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Unformatted text preview: is often referred to as a “DVA no–no”–no down, no closing costs. In the discussion of FHA loans, the advantages and disadvantages were listed. Most of the advantages and disadvantages also apply to DVA loans. Some differences, however, are worth listing. ADVANTAGES OF DVA LOANS
In comparison with conventional loans, USDVA–guaranteed loans have these advantages: No Down Payment – DVA–guaranteed lenders ordinarily do not require any down payment on loans up to $240,000. This is the maximum that FHLMC and FNMA will purchase in the secondary market, to be discussed in Chapter 7. Since $60,000 (.25 x $240,000) is the maximum guarantee to lenders, the difference, $180,000, is the lender's exposure, or risk (75% loan–to–value). The relatively high loan amount without a down payment requirement makes a DVA loan highly desirable. The “no down” feature is ideal not just for moderate–income people. Business and
5-42 Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 5: GOVERNMENT PARTICIPATION & BACKED LOANS
professional people are also attracted to DVA loans because they can use the money they save on a DVA loan in their business or other investments. No Closing Costs, or minimal closing costs. Easy Qualifying – DVA loans has a better qualifying ratios than the conventional loans. Qualifying DVA loans will be discussed in details in chapter 13. No Prepayment Penalty – The veteran–borrower may pay off the loan in full at any time without penalty. Assumable Loans, with Limitations – Loans made before March 1, 1988, are freely assumable. Properties can even be sold subject to that existing financing, although no release of liability could be obtained with such a sale. For loans made and guaranteed by the USDVA since March 1, 1988, the USDVA or the loan holder must give prior approval for any sale of property securing USDVA loans unless the loan is paid in full. When approved the loan is assuma...
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- Spring '10