sent to

the Member contact every Friday.

Page 3 of 3

Q. Can the subject property be a manufactured home?

A.

Yes. However, the manufactured home must be built on a permanent chassis,

installed on an FHA Title II permanent foundation system, be a multi-section home at

least 24 feet wide. Additionally, the home and lot must be taxable together as real

property and the home must be built to the Manufactured Home Construction and

Safety Standards (HUD Code). A copy of the appraisal is required at time of funds

reservation.

Q. Are tax returns required to document total household income?

A.

Depends. If income is from employment, we require two consecutive YTD pay stubs

or a completed Verification of Employment. If income is from self-employment, we

require the most recent two years’ signed federal tax returns. More information on

documenting income can be found in our Welcome Home Guide, which is available

on our website at

http://www.fhlbcin.com.

Q. Can the Member close their loan with a repair escrow?

A.

Yes. However, if the repair escrow is greater than $500 and is held from the buyer’s

funds, the Member must obtain pre-approval from the FHLBank. The Member

should send the FHLBank a copy of the appraisal showing all repairs were required

and the estimated amount of the repairs. The FHLBank staff will review the request

and email the Member contact with a response. Note: We expect the Member or

their closing agent to hold the escrowed funds and to disburse them upon presentation

of acceptable receipts and/or invoices. If the repair escrow is held from the seller, no

pre-approval or documentation is required.

Q. What documentation does the FHLBank need to prove the escrowed repairs

have been completed?

A.

The Member must submit an inspection showing all repairs have been made, copies

of invoices and/or receipts showing all parties were paid, and proof no funds were

returned to the homebuyer.

Q. What should I do if the homebuyer did not spend/use all of the escrowed funds?

Can they have cash back?

A.

If all escrowed funds are not used, the balance should be applied to the first mortgage

as a principal reduction. However, if the HUD-1 clearly shows that the homebuyer

used their own funds to set up the repair escrow account, and they did not use all

those funds, they may have their remaining funds back as long as they have the

minimum $500 in the transaction. If the HUD-1 shows the homebuyer only had the

minimum $500 in the transaction, and they did not use all of the escrowed funds, the

balance must be applied to the first mortgage as a principal reduction or the Welcome

Home grant will be reduced.

Q. Where can I find the complete description and requirements for the Welcome

Home Program?

A.

The 2011 Welcome Home Guide is available on our website at http://www.fhlbcin.com