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Interim Guidance for the Blue Water Navy Act of 2019

The following is excerpted from a notification from the Ohio Mortgage Bankers Association.

VA Releases Circular 26-19-23 on August 12, 2019
Circular 26-19-23, interim guidance for the Blue Water Navy Vietnam Veterans Act of 2019. Some key provisions of the Act, effective with loans closed on or after (and not before) January 1, 2020, are:

Veterans with loans amounts over $144,000, with full entitlement, will not need a down payment regarldess of purchase price;

The guarantee for loans at $144,000 and less will not change;

For Veterans who have previously used entitlement that has not been restored, the maximum amount of guaranty is the lesser of 25 percent of the loan amount OR the maximum amount of guaranty entitlement available. The maximum amount of guaranty entitlement is 25 percent of the Freddie Mac Conforming Loan Limit, reduced by the amount of entitlement previously used (not restored). In other words, the loan amount without a down payment could be 4 times the remaining entitlement. 25% down payment would be required over and above that loan amount.

Funding Fees will be as follows for all veterans, regardless of whether Regular Military, Reservist, or National Guard:

Type of Loan	Downpayment	Percentage for First Time Use	Percentage for First Time Use
Purchase and Construction Loans	None 5% but less than 10% 10% or more	2.30% 1.65% 1.40%	3.60% 1.65% 1.40%
Cash-out Refinance Loans	n/a	2.30%	3.60%
IRRRLS	n/a	0.50%	0.50%
Loan Assumptions	n/a	0.50%	0.50%

Purple Heart recipients will be exempt from paying the Funding Fee.

Mortgage terms | the basics

Buying a home can be daunting with all of the jargon and terms. Here are five basic terms that will be helpful to you during your loan shopping and purchase.

ANNUAL PERCENTAGE RATE (APR) – The cost of all credit and finances as determined by the length of a year, including the interest rate, points, broker fees, and other credit charges obligated to the buyer.

CLOSING COSTS – Also referred to as transaction costs or settlement costs. These may include various fees and charges associated with finalization. Closing costs can relate to application fees, title examination, title insurance, property fees, settlement documents, and attorney charges.

DOWN PAYMENT – Just like purchasing a new car, the process typically involves a downpayment. Larger sums of money are involved with most mortgages. The downpayment is the amount paid by the homebuyer to make up for/lower the gap between the purchase price and mortgage amount. It is generally advised this amount be no less than 10% to 15%, with the average magic number being 20%, of the purchase price. Avoiding Private Mortgage Insurance (PMI) and lower interest rates are key goals in the downpayment process.

PRIVATE MORTGAGE INSURANCE (PMI) – when a homebuyer places less than 20% of a downpayment on their home purchase, PMI is typically required. This insurance protects the lender in the instance of possible loan default. PMI is an added expense tacked onto the monthly mortgage payment and can take years to pay down.

LOAN ESTIMATE (LE) – The Consumer Financial Protection Bureau, or CFPB, requires lenders to issue a Loan Estimate within three business days of the mortgage application. The Loan Estimate details the loan terms and also estimated closing costs.[/vc_column_text][/vc_column][/vc_row]