It just became cheaper to finance a VA loan. When military members purchase a San Diego single-family home or condominium through the VA loan, they are charged a funding fee. On October 1, 2011, the VA funding fee was reduced. This means that the cost of financing a VA loan is less, which makes your monthly payment less (because the fee is usually incorporated into your monthly payment) and, ultimately, makes it more affordable to buy a San Diego home.
Federal Government backed loans (like VA mortgage loans) are required to charge a VA Funding Fee as part of the loan process to act as an insurance measure. The reduction in the VA Funding Fee affects all VA loans that close on or after October 1, 2011. These are the changes currently in affect for all VA loans:
- The funding fee will be 3/4% for both active and retired service members, Reservists and National Guard members the first time they use their VA entitlement.
- When using their VA entitlement for the second time (or higher), the funding fee will be a 1/2% for any military member (active or retired) putting down 5% or less as well as cash-out refinance transactions and 3/4% for any military member using more than 5% as a downpayment.
- All rate reduction refinancing loans will continue charging 1/2% for the VA funding fee (no changes to previous rates).
- All disabled veterans (who were disabled while in the line of duty) and surviving spouses of military members who died or were disabled while in the line of duty remain exempt from paying the funding fee.
If you are confused about which category you fall under, contact your VA representative. If you don't have a great VA loan representative, please contact me and I will refer you to one. Any member of the military who is looking to buy a San Diego home should seriously consider using their VA entitlement, especially since the VA funding fees have been reduced.
Interest rates continue to hover around 4%. This is a 60 year low. There are some great VA homes to choose from in the San Diego area. Home prices are more affordable than ever before. Many clients I'm helping are paying the same or less to own their own home than their current BAH and rent payments! Contact me to find out which homes are selling under VA terms and I'll be happy to help you find the home of your dreams.
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