Tuesday, June 19, 2012

FHA & VA Certification

By Karina Hernandez

The Federal Housing Administration (FHA) is the world's largest government-backed mortgage insurer. Part of the U.S. Department of Housing and Urban Development (HUD) since 1934, FHA guarantees loans on various types of residences and real property and pays the lender if the borrower defaults. The United States Department of Veterans Affairs offers a similar home loan guaranty protection for lenders. VA loans are only available to certain individuals affiliated with the armed forces. Each agency requires a specific type of certification in order to insure a loan.

Certain veterans, military service members and their beneficiaries are eligible for VA mortgages. They must obtain a Certificate of Eligibility (COE) from the VA to qualify for the loan program. It certifies that the applicant has served in the military, has served honorably or is a surviving spouse of a veteran and meets all requirements for eligibility. FHA loans are available to the general public. FHA certification designates a property's eligibility for the financing, rather than that of the applicant.

The VA Certificate of Eligibility is available to veterans, active duty personnel, reservists and National Guard members, according to the U.S. Department of Veterans Affairs. The current marital status of surviving spouses affects eligibility. An un-remarried surviving spouse of a veteran that died on active duty or as the result of a service-related disability is eligible, states the website. A spouse may refinance a VA loan through the VA, if the original loan was obtained when the deceased spouse lived. Surviving spouses who remarry on or after the age of 57 and on or after Dec. 16, 2003, may be eligible for the home loan benefit. Surviving spouses who remarried before that date are ineligible for VA certification.

In order for FHA to insure a unit located in a condominium or townhouse project, the complex must have FHA certification. FHA certification proves that the FHA and HUD approve of various aspects of the units, the complex and its homeowner's association. For instance, the project must be 50 percent owner-occupied, have proper insurance coverage and meet minimum reserve and budget standards to qualify for FHA certification. Certified condos can be automatically found on HUD's FHA-approved condominium projects database.

Condo and townhome projects not on HUD's list of approved condos may be presented to HUD or a HUD-approved underwriter for review. The project approval process requires various documents from the builder and homeowner's association regarding finances, hazard and flood insurance, inspections and other supporting information to receive FHA certification. The veteran or a VA-approved lender may obtain the Certificate of Eligibility for the applicant from an online database called Web LGY or by submitting the proper application along with proof of service to the Winston-Salem Eligibility Center, according to the Department of Veterans Affairs.

Military Hub, an armed forces lifestyle website, says the number of VA guaranteed loans increased 31 percent in 2008 because it became one of the only forms of zero-percent financing available in the volatile mortgage market. VA certification gives veterans and military service members easier access to no-down payment mortgages than conventional mortgage providers can. An article in the Chicago Tribune advises condo associations to obtain FHA certification. Because FHA is slated to be key to a recovering housing sector, certification welcomes FHA buyers and facilitates the purchase of units for sale in the complex.


http://www.lenderva.com

1 comment:

  1. As a realtor, obtaining FHA Certification is one of the most daunting processes. A few months ago, I was introduced to Association Online. They promptly assisted me in getting FHA approval for an HOA in Nevada. They gathered all the data and assembled the package. The team at AO made my FHA Certification process very simple! You should check them out www.associationonline.com or call (970-226-1324).

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