January 2010 Navy

by LCDR David M. Bradley, USN (Ret)

VA Home Loans

VA loans may be used to buy an existing home, including a townhouse or condominium unit, in a VA-approved development; to build a home; to simultaneously purchase and improve a home; to improve a home by installing energy-related features to refinance an existing home loan; cash-out refinance; reduce the interest rate (interest rate reduction loan or streamline); hybrid adjustable rate mortgage; adjustable rate mortgage; convert an adjustable rate mortgage to a fixed rate mortgage; to purchase a multifamily property (up to four units) and the veteran must occupy one of the units as his or her primary residence.

VA guaranteed loans have many advantages over conventional loans. Among these are: No down payment; loan maximum may be up to 100 percent of the VA established reasonable value of the property; however, due to secondary market requirements, VA loans generally do not exceed the Freddie Mac conforming loan limit for a single-family residence (currently $417,000 and $625,500 for Alaska, Hawaii, Guam, and the Virgin Islands); flexibility of negotiating interest rates with the lender; no monthly mortgage insurance premium to pay; limitations on the buyer’s closing costs; an appraisal that informs the buyer of the property value; thirty-year loans with a choice of repayment plans, traditional fixed payment, Graduated Payment Mortgage (GPM), Growing Equity Mortgages, Hybrid Adjustable Rate Mortgage (HARM); effective until 9/30/12, Traditional Adjustable Rate Mortgage (ARM); effective until 9/30/12 for most VA loans for proposed construction, construction is inspected at appropriate stages to ensure compliance with the approved plans; an assumable mortgage, subject to lender or VA approval of the assumer’s credit; right to prepay loan without penalty; VA performs personal loan servicing and offers financial counseling to help veterans avoid losing their homes during temporary financial difficulties.

Generally speaking, if you are on active duty (AD) for at least 181 days or are a member of the Reserve Component (RC) and have been in drill status for at least six years or have served for at least 90 days on active duty during WWII, Korea, Vietnam, or the Gulf War conflicts, you’ll meet the requirements for a VA loan. Other peacetime periods also qualify and require at least 181 days of active duty. In all cases, veterans must have been discharged under other than dishonorable conditions. Additional information may be found on the “General Rules for Eligibility” VA Web page at http://www.homeloans.va.gov/elig2.htm.

VA loans are obtained through mortgage lenders that participate in the VA home loan program. You should first get a Certificate of Eligibility from VA to prove to the lender that you are eligible for a VA loan. The certificate is obtained by submitting a VA Form 26-1880 (on line at http://www.vba.va.gov/pubs/forms/vba-26-1880-ARE.pdf). Complete and mail this form along with proof of military service (usually a copy of the DD-214) to the VA Loan Eligibility Center; PO Box 20729; Winston-Salem, NC 27120. AC personnel must include an original statement of service signed by, or by direction of, the 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. RC personnel must include an original statement of service signed by, or by the direction of, the personnel officer or commander of your unit or higher headquarters showing the length of time that you have been a member of the RC. Again, at least six years of honorable service must be documented.

It’s also possible to obtain a Certificate of Eligibility from your lender. Most lenders have access to the Web LGY system. This Internet-based application can establish eligibility and issue an on-line Certificate of Eligibility in a matter of seconds. Not all cases can be processed through Web LGY – only those for which VA has sufficient data in their records. You are encouraged to ask your lender about this method of obtaining a certificate.

Space “A”Travel

Space available flights, better known as Space “A”, are a unique privilege afforded to service members, retirees, and their families. Under this program, unused seats on board US military aircraft are made available to these passengers on a space-available basis. Unused seats on DoD-owned or controlled aircraft are made available once all the space-required (duty) passengers and cargo have been accommodated.

Space-A travelers may sign up for travel 60-days in advance of the desired travel date. Passengers are categorized by priority of travel and are processed in priority order by their sign-in time (Julian date). For leisure travel, Reservists are placed in category VI, which is a rather low priority. (Official duty passengers have priority over Space “A” travelers.)

While the precise procedures for making flight arrangements may vary from one air terminal to another (a list of terminals may be found at http://www.military.com/Travel/Content1/0,,SAF_gateways,00.html), the first step is to find out what destinations you can travel to from the air terminals near you. The simplest way to get a list of destinations is to call the terminal in your area. Terminals typically provide either a voice or recorded listing of upcoming flights. On request, most terminals can also fax you a copy of their flight schedule.

Once you have made your travel plan, you can sign up for flights in several ways. You always have the option of going to a terminal in person. However, in many cases, you do not even have to leave your home. Flight requests can be made by mail, by telephone, via the Internet, or by facsimile. Upon sign-up, travelers are assigned a travel category and compete for seats in that category, based on the date and time of sign-up. Passengers stay on the flight register for either 60 days, the duration of their travel authorization, or until they get a seat. Once registered, passengers can review their reservation status any time.

Space “A” travel has become more complicated and difficult since 9/11, and you should check Web sites such as http://www.military.com/Travel/TravelPrivileges/0,13396,,00.html or http://www.spacea.info/ for more detailed information.