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2021HOMEBUYER’S GUIDEUnderstanding Your VA Loan Benefits & The Home Buying ProcessThe Guanio Ohana, O’ahu
TABLE OFCONTENTSIntroduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Understanding VA Loans . . . . . . . . . . . . . . . . . . . . . . . . 2Benefits of Homeownership . . . . . . . . . . . . . . . . . . . . . 4VA Loan Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Entitlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9Certificate of Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . 11Occupancy Requirements . . . . . . . . . . . . . . . . . . . . . . 12The Funding Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13VA Closing Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Condo Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16The Homebuying Process . . . . . . . . . . . . . . . . . . . . . 17Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
1If you are a U.S. military veteran, or if you are currentlyserving our country and have been on active duty for aminimum of 90 days, you could qualify for a VA home loan.The special benefits of a VA home loan almost always makeit the best financing choice available for eligible borrowers.In this VA Homebuyer’s Guide, Hawaii VA Loans will showyou why the VA home loan program is so great. We will alsooutline the home buying process to demonstrate how easyit is to become a homeowner by utilizing your VA eligibility.Did You Know?In 2020, the state ofHawaii saw 2,908 VApurchase loans – a23.5% increase since2015.In addition, Hawaii VA Loans will walk you through everystep of the home buying process. As a VA approved lender,a dedicated VA Loan Specialist on our team will provide youthe necessary paperwork to start the process, help youpredetermine your eligibility, prequalify you for a homepurchase, and eventually get you approved for a VA loan.You’ve earned your VA eligibility and we’re here to help yourealize your dreams of homeownership!
2he first thing to understand is that the VeteransAdministration does not actually lend money. They arenot a mortgage company, but they work with mortgagelenders like us to guarantee the home loans that wemake to veterans.The VA hasguaranteed over22 million homeloans since 1944when it set out tohelp veteransachieve theirgoals ofhomeownership.In the event that the lender is faced with incurring a lossdue to foreclosure, the VA will reimburse the lender all ora portion of the money that they have lost. This guaranteeenables lenders to provide VA loans for borrowers thatmay not qualify under other loan programs. The VA hasguaranteed over 22 million home loans since 1944 whenit set out to help veterans achieve their goals ofhomeownership.There are also significant money-saving reasons why youshould finance your home with a VA loan rather than aconventional loan. The number one reason is that youdon’t have to make a down payment. Other homebuyersmay have to save for years to afford their first home. Youcan be ready immediately with a VA loan.VA loans generally have lower interest rates than mostconventional loans. That means more affordable monthlypayments. Veterans who get a VA loan do not have to paywhat is known in the conventional loan world as PMI –private mortgage insurance.
3This is yet another factor that lowers the monthlymortgage payment on VA loans.Due to recent changes in the mortgage market, it isconsiderably easier to qualify for a VA loan than aconventional loan. In fact, some reports say that over80% of those who qualify for VA loans could not havequalified for a conventional mortgage. Why? TheVeterans Administration is backing these loans, so amortgage company like us is able to take a risk on aloan that we may not otherwise take.Did You Know:In 2020, theDepartment ofVeterans Affairsguaranteed 6,248,562,210 in VAloans in Hawaii.One of the biggest benefits the Veterans Administrationprovides for the individuals who have stood behind ourcountry is standing behind their VA loan. Why not usethose benefits to become a homeowner here in Hawaii?
4uying a home provides a place where you can say,“This is mine.” A home lets you put down roots andbuild equity in a place of your own.If you have a growing family, you may be ready to get intoa home that accommodates a different lifestyle. If you arean empty nester, you may want to experience a newenvironment that you’ve always dreamed of living in.Whatever your desires, you can enjoy a greater sense ofpersonal style and freedom in a home of your own.Did You Know:In 2020, the Departmentof Veterans Affairsguaranteed a total of1,246,815 VA loansnationwide – that includesPurchase loans (428,421) andRefinance Loans (818,394).Beyond being a place to live, when chosen wisely andproperly maintained, a home is usually a long-terminvestment that historically appreciates in value over time.Instead of paying monthly rent money that you’ll never seeagain, you can become a homeowner and build up equitythat you’ll usually get back if you decide to sell.The longer you pay on a particular home mortgage, thepercentage of your payment that goes toward the loan’sprincipal increases. At first, most of your payment goes tothe interest on your loan, but the longer you live in yourhome, the more equity you have in it that is yours whetheryou decide to sell or remain in your home forever.
5Homeowners also have the ability to borrow against theequity in their home. Interest rates for home equity loansare typically much lower than other types of loans.Although it’s never wise to put your home at risk byoverextending your credit, you can use an equity loan topay down credit card debt at a much lower interest rate.That interest may also be tax deductible.As a homeowner, you can take advantage of severaldifferent types of tax deductions. Your mortgage interestis deductible on your tax return and so are your propertytaxes. When you sell a home that you have lived in for twoor more years, you get the benefit of capital gainexclusions. This means that individuals do not have to paytax on up to 250,000 of the profit from the sale of thehome. Married couples can waive taxes on up to 500,000in profit from such a sale.Based on all of these benefits, it’s easy to see whyhomeownership is a smart decision for anyone.
6Today, VA loans are one of the very few loan programs thatdo not require a down payment. Most 100% financingprograms have disappeared and lenders are now requiringat the very least a 3.5% - 20% down payment in order toqualify for financing.Even with no downIn a conventional mortgage, a borrower who does not putat least 20% down payment is required to pay privatemortgage insurance (PMI). Even with no down payment, aVA home buyer does not have to pay for monthly PMI witha VA loan. This can translate into monthly savings of 200 400 per month.payment, a VA homebuyer does not have topay for monthly PMI.This can translate intoNobody likes to pay for closing costs. Fortunately forveterans, a good portion of these costs are waived. Addedup, veterans can save roughly 2,000 in closing cost feesthat conventional loan borrowers have to pay when buyinga home.savings of 200 - 400per month.In today’s market, lenders are increasingly tightening theirmortgage guidelines, making it harder for a potentialhomeowner to qualify for a mortgage. VA loans have notgone through this same tightening phase.
7As a result, you have a greater chance of getting qualifiedfor a VA mortgage than a conventional mortgage.The maximum VA loan amount with no down payment isreferred to as the "VA loan limit" and it's determined byaverage home prices in each county. In the continental U.S.,the limit will never be less than 453,100.In Hawaii, there is no VA loan limit in 2021 for VA buyers withIn Hawaii, there is noVA loan limit in 2021full entitlement. That means if you can afford the paymentand are pre-approved to purchase a 2.5 million dollar home,then you can buy one using a VA home loan with zero down.for VA buyers withfull entitlement.As a VA mortgage holder, you may automatically qualify foran Interest Rate Reduction Refinancing Loan (IRRRL) – alsoreferred to as a “Streamline.” Furthermore, closing costs feescannot be passed on to VA borrowers, so VA homeownerswill save roughly 1,500 - 2,000 in closing costs compared torefinancing through a conventional mortgage.
8ecoming entitled for a VA loan is just a matter of time.Once you’ve earned it, there is no specific time limit forusing your entitlement to obtain a VA loan. Whether youare active duty, in the reserves, or have been out of themilitary for years, as long as you are eligible for a VA loan,you can use your entitlement.Whether you are activeduty, in the reserves, orhave been out of themilitary for years, aslong as you are eligiblefor a VA loan, you canuse your entitlement.Your basic VA loan entitlement is 36,000, but that smallamount will provide enough guaranty to allow you toborrow up to the county loan maximum (reminder: there isno county loan maximum for 2020). In most cases, you mayonly have one VA loan at a time. Although, if you currentlyhave a relatively small VA loan elsewhere, you may be ableto obtain a second VA loan here in Hawaii. If this applies toyou, contact us at 808-792-4251 for more details on how tocalculate your remaining eligibility.Once your VA loan has been paid off (through sale orrefinance to a non-VA program), you can restore yourentitlement and regain your full eligibility. However, if youtransfer the VA loan on your home to another person byletting them take over the payments, then your entitlementis tied up or still in use with the loan, and you cannot obtainanother VA home loan until the loan is paid off.When a veteran sells a home that he or she has financedwith a VA loan, it would be wise to let the new ownersarrange their own financing. This allows the veteran toretain the right to finance their new home with all of thecost-saving benefits of a new VA loan.
9s a veteran, the first step in obtaining a VA loan is todetermine whether or not you are eligible. Thisdetermination is based upon the type of service and thetimeframe.If you enlisted before September 7, 1980, or enteredservice as an officer before October 16, 1981, you may beeligible for the VA home loan program if you served at least90 days in wartime and 181 days in peacetime.If you enlisted after September 7, 1980, or entered serviceas an officer after October 16, 1981, and are separated fromthe military, you need to have served at least 24consecutive months of active duty with other thandishonorable discharge or the full period called to activeduty - not less than 90 days in peacetime or 181 days inwartime - to be eligible for VA loan benefits.More time is required for reserves and National Guard, butthose who have served at least six years are eligible. Thiscan be non-consecutive years of service and service indifferent branches of the reserves. Service in the ArmyNational Guard, Air National Guard, Army Reserve, NavyReserve, Marine Corps Reserve, and Air Force Reserve allcount toward your eligibility for a VA home loan.If you are currently on active duty, eligibility can beestablished after 90 days of continuous active duty. Upondischarge or release from active duty, eligibility must bereestablished.
10Some individuals who do not meet the requirements foractive or reserve duty may still qualify. These include thefollowing:Spouses of deceased veterans who died as aresult of their active service or service-connectedinjury are eligible if they have not remarried.Spouses of missing in action or prisoners of warare eligible for VA loans if the service enlistee hasbeen missing for over 90 days.U.S. citizens who served with an allied countryduring WW II may be eligible.Individuals with service as members in certainorganizations, such as Public Health Serviceofficers, cadets at the United States Military, AirForce, or Coast Guard Academy, midshipmen atthe United States Naval Academy, officers ofNational Oceanic & Atmospheric Administration,merchant seaman with World War II service, andothers.
11veteran must prove his or her entitlement byobtaining a Certificate of Eligibility (COE). Theprocess is simple and requires a complete VA Form26-1880.Once the form is filled in completely and submitted to theVeterans Administration, they confirm your informationand issue a COE. The information needed for the formincludes basics such as your name, address, phone number,and Social Security number.There are approximately 20million veterans living in theUnited States today, nearly allof whom are eligible for a VAhome loan. According to a 2018National Association of Realtorsreport, 77% of active duty buyersused their VA loan and 56%financed with no down payment;58% of veteran buyers used theirVA loan and 41% financed withno down payment.You will also need to specify which branch of the militaryyou have served in, or the branch in which you currentlyserve, along with your service number, separation ofservice or statement of service papers. You will also beasked to provide the VA loan number for any previous VAloans that you may have had.We can help you obtain the forms you need, fill them outproperly, and submit them to receive your COE. Thiscertificate makes it possible for us to being qualifying youfor a VA loan.In many cases, we can determine your eligibility within 24hours by accessing the VA’s Automated Certificate ofEligibility (ACE).
12nlike conventional loans which can be obtained forvacation homes or home used as a rental property, VAloans are only made on primary residences. This meansthat VA buyers should be prepared to move into the homewithin 60 days after the loan closing.VA buyers should beprepared to moveinto the home within60 days after theloan closing.Some VA loans are approved if non-military employmentelsewhere prevents the applicant from moving into thehome within a year. VA loan applicants who travel onbusiness for extended periods of time may still meet therequirement of primary residence as long as they can showa history of continuous residence in the community(provided there is no indication that they have a primaryresidence elsewhere).The spouse of an active duty borrower can satisfy themove-in date requirement, even if the servicemember isunable to occupy the property due to active dutycommitments. Servicemembers deployed from theirpermanent duty are considered to have temporary dutystatus and in such cases, a VA loan may still be approvedwithout the spouse having to occupy the home until theservicemember returns.No specific time is required for the Interest Rate ReductionRefinancing Loan (IRRRL). For these, a VA borrower needsonly to certify that he or she previously occupied the homebeing refinanced.
13o cover some of the VA home loan program’s guarantyand administrative costs, nearly all VA borrowers arecharged a one-time VA Funding Fee that ranges from 0.5%- 3.6%. The funding fee can be paid up-front or financedinto the loan, and is not refunded once the loan has beenrepaid.As you know, the 2020 VA loan limit in Hawaii is NO LIMIT!This change from previous years came about as a resultof the Blue Water Navy Vietnam Veterans Act of 2019. Inorder to fund the program, Congress needs a revenuesource, so the additional revenue from increased VAfunding fees will go to support the costs.In certaincircumstances, theVA Funding Fee maybe reducedor waived.Here are additional changes made to the VA Funding Feeguidelines:- The VA has increased the VA funding fee by .15%(previously 2.15%) for all purchase and cash-outrefinance transactions.- The old 0.25% increased funding fee for veterans whoearned their eligibility through National Guard/Reservesservice has been eliminated. The fee will be the sameregardless of how the entitlement was earned.- There is a new funding fee exemption for active dutyservice members who have received a Purple Heart.For example, if a first-time VA home loan borrower is amilitary veteran applying for a zero down payment loan,he or she will pay a 2.30% funding fee. On a 500,000 loan,the amount would be 11,500. If they finance it into theloan, the total amount would be 511,500.
14The VA Funding Fee may even be waived for the borrowerin three situations:The borrower receives VA compensation for aservice-connected disabilityThe borrower would receive VA compensation if theydidn’t receive retirement payThe borrower is a surviving spouse of a veteran whoeither died in service or from service-relateddisabilities.Type of LoanDownpaymentPercentage forFirst Time UsePercentage forSubsequent UsePurchase and ConstructionLoansNone5% but less than 10%10% or more2.30%1.65%1.40%3.60%1.65%1.40%Cash-Out Refinance Loansn/a2.30%3.60%IRRRLsn/a0.50%0.50%Loan Assumptionsn/a0.50%0.50%
15long with no down payment, there are otherregulations in place that keep up-front costs as low aspossible for veterans who utilize their VA loan:Allowable costs that VA borrowers pay:Credit ReportOriginationDiscount PointsVA Funding FeeRecordingAppraisal/Notice of Value (NOV)A typical home buyerdoing a VA loan willsave roughly 1,500 2,000 in closing costsSurveyFlood Zone DeterminationHazard InsuranceTitle InsuranceTitle Examinationwhen compared tofinancing with aconventionalmortgage.Pest InspectionDocument PreparationUnderwritingProcessingAttorneysTax Service
16hen using a VA loan to purchase a home that is acondominium, you will first want to ensure that thecondo you are interested in is eligible for VA financing. Thelast thing you want to do is fall in love with a particularcondo, only to find out that it is not on the VA-approvedcondo list.Although most condos in Hawaii are VA eligible, not all ofthem are. How can you tell in advance? Simply go towww.hawaiivaloans.com/condo-check to use ourconvenient Condo Eligibility Check Tool.Verify condoeligibility in Hawaiiat:www.hawaiivaloans.com/condo-checkOnce you arrive at the page, simply type the first fewletters of the condo name into the box. The suggestionmenu will automatically return the most relevant results.Once you see the condo name you are searching for, clickthe name and find out if it is approved for VA financing ornot.If the particular condo that you are searching for does notappear in the search box, the condo is either not approvedfor VA financing or has yet to be reviewed by the VAregional office. If it’s not on the list, contact a VA LoanSpecialist on our team to find out how we can get itapproved for VA financing.
176 Simple Steps to Buying Your Home1. Get Pre-Approved: Before you start searching for yournew home, it is always recommended to get prequalifiedfrom a VA approved lender first. Here’s a checklist of itemsyou’ll need:1. Completed Certificate of Eligibility form (VA Form26-1880). If you are no longer in the military, youwill also be required to submit your dischargepapers (DD Form 214).2. Most recent LES or pay stubs (one month)It takes less than 15minutes to get prequalified over thephone with one ofour VA Loan Specialists. Call808-792-4251.3. Last two years W2 statements and tax returns (ifself-employed)4. Last two months bank statements (all pages)Once you have this paperwork ready, contact a VALoan Specialist at 808-792-4251 or fill out the VAPurchase Application at www.hawaiivaloans.com.2. Contact a Real Estate Agent: If you are already workingwith a real estate agent – great! We’ll make sure your agentknows the loan amount you are preapproved for. If youdon’t have a real estate agent, we can refer you to anumber of qualified agents that can help you find thehome that fits your specific needs here in Hawaii.
183. Narrow Down Your List of Properties: Based on theloan amount you are prequalified for, your real estate agentwill email you a list of properties that fit your specificcriteria. From that list, you’ll need to narrow down theselection so that your real estate agent can schedule ashowing with the seller’s agent. Keep in mind that not allcondominiums are eligible for VA financing, so use theCondo Eligibility Check Tool on our website to see if yourparticular condo is approved.4. View Properties: Now it’s time to see the properties foryourself. This is where you’ll really decide which home willbe the best fit for you and your family.Certificate of Eligibility (COE) Request Form:www.hawaiivaloans.com/coeGet prequalified with a VA Loan Specialist:www.hawaiivaloans.com/purchaseCondo Eligibility Check ns5. Submit an Offer: Once you’ve decided which house youwould like to purchase, your real estate agent will draft upan offer that will be accompanied by a prequalificationletter from your VA Loan Specialist.6. Leave the Rest to Your VA Homebuyer’s Team: Oncethe offer is accepted, sit back and relax as your VA LoanSpecialist, real estate agent, and escrow officer handle thenuances of your purchase transaction. The process typicallytakes 30-45 days. You will come in and sign the final loandocuments. When this is complete, you will receive yourkeys and officially become a Hawaii homeowner. It is reallythat simple!
19s an active duty servicemember or veteran, you deservethe right to become a homeowner. The VA Home LoanGuaranty Program and Hawaii VA Loans can help you achieveyour homeownership goals! Contact a VA Loan Specialist to getstarted today!Hawaii VA Loans, a division of Land Home Financial Services, Inc., is theleading resource center of VA loan information for the state of Hawaii.In addition, Hawaii VA Loans has become the longest-running VA loanspecialized lender in Hawaii, comprised of the top mortgage professionalsin the state to guide you through every step of the VA loan process. VALoan Specialists are right here in Hawaii ready to assist you. It has neverbeen easier to get approved for a VA home loan!
O‛OLAWETwo Locations onOahu ServingVeterans on AllHawaiian Islands:HAWAI‛I ISLANDKapolei Branch338 Kamokila Blvd. #202Kapolei, HI 96707Kailua Branch111 Hekili St. #102Kailua, HI 96734p: 808-824-4330CONTACT US ANYTIME:e: aloansHawaii VA Loans is not affiliated with any government agencies, including the VA. Hawaii VA Loans is dbaof Land Home Financial Services, Inc, a VA approved lender. NMLS #386040
minimum of 90 days, you could qualify for a VA home loan. The special bene ts of a VA home loan almost always make it the best nancing choice available for eligible borrowers. In this VA Homebuyer's Guide, Hawaii VA Loans will show you why the VA home loan program is so great. We will also outline the home buying process to demonstrate how .
