VA Loan Questions with Curtis Bissmeyer from Fairway Mortgage Company
Jan 13, 2020
VA Loan Questions with Curtis Bissmeyer from Fairway Mortgage
Steven O’Brien: Steven O’Brien here with Mr. Curt Bissmeyer. How long have you been in the mortgage business?
Curt Bissmeyer: 17 years. I retired from the navy and went into the mortgage industry with close personal friend of the family, and doing it ever since.
Steven O’Brien: What did you do in the navy?
Curt Bissmeyer: I was in the Aviation Ordnance field. I worked with different explosives and all of the delivery systems—explosives usage, storage, maintenance and delivery. I worked with all military branches on different bases, commands and duty types during my career.
Steven O’Brien: Sounds kind of different.. did that help with becoming a successful loan officer?
Curt Bissmeyer: Totally.. the attention to detail mindset required when planning and managing multiple facets of military operations prepared me for the all of the different variables involved when someone is purchasing a home.
Steven O’Brien: So, speaking of that, how many times have you moved?
Curt Bissmeyer: I’ve lived in nine different locations throughout the United States.
Curt Bissmeyer: I got a set of orders to Orange County, from there, my next set of order was in San Diego, I could have stayed in orange county for 7 – 8 – 9 years probably, instead I ended up transitioning down to san Diego.
Steven O’Brien: You’ve been in the mortgage business for a long time and one of the main benefits of working with you is your experience in the military and understanding how to navigate the VA loan world. I want to focus on some of the main questions regarding VA that you and I have run into over the years.
Curt Bissmeyer: We have run into just about everything.
Steven O’Brien: How do you qualify for a VA loan? Is the only requirement that you must be in the military for a certain period of time?
Curt Bissmeyer: There is no clear cut answer but I have access to pull the certificate of eligibility from the VA website. All I need is the borrowers name, social, date of birth, current address and i can usually get it in two minutes. The borrower can go into the VA system and have it mailed but it takes a while. If the borrower decides to do this Just make sure you are really contacting the VA and not a lender posing at the VA.
Steven O’Brien: So, the service member has the option to do that, but why do it when they can contact a loan officer and they can do it – because you have access to a back-end system?
Curt Bissmeyer: Yeah we have what’s called the VA portal, what that actually does it gives lenders and other types of entities who work directly with VA, realtors, very few realtors, but lenders and appraisals, they can go in and go directly into a VA portal with a case number and upload documents or a social security number and enquire about the eligibility.
Steven O’Brien: So, let’s say – speaking of eligibility. Eligibility is basically the dollar amount you would have left to be able to borrow, using a VA loan. So, one of the things we’ve run into is someone will say –
Curt Bissmeyer: You’re confusing your words. Your certificate of eligibility is – Steve congratulations, you just completed one year of active duty, you are now eligible to use a VA loan. Entitlement is the amount of the dollar figure that the VA will insure on the mortgage. Right now (in Hampton Roads), its $484,000 and change, it’s going up to $510,000 next year, on actually January 1st drop dead date.
Curt Bissmeyer: Yeah if we went to Northern Virginia like up in Dallas, its $732,000 and change.
Steven O’Brien: So, its relative to the mortgage.
Curt Bissmeyer: Yeah, it goes off the average sale price of the home, they have all kinds of algorithms.
Steven O’Brien: If you have a house already with a VA loan on it and you would like to purchase another house using your VA loan, for example maybe you have a house in California that you rent out, okay – and you come to Norfolk, you want to buy a house, you want to use your VA loan – what is the VA going to look at to determine if you have enough eligibility – entitlement.
Curt Bissmeyer: Okay right now today entitlement is based off of total VA entitlement. So, Steve buys a house for $200,000 – he has $280,000 remaining, cause it’ll be $284,000 remaining – on January 1st – VA’s changing entitlement regulations where if you bought a house in North Carolina Florida for $400,000 last year, the navy decided to move you up here at the air force or whatever. You PCS’d or you got out, returned home, came up here – you would get here and say – hey our loan amount right now is $510,000 – you would be able to use $510,000 to purchase a new home, even though you had a house in Florida for $400,000. Provided you can qualify properly.
Steven O’Brien: Well and previously to this –
Curt Bissmeyer: You were limited to the $484,000 of total VA entitlement being used.
Steven O’Brien: So, prior to 2020 you would only have $80,000 dollars worth of VA left in that scenario to purchase a home, now you’re full – so it’s almost like you don’t even have that other VA loan on the books.
Curt Bissmeyer: Correct, you just have to qualify which normally in most situations you would have that property rented out with property documentation.
Steven O’Brien: So, VA is changing the way they look at –
Curt Bissmeyer: Multiple housing situations.
Steven O’Brien: So, let’s talk about when you PCS to another area – you have housing calculated in each specific area depending on the area’s per capita income, so you’re coming from say California where the housing cost is much higher, guys getting $2800
Curt Bissmeyer: Yeah VA housing allowance in Southern California right now is $2874
Steven O’Brien: Service member comes to our area
Curt Bissmeyer: It drops to $1850.
Steven O’Brien: Okay, how long does it take for BAH to adjust when moving to a new area?
Curt Bissmeyer: Normally 30 days, however the reality of that becomes something I would handle because what I’m going to do is I’m going to make sure that once they arrived or if they were in the process, I would use everything – calculated using their BAH for our location, whether it’s here or if its Northern Virginia or if its North Carolina or Maryland, wherever – if somebody is buying a house in one of those locations and we’re working with them, I would make sure to use the right BAH because when it gets in there, an underwriter is going to have the orders and they’re going to see the new zip code and they’re going to put that in and make sure we’re using the right numbers anyway.
Steven O’Brien: Speaking of that, if someone’s getting out of the military, they’re year 3.5 into their 4 years contract we’ll say and they want to buy a house, what’s the underwriter going to do?
Curt Bissmeyer: We will require a current LES, we will get a statement of service from his command or her command, stating that they are eligible for reenlistment.
Steven O’Brien: So, if you’re a 3.5 and you decide to get out – like when do they do the reenlistment paperwork?
Curt Bissmeyer: Re-enlistments are normally done about a year out –
Steven O’Brien: So, year 3.5 someone should know whether or not they’re staying in.
Curt Bissmeyer: Yeah there is – and they may not have reenlisted yet because there are a lot of variables. Hey I’m going on deployment I want to reenlist tax free over in Dubai, instead of getting a bonus of $8000 I’m going to actually get all $20,000 because its tax free. So, there’s reasons but normally you would have the paperwork – hey he’s approved for reenlistment, we’re just waiting for this or whatever.
Steven O’Brien: Does the mortgage company require said paperwork too?
Curt Bissmeyer: Yeah. Cause we want to make sure that this person is going to have a job to pay the mortgage for 6 months.
Steven O’Brien: So, let’s talk about someone getting out of the military. Now we don’t have – we can’t count that active military income anymore, but the service member may qualify for disability or retirement income – they’re retiring. How long does it take for the retirement income to come into effect and any disability income to come into effect and become usable to qualify for a new loan? What do you need to be able to use that income? How do you document that income to the mortgage company to make sure you can use it as income to purchase the home?
Curt Bissmeyer: The first question we have for example a master/ sergeant so and so with the air force, he is scheduled to retire in 3 months – him and his wife decide they’re going to stay here, he starts seeking employment, his wife will still have stable job, we’re not going to use her income at all, it’s all on him, so what I would do in his situation is I would get in contact with his personnel management company –
Steven O’Brien: This is 3 months out.
Curt Bissmeyer: 3 months before he’s ready to retire, because you will get notified or you’ll receive official notification that your retirement has been accepted and has been approved.
Steven O’Brien: Is it faster to get the retirement income worked out versus disability?
Curt Bissmeyer: We’ll come back to that please. So, for example he’s retiring in 3 months with 22 years of service, this pay grade, this rank – I know his exact retirement, I have figured it out, I have access to all military websites, I know how to figure it out. What I have to do then is get the supporting paperwork from his personnel saying, yes, his retirement is on March 15th 2020 – okay. His effective pay will be base pay X amount – disability not determined at this point. If we have a veteran who can qualify with just that retirement, we’re good. Let’s say he’s an electronics technician or whatever – he finds the same job in the same field, he gets us an offer letter from that company that states income, we can actually use that income if the company will provide us with the proper support documentation.
Steven O’Brien: So, it has to be a similar type of business.
Curt Bissmeyer: Correct. We could use that, the biggest hurdle that you get into that is with a lot of projected income is that they are not working there right now, that gets tough – not for us the mortgage company, this gets tough for the borrowers new company cause we want a letter saying he will start on March 16th – And some companies have a hard time documenting/guaranteeing future income for a future employee who technically hasn’t been completed vetted/hired.
Steven O’Brien: So, they’re documenting that –
Curt Bissmeyer: They’ll say yeah, we offered him a job 80K a year, what’s the problem? We need to know is it a salary? And the problem is when we start asking them all the questions they’re going to be like – whoa! We don’t have him through screening, we don’t have him through finger prints yet, he is technically still committed to the military.
Steven O’Brien: Right and you need that documentation to use that income –
Curt Bissmeyer: 12 months of continual income into the future. With disability – I would always tell people to get their disability figured out first.
Steven O’Brien: I’ve heard at least 6 months prior if you can –
Curt Bissmeyer: Yeah what normally – 6 months before you’re retiring you should have already met with DAV – Disabled American Veterans, they go through your entire medical record and say, you are one broken sailor. Okay, you should go after this, this and this for disability, you submit it, you set up an appointment with VA, they look at it and say – no we’re not giving you that, but we’ll give you this – and you say – Okay, I agree that these conditions are acceptable. They submit the preliminary package up to VA for whatever conditions, but they also look at the ones that – the preliminary medical examiner said no to. So, if I had a scar on my elbow and I said, oh that’s 35% just for that scar, the original doctor will be like – you’re crazy, we aren’t giving you nothing for that scar.
Steven O’Brien: So, the day you get out, you’re like – all right I’ve got retirement coming, that’s already set up. Disability, I’m waiting on that – but I’ve talked to the VA and they’ve authorised a certain amount of disability money, what documentation do you need to be able to use that disabilities income?
Curt Bissmeyer: The VA award letter. The VA award letter will come out and say – hey congratulations, so and so on your retirement, the VA disability board has submitted a finding of 30% disabled. Once that happens that’s all we need. I want people to plan on 6 months before you get it, because if you don’t front load it, it will take longer.
Steven O’Brien: All right so we’ve talked about retirement income, we’ve talked about disability – We’re talking about income, now let’s talk about debts. When you’re calculating someone’s debt and deciding if they’ll qualify for a VA loan, you’re looking at their income and their monthly obligations, one of those obligations that is hard to quantify is childcare.
Curt Bissmeyer: Okay, well basically a VA loan is different than other loan programs. VA does not actually look at debt to income. What they actually look at is what’s called residual income. What that means is Steve O’Brien makes $5000 a month salary, he pays $400 in taxes, $200 social security, a $100 in Medicare, whatever – when it all comes said and done they say – Okay, his personal debt – car payment, house payment, plus his obligations to IRS, social security, his debt to income is required for a household of – we’ll say you have one wife and one child – household of 3 is $884 a month. So, household of three, VA minimum residual requirement is $884 – you have to have, after you pay all your bills, you have to have at least $884 left.
Steven O’Brien: So apparently that’s what they’ve determined is enough for someone to –
Curt Bissmeyer: After all your bills, all your bills are paid – so one of the bills that people don’t think a lot about is child care, because we just gave you a wife and one child, well your child is only 6 months old, she is costing $350 a week – that’s $1200 a month. That’s a big debt. That’s part of your residual income because it’s after all of your bills are paid what do you have left? Well that child care then becomes a bill.
Steven O’Brien: Okay so when we talk about child care, its interesting because – how do you document that? What if your child is staying with the neighbour down the street who has an inhome daycare that you pay in all cash, is that acceptable?
Curt Bissmeyer: You would have to get a signed statement from her or from him stating that hey, I’ve been watching little Joey for the past year, I charge them “X” amount per week and then they would probably have to come up with some type of payment option where he’s being paid. Generally, that can get a little bit challenging and especially if it’s a family member.
Steven O’Brien: But you muscle through it –
Curt Bissmeyer: Yeah as long and you can provide realistic documentation and it makes sense to an underwriter. That’s 100% is presenting it – hey we had our babies the same time, they hang out all day, they would probably hang out three days a week whether or not I was paying them or not. As long as you document and come up with a reasonable, logical explanation, my underwriter is very understanding about stuff like that, because they get it.
Steven O’Brien: So now you’re in the process of buying a house. One of the questions I get quite a bit is – I like this $200,000 house, it needs a lot of work. Can I get extra money from the VA to renovate the property?
Curt Bissmeyer: Yeah. VA has VA renovations programs that are designed because in our environment we can’t create more land, so in metropolitan areas where you can’t keep expanding cause people don’t want to drive 2 hours to get to work, so a lot of people have been buying order homes and renovating them. VA has a program called a VA renovation loan; for example you purchase it for $200,000 in your circumstance. We would say – now that’s your acquisition cost. Then you say – hey, we want to put in a new kitchen, one bathroom, whatever – a new roof. We’re going to get a class A contractor who is approved through VA, he is going to go out there and he’s going to look at the property and he’s going to give us an itemised bid saying, kitchen is done, this is done, it’s this much wood, this much flooring, this much labour, it is line by line straight through it. Then we’re going to take that bid for $30,000 we’re going to send it over to the VA appraisal when we request appraisal. Appraiser looks at it and says, right now it’s worth $200,000 – when all this work is done it’ll be worth $230000 – and then we finance the $230000 in your total mortgage amount.
Steven O’Brien: How does a contractor get approved with VA? Can the borrower’s contractor friend get approved?
Curt Bissmeyer: No, normally a VA approves them, but we also have to approve them, because in situations like that, it has to be a class A contractor, because this contractor is not going to get paid for a while.
Steven O’Brien: The contractor needs to have the financial strength to handle not getting paid for a couple months?
Curt Bissmeyer: Because when we close the loan, if we did a $30,000 renovation, he would get $15,000 upfront, that Steve O’Brien would sign as the home buyer and then Jo the contractor would sign that check – they both sign it, he gets to go deposit it and start doing all the work. Once he finishes all the work, we order the appraisal, he comes back and looks at everything and says – it was done correctly. And then he gets paid the rest of the money once again with a check that they both have to sign.
Steven O’Brien: Okay let’s say you’re not renovating a property. The HVAC is 18 years old, the life expectancy of the HVAC is 15 years old. Everything else in the house is perfect and the HVAC is working and the seller does not want to replace it for the buyer because it works, but we know that’s its time is limited – is there a VA option for getting a new HVAC worked into the deal?
Curt Bissmeyer: Yes, it’s called an energy efficient mortgage. Basically, what this will do is – this loan allows –
Steven O’Brien: It’s through VA?
Curt Bissmeyer: Yes, it is through a VA loan, what it allows you to do is, you have to – if there is a major system that can save the borrower money – in this case a veteran specifically, will save money over the long time, or long term, they can actually finance the cost of a new HVAC unit, a hot water heater, a roof, windows, some of these items can be actually financed as an efficiency upgrade to the property and it gets rolled into the loan amount, and yeah that way the veteran has a spectacular home to live in for however long they choose to.
Steven O’Brien: Yeah, I mean most of the time –
Curt Bissmeyer: The biggest problem that you run into with the energy efficiency mortgage, it becomes a big timeline issue- because what happens is they find the house on the first of January – they write the offer on the 3rd, it gets accepted on the 10th and keep in mind we’re closing on January 30th – we’ve already lost 10 days, and they finally get the seller to come back and forth and they agree they’re not going to fix the HVAC unit – now we have 15 days remaining to get the contractor done, get the energy efficiency stuff put in, approved and everything set up and then the appraisal can get ordered.
Steven O’Brien: How much time should you request – if you’re going into a bidding situation, knowing you’re going to try to exercise an energy efficient type of upgrade, how much time should you add to the contract when negotiating?
Curt Bissmeyer: If you know it upfront – if the item is identified and you have the time, I would say add 10 days extra because it’s a home purchase.
Steven O’Brien: But like you said, you don’t normally know you’re dealing with that until after you’ve gotten through the home inspection – if there is a home inspection period, you’ve gone through that, then you’ve gone back and forth and before you know it 10 days have gone by.
Curt Bissmeyer: And now your seller is sitting there so – but that’s an open communication piece between the buyer’s agent and the sellers agent saying, hey okay we’re going to do this but in order to add this efficiency mortgage in we’re going to need a couple of extra days, would that be a problem? Cause it would save the seller having to replace it.
Steven O’Brien: Speaking of the seller, when you’re negotiating an offer, we hear this in Virginia, in our area – the buyers are typically getting some sort of closing cost assistance from the seller, every loan type has a different tolerance for that. With the VA loan, what’s the max amount of contribution at closing that a buyer can get from the seller, and when I say – the buyers not getting it directly, but on their behalf, they’re getting cost paid on their behalf by the seller, what would be the max amount that the seller could contribute on the buyers behalf at closing?
Curt Bissmeyer: Normally – and there’s a huge rumour mill, VA doesn’t actually specify the exact percentage. Everybody says oh well its 6% – VA doesn’t lend money. VA doesn’t have any loan officers; they don’t have any loan consultants, let’s come back to that question.
Steven O’Brien: Okay let’s jump to that next question – so just for ease of answering –
Curt Bissmeyer: Yeah basically, VA – what is most customary, is what they say customary closing costs are expected to be 4% and the lenders are the ones that actually lend the money. They make the guidelines and the regulations through VA agreement and push back when you sell them a loan, when you send a loan and the VA pulls it to audit it, they say – hey, you had this way too much closing cost assistance. So, normally 6% is what you would hear, 4% can be used towards closing cost and then you can be leftover some money to do other stuff with.
Steven O’Brien: So that depends on the lender is what you’re saying?
Curt Bissmeyer: Yeah, I have had another lender that is on the same street that my office is on, and they have said they will only use 3% –
Steven O’Brien: Interesting, I thought it was a VA guideline, but it’s not.
Curt Bissmeyer: No, it is – VA doesn’t clarify specifically.
Steven O’Brien: Interesting.
Curt Bissmeyer: The problem is you get into normal assumed closing cost, which is one company – this credit union charges 1 origination all the time every time.
Steven O’Brien: So that brings me – does the department of VA give issue loans?
Curt Bissmeyer: Absolutely not.
Steven O’Brien: They do not issue loans.
Curt Bissmeyer: No.
Steven O’Brien: So if you hop on the internet and you Google, I want to use my VA home loan and you dial this number – somebody answers the phone and says – Mike – Mike answers the phone and says I am your certified VA loan specialist – that is not necessarily the truth. He does not work for VA – he works for a mortgage company.
Steven O’Brien: Well, does the VA certify loan specialists?
Curt Bissmeyer: No. there is a licensing criterion for a mortgage lender.
Steven O’Brien: So, if someone says I’m your licenses VA home specialist.
Curt Bissmeyer: He’s telling the truth, he is being very vague about it, but it is the truth, because he has the license and he can do VA loans.
Steven O’Brien: Right so the department of VA does not have –
Curt Bissmeyer: They do not lend money.
Steven O’Brien: They just insure banks – they say hey, if you lend money to my borrower, my veteran, we will pay you back if they foreclose?
Curt Bissmeyer: Correct, if they default, yes.
Steven O’Brien: All of these banks want to lend to a veteran because the VA is saying “hey – if the veteran forecloses, we will guarantee the loan.” The banks just adhere to the VA guidelines. VA says, if you do these things, we will guarantee the loan that you generated.
Curt Bissmeyer: Right and the VA guidelines for lending are less strict than the banks.
Steven O’Brien: Right.
Curt Bissmeyer: I mean if you actually sit down, if you have a whole day and you want to go and Google VA loan guidelines, you will find them online. VA doesn’t have a credit score. So, you hear people say – oh I have a 560 I can get a VA loan, because I looked on the VA website and they said, no credit score required. The mortgage industry sets standards based upon your credit profile.
Steven O’Brien: So that’s where the competitiveness of the market comes into play and each lender has their own set of guidelines.
Curt Bissmeyer: Yeah, they’re called overlays. Basically, we work directly with the VA, we service sell all of our VA loans, what that means is – we close a loan and it goes from our origination portfolio to our servicing portfolio company. So, it feels like –
Steven O’Brien: My loan care – which they are great to work with by the way.
Curt Bissmeyer: But when you transfer loan, we still own the rights to it, it’s just that we – as servicing there’s different pieces that have to be followed by legal lending guidelines and disclosure and servicing a setup to handle those items.
Steven O’Brien: So long story short, once you close on your loan it might get sold to another servicing company after closing. The new servicer will send a letter to the homeowner.
Curt Bissmeyer: When you get it call your loan officer.
Steven O’Brien: Yeah make sure you’re paying it to the legitimate company.
Curt Bissmeyer: I had somebody who called me and I was like – I had to look in the file and sure enough, it was not where they were getting ready to send their payment.
Steven O’Brien: Yeah, I can see that.. Make sure you verify the letter you received is legitimate.
Curt Bissmeyer: What’s on that letter? It’s all information that’s on the public recorded at the courthouse. So, I actually – one of the few times I had to call the CFPB, which is the mortgage regulators for finances and ask them if they could do a research to find out who this company is.
Steven O’Brien: You’re in the process, you’re getting the loan. So, a lot of times a buyer will ask if the department of VA will inspect the property? A home inspection is not mandated by VA. The borrower negotiates the right to have a home inspection with the seller. The home inspection is designed to check the physical components of the home, to really do a deep thorough investigation into the home and for you to decide if you feel like you want to move forward on it. If you decide to move forward with the home purchase after the home inspection the VA will send an appraiser out to the property.
Steven O’Brien: What’s the process of ordering an appraisal?
Curt Bissmeyer: Appraisal is when we contact the VA and set up their VA case number. Once we set the case number up the system asks.. do you want a VA appraiser assigned? Yes! Once we click that block, VA appraiser will get assigned, whoever – Joe Smith, he works for the VA, doesn’t work for my company, doesn’t work for Steve O’Brien –
Steven O’Brien: He’s a neutral third party.
Curt Bissmeyer: Yes, he’s going out for three major items on the property. He’s going to make sure that its worth what it’s worth.
Steven O’Brien: He’s the eyes and the ears of the bank.
Curt Bissmeyer: Yeah. Of the VA. He’s out there to protect the veteran first, and VA second – so if he goes out – hey its worth $200,000 dollars, okay – great, the next thing he does he looks at the material condition of the entire property. It has to meet VA minimum property requirements. While he’s there the gutter is loose hanging off the side of the house, he may comment, I want the gutter replaced or repaired properly before the veteran can purchase the home. Once he puts it on the appraisal it becomes a required repair and he’ll have to go back out, make sure the repair was done and then he’ll say yes, the VA is willing to lend $200,000 dollars for this property.
Steven O’Brien: And typically, they don’t put a lot of condition issues on an appraisal, unless they are –
Curt Bissmeyer: Normally the appraisal is looking at major systems.
Steven O’Brien: Safety –
Curt Bissmeyer: Yeah safety is the number one issue –
Steven O’Brien: Does the heat work? Does it have a stove? Is the house going to fall down?
Curt Bissmeyer: Yeah. All of the major systems roof – siding, or if the window is broken, not being weather resistant, they’re looking at the major functionality of the home.
And as long as I’ve been doing it, I couldn’t tell you – it depends on the appraiser how meticulous they are. So, there’s no way to know what they’re going to flag, because the VA guidelines- is there somewhere to go to find those appraisal guidelines?
Steven O’Brien: Yes. I just feel like it’s –
Curt Bissmeyer: You may not want to because it won’t – the VA minimum property requirements are vague because every property is different. It would be a circumstance where – when I tell you about – hey, this gutter was hanging off the roof and you’re like – Curt that was on the backside of the garage on the edge of the house that runs straight down to the water, they don’t even need a gutter there. There are situations where you get into with a property that you have to be there to see it and most appraisers are reasonable, when you think about who they work for.
Steven O’Brien: And how much of an appraiser flagging a particular condition item is VA? Or more the lender’s underwriter?
Curt Bissmeyer: The lender has very little say. The problem really comes down to the appraiser’s eyes. Once he annotates it, you’ve got – so I’ve never had an underwriter add conditions to an appraisal. They’re never going to come in and say hey, we really don’t like this, because you’ve got to remember, when the VA appraiser does it, he sends it back to the underwriter first, so the underwriter has to go out and pull it out of the VA portal. So, the underwriter sees it before we do. That’s why normally when you receive a VA appraisal, you’ll get an email from myself saying hey, congrats, the VA appraisal has been received, it is being reviewed. We expect to have it available within the next 24 hours.
Steven O’Brien: So, VA sends an appraiser over, they do not do home inspections. Okay so the appraiser goes over and just makes sure that the asset is a viable candidate for collateral.
Curt Bissmeyer: That’s a very good way to say it. That’s solid.
Steven O’Brien: And that’s it, and usually just to point out – a VA appraiser is typically at a property for 15 to 20 minutes – I’ve had some that have gone an hour, so it really depends on the appraiser.
Curt Bissmeyer: A lot of it depends on the appraiser
Steven O’Brien: And the condition too. I mean if they walk up and they go – this is normal; everything looks to be in order, walk in walk out – if it’s in rough shape they’ve got to spend more time.
Curt Bissmeyer: If it has some cosmetic issues, they – it tends to bring their eye to it.
Steven O’Brien: Right and if they’re going to ping on one thing, might as well ping on a couple of things. And, safety issues seem to be a big item.
Curt Bissmeyer: Not even a question, safety issues have to be fixed. I had sellers argue about it. The funny one is the third step in the $600,000 neighbourhoods, with the gorgeous brick stairs that are three steps. VA appraiser goes out and they’re going to have to put a hand railing right in the middle of that gorgeous set of stairs. It’s the silliest thing. I’m not going to say I don’t agree or disagree with it, I understand it but cosmetically 90% of the time a house like that the front is cosmetic, it’s there to look good – everybody goes in and out through the garage.
Steven O’Brien: Right, it is what it is; we have contractors that make good money putting 2X4 stairs up. Okay, a couple more questions. Buying a house site unseen has become easier as technology improves, convenience becomes more and more important and part of that is hey I’m in California, I’m getting transferred, I just want to have a house ready to roll by the time I get to Norfolk – what – is there anything different with the VA – I thought a borrower had to be at signing the contract or closing. How do you know that the borrower that has signed the initial offer to purchase via electronic document has been to the property? What is the guideline?
Curt Bissmeyer: Okay – with electronic documentation what happens is when you do an electronic document, a lot of the time when you receive it or send it, I don’t know on the sending side so much, but on the receiving side when you receive it, if you scroll down you can check and verify the validity of the document, and it gives you the IP address. When we get that document, we upload it – as a loan officer I don’t think anything about it. However, our compliance people when they see it coming, and we have a power of attorney or something to that effect, they look at the IP address and then they hop on the web and they say – whoa! This guy is in California. So? Is he going to be there to wet sign any of these documents? Well he’s coming to the closing; he arrives the day before. Then we’re okay.
Steven O’Brien: What if he has a power of attorney?
Curt Bissmeyer: It has to be specific for the property address and loan amount.
Steven O’Brien: Okay. At the end of the day somebody has to sign the dotted line to get the keys.
Curt Bissmeyer: The biggest challenge you run into with something like that is most military men and women automatically go and get a general power of attorney – when you’re dealing with the VA and guaranteeing a mortgage, it has to be a specific power of attorney.
Steven O’Brien: Which is easy – doesn’t take – just get it drawn up –
Curt Bissmeyer: As long as they will listen to the council. A lot of times they want to go to – oh I’ll just go to base legal. They’re not going to give you one that works.
Steven O’Brien: Oh really?
Curt Bissmeyer: Yeah. They’ll give a general saying – oh it’s good for everything, see we even have a block for purchasing a home, for a conventional loan that might work, but for a VA home loan, it has to be specific and it has to state – VA funding fee, VA entitlement usage.
Steven O’Brien: 90% of the time where does a veteran or a VA purchase or get the specific power of attorney?
Curt Bissmeyer: The lenders should have access to it. Cause we have to get it approved through our company, while my company requires us to make sure it meets VA guidelines. We make sure that –
Steven O’Brien: Do you have one?
Curt Bissmeyer: Yes. I would say hey Joe, here is your specific power of attorney. Here is your name, your address that you’re buying, here is the loan amount. You need to take this, print it out on 8.5X11 white paper, you need to take it to your base legal and notarize it. If you don’t want to do that, go to your bank and walk in with your – and they’ll probably notarize it for free but make sure that you look at it and you make sure that I didn’t make a mistake typing it up and misspell your name and put JEO instead of JOE.
Steven O’Brien: So, the buying sight unseen is relatively simple, once you have found the house you want.
Curt Bissmeyer: Once you – if you know you’re doing a sight unseen purchase, the realtor – you and me will be in conversation about that and we’ll make sure we have all the right pieces lined up to move accordingly.
Steven O’Brien: Okay so you’re setting up closing on your VA loan, can the spouse be on title?
Curt Bissmeyer: Yes and no. that would be very unique – that would be a question that would depend completely on every situation. Some spouses want to be obligated – or on title without being on the mortgage – oh well, that way they can’t sell it, right – but at the same time if you’re tied to that property you potentially could lose advantages by not being a homeowner later on. Cause if they come back with some of these first time home buyer programs where they’re saying – hey, buy a house, give $5000 and you’re tied to that property as a non-obligated spouse, you would not be considered a first time home buyer anymore, cause you are gaining from the ownership interest.
Steven O’Brien: Any words of wisdom for a VA borrower?
Curt Bissmeyer: A VA borrower – I did it the wrong way, I bought my first house, thought I was cool. They asked me – hey you got any questions? No man I’ve got this. I wish I would have had somebody say – this is how the process goes, this is what you need to be prepared for. Figure out your money and what you’re really comfortable with. Not what are you approved for. My first house I bought, it looked great, it was awesome. I washed and waxed my car every weekend because I couldn’t afford to put gas in it cause my house made me poor. Figure out what your realistic living circumstance looks like and then respect it. Your realtor – your friends – oh well, how did the Anderson guy –
Steven O’Brien: So, don’t try to keep up with your neighbors?
Curt Bissmeyer: Get what you want to do – that would be my big thing would be – figure out what you need, what your lifestyle looks like and what you want it to look like, cause realtors, friends, they’re going to be like – oh look I just bought in this neighbourhood and its $400,000 and you’re like – man, his payment is $2800 a month, how is he affording that? And you don’t – he’s not. Can he make the payments? Yes. Can he afford it? No.
Steven O’Brien: And I would say – anticipate your life changes – try to anticipate your life over the next say 7 years, if you have children, multiple children you’re going to have extra expenses that may come up – what you can afford today may improve over the seven years, or it may go down depending on your lifestyle.
Curt Bissmeyer: I would agree. Yeah, I would get your subject matter experts. Get a realtor, get a settlement company, get a good loan officer who – as a loan officer, if it isn’t me, I’m fine with that, but I’m going to tell you the truth, they better be willing to tell you no.
Steven O’Brien: So, what’s your definition of a good loan officer?
Curt Bissmeyer: Somebody who will take the time before you’re under contract. Sit down with your income, your assets, your situation, go over a worksheet and explain – hey this is buying a house, this is your title cost, your settlement cost, your attorney, your fees, this is where you got 3% from the seller or whatever, and go over the specifics of a transaction so you’re prepared.
Steven O’Brien: So how many times do borrowers actually take the time and go sit down with you –
Curt Bissmeyer: Never. The problem you run into is – so I saw this one online, I’m going to look at it – I shouldnt say never but it is an emotional transaction and good realtors understand it and they know the difference between – hey, I’m approved – what does that mean? And you look at the letter and Steve and I’ve worked together too long, you know – if I’m giving you a letter, I’ve got your stuff. I’ve got bank statements, pay stuff, W2 tax returns, alimony child support annuity’s, CD’s whatever – I’ve got it. I’m not giving a letter – an approval letter to one of my clients that I’m concerned about their ability to close on a purchase. I don’t want to lose that client as a potential friend and referral source in the future and I don’t want to waste their time going out looking for homes they shouldn’t be looking at. And if I say – hey you’re approved for $240,000 and they say okay, what does the payment look like? Oh, $1250 – I can do that, okay cool, let’s go. And I – oh Curt, we’ve been looking at $300,000 – oh here’s your payment for that. Oh! Can we buy that? Yeah, you can actually get approved for that mortgage. This is where integrity is crucial. I don’t recommend it and I think it’s too much house for you at this point but I’ve had people that say Curt – you just do your job; I’m going to go buy the house. But that’s where you have to be – if you’re aware of it, there could be other variables. Hey, my wife is going to have a job in 6 months.
Steven O’Brien: So, you would say that, when you’re trying to find a loan officer, you want someone who is just going to shoot you straight with your –
Curt Bissmeyer: With your ability to purchase, and what it’s going to look like.
Steven O’Brien: Yeah, I think we can all benefit from that type of transparency in all businesses.
Curt Bissmeyer: The problem is too many loan officers and realtors don’t want to slow down because they don’t want the person to hesitate, they just want to get them to the finish line. You’re sitting in the car saying, hey I want to buy a house, I want to get him the money to get a house, you want to find a house and sell it to them, hey there you go, this is perfect. There comes a point when you have to say – I would recommend getting the subject matter experts, your realtor, your loan officer, your insurance company, your financial planner if you have one, people who are going to give you the truth. May not be what you want to hear, but they’re going to be honest enough to deal with your reality.
Steven O’Brien: Well, thanks for your time. I know you’re busy but I think the – you answering these questions can hopefully give some good insight into the process of buying a VA or using a VA loan to purchase a property.
Curt Bissmeyer: Yeah you get into a very – and everybody says that its standard and it’s really not. I’ve been doing this for 17 years and I can’t remember two loans or two people who were exactly the same.
Steven O’Brien: No its just like, I tell people, it’s just like if you have kids, everyone’s journey is different, because when you’re having a kid everybody talks to you about, this is going to happen, and this experience and that experience and it’s just different for everybody and at the end of the day we all get to the finish line, but everybody’s journey, yeah it’s never the same. That’s what I love about the business, every day is a new day. I think we both appreciate the spontaneity of it, else you wouldn’t do it.
Curt Bissmeyer: Exactly.
Steven O’Brien: All right thank you sir. Thank you Mr. Curtis Bissmeyer with Fairway Home Loans, his contact info is 757-813-6165, www.loansbycurt.com