Could a VA Loan be Right for You?

Watch on your mobile device >>

We’ve got a special place in our hearts for our military servicemen and women. That’s why we understand the needs of our military clients and their families. It’s the reason we take such pride in providing the best service available for those we hold so close to our hearts.

In keeping with our commitment to our veterans, we wanted to share some critical information regarding VA housing loans so many of our clients are eager to use. Here are a few of the questions we hear, and we hope the answers will help you decide if a VA loan is right for you.

Who is eligible for a VA loan?

According to http://www.valoans.com/ you may qualify for a VA loan if:

- You enlisted and began service before Sept. 7, 1980, or served as an officer before Oct. 16, 1981
and
- You’ve served at least 90 days of active duty during wartime; and/or
- You’ve served at least 181 days of active duty during peacetime
- You were not dishonorably discharged
- After Sept. 7, 1980, you served a minimum of two years of active duty and were not dishonorably discharged

- After Oct. 16, 1980 you served as an officer for a minimum of two years of active duty and were not dishonorably discharged

- You’ve served six years with the National Guard or as a reservist, were not dishonorably discharged and meet other specific criteria

- You are the surviving spouse of a veteran and you meet specific criteria

What are the advantages of a VA loan?

VA loans are the best mortgage loans on the market for these reasons:

- They are the only true 100% mortgage loan that does not require any down payment.
- They are free of most of the junk fees that affect other loans.
- They do not require private mortgage insurance (PMI).
- The home’s seller is required to cover a portion of closing costs, including paying for a termite inspection.
- A VA loan is assumable which allows another eligible veteran to take over the loan at whatever rate you locked in, even if current market rates are much higher, which is a huge selling point.

How do I apply for a VA loan?

While many traditional lenders can do VA loans, we’d encourage you to call us first so we can match you with one of several of our preferred lenders who excel in processing VA loans. In addition, here are a few other tips.

- Be sure to secure your Certificate of Eligibility (COE) for Home Loan Benefits as soon as you think you may be ready to purchase a home. Click here to download an easy-to-follow guide for how to apply for your COE.

- Examine your credit report to be sure all of the information is accurate. Experts recommend that you do this up to a year before you plan to buy a home so that you have time to clear up any mistakes or take action to reconcile any negative information that may appear. Even if you don’t have that long, you should still carefully review your credit report so you can see what the bank will see.

- Once you have your COE and you’re comfortable with your credit report, you’re ready to talk with the lender to begin the process, and we’d be happy to help you with everything.

How does a VA loan work?

While a VA home loan works much like other types of loans, there are a few things you need to know.

1. You will be assessed a one-time funding fee that could range from 1.15% - 3% of the loan amount, depending on whether you’re a first-time home buyer or not. Often this fee can be incorporated into the final loan amount.

2. Even though in most cases a VA loan does not require a down payment, if you do put down at least 5%, the government will reduce the one-time funding fee amount.

3. The money that funds your loan comes from the private lender, not from the VA. The role of the VA is to issue a loan guaranty, which promises to pay the lender a certain percentage of your loan if the bank has to foreclose on your home.

The good news is that applying for a VA loan is relatively simple and straightforward, especially once you’ve secured your Certificate of Eligibility, and we’re here to help however we can. 

Thanks to all of those servicemen and women for their bravery and their dedication to duty, and our gratitude to their families for their strength and support. Please let us know if there is ever anything we can do to be of service to you!

Home Prices...Hang in there!

The third quarter brought another dose of persistently disappointing home prices, with the U.S. national home price index up only 0.1% from the second quarter and down 3.9% from year-ago figures, the S&P Case-Shiller report said Tuesday.
The national index decline is not as steep as the 5.8% decline posted in the second quarter, but home prices overall are back to first quarter of 2003 levels.
The report found that the annual rate of change in 14 of the 20 metropolitan statistical areas covered by the report improved in September when compared to August.
The 10-city and 20-city composites saw annual rate declines of 3.3% and 3.6%, respectively. Between the second and third quarter the 10-city index home price index declined 0.4% and 20-city declined 0.6% during that time.
"Home prices drifted lower in September and the third quarter," says David M. Blitzer, chairman of the index committee at S&P Indices. "The national index was down 3.9% versus the third quarter of 2010 and up only 0.1% from the previous quarter.
"Three cities posted new index lows in September 2011 — Atlanta, Las Vegas and Phoenix. Seventeen of the 20 cities and both composites were down for the month," Blitzer said. "Over the last year, home prices in most cities drifted lower. The plunging collapse of prices seen in 2007-2009 seems to be behind us. Any chance for a sustained recovery will probably need a stronger economy."
Year-over-year, Detroit and Washington posted positive annual rates of change and noted an improvement in these rates compared to August. New York, Portland and Washington saw monthly gains between August and September.
"It is a bit disturbing that we saw three cities post new crisis lows," the S&P Case Shiller report said. "For the prior three or four months, only Las Vegas was weakening each month. Now Atlanta and Phoenix have fallen to new lows too. On a monthly basis, Atlanta actually posted a record low rate of -5.9% in September over August."
The relative lack of closed transactions might be exacerbating the downside, the report said.
"The relative good news is that 14 cities saw improvements in their annual rates of change, versus the six that weakened."

What Are FHA Loans and How Do They Benefit Me As A Consumer?

Watch on your mobile device >>

The Federal Housing Agency (FHA) doesn’t directly offer loans. Instead, its purpose is to provide mortgage insurance for Americans to purchase or refinance a principal residence.
To put it another way, the mortgage loans are funded by private lending institutions (mortgage companies, banks, savings and loan associations, etc.), and those mortgages are then insured by FHA/HUD.

The Benefits of FHA Loans

If you qualify as a prospective homeowner, these loans have three great benefits. First of all, your down payments are lower. Second, closing costs are also lower. And, finally, it’s easier to qualify for credit.

Who Qualifies?

FHA has programs for:

• First-home buyers
• Seniors
• Fixer uppers
• Manufactured housing and mobile homes
• Energy efficiency, etc.

If you’re a first-time home buyer, a FHA loan can be a good deal for you. See the eligibility requirements below. Later, I’ll cover the fixer-upper category requirements. Check with the FHA on other programs.

First-Home Buyer Programs

These programs have the following eligibility requirements:

• You must meet standard FHA credit qualifications (judged by the individual’s credit record).
• You’re eligible for approximately 97% financing.
• You’re able to finance the upfront mortgage insurance premium into the mortgage.
• You’re also responsible for paying an annual premium.
• Within this category, the eligible properties are one-to-four unit structures. As of this writing, the highest maximum FHA mortgage is $362,790 while the lowest maximum amount is $200,160.

The 203(k) Program for Fixer-Uppers

The 203(k) program issues loans to allow you to buy or refinance a property. In the loan, you can also include the cost of making the repairs and improvements.

The loans are provided through approved mortgage lenders nationwide, and they’re available to buyers wanting to occupy the home.

The down payment requirement for an owner-occupant (or a nonprofit organization or government agency) equals about 3% of the acquisition and repair costs of the property.

There are several steps to obtaining such a loan:

• You find a fixer-upper and sign a sales contract after doing a feasibility analysis of the property with a realtor.
• The contract should state that you’re seeking a 203(k) loan. It should also state the contract is contingent on loan approval based on additional required repairs by the FHA or the lender.
• You then select an FHA-approved 203(k) lender and arrange for a detailed proposal showing the scope of work to be done. The proposal should include a detailed cost estimate on each repair or improvement of the project.
• The appraisal determines the value of the property after renovation.• If you pass the lender's credit-worthiness test, the loan closes for an amount that will cover the purchase or refinance cost of the property, the remodeling costs and the allowable closing costs.
• The amount of the loan also includes a contingency reserve of 10% to 20% of the total remodeling costs. It’s used to cover any extra work not included in the original proposal.
• At closing, the seller of the property is paid off and the remaining funds are put in an escrow account to pay for the repairs and improvements during the rehabilitation period.
• The mortgage payments and remodeling begin after the loan closes.


You can decide to have up to six mortgage payments (PITI) put into the cost of rehabilitation if the property is not going to be occupied during construction, but it cannot exceed the length of time it’s estimated to take to complete the rehab.

• Escrowed funds are released to the contractor during construction through a series of draw requests for completed work.
• To ensure completion of the job, 10% of each draw is held back; this money is paid after the lender determines there will be no liens on the property.

Whew, somewhat complicated, isn’t it? Well, we’re dealing with a government program! But, FHA loans can be a good deal for you, and I’m available to guide you throughout the entire process. Just give me a call today!

Five Reasons You Can’t Afford to Say NO to a Refinance Right Now

Watch on your mobile device >>

Do you remember when mortgages used to cost as much as it costs you to use your credit card?  That’s right!  Though looking at today’s rates you would find it hard to believe, there was actually a time when mortgages were being doled out at an astronomical seventeen to eighteen percent.  While the real estate industry is going through a somewhat rough time nowadays it still does not negate the fact that for people on one side of the fence it couldn’t be a better time.

If you are a buyer or an existing homeowner, this is the BEST time to consider a new mortgage!  With mortgage rates as much as five times less than what they were during the era of big hair, tight jeans and bomber jackets – you can’t afford to pass up this opportunity.  Here are some very compelling reasons and scenarios where getting a refinance right about now makes perfect sense.

GET OUT OF BEING STUCK WITH AN ADJUSTABLE RATE
Homeowners that have mortgages with an adjustable rate that goes up and down throughout the years end up facing considerable risk of drastic fluctuation.  By refinancing now, a low 30-year fixed rate can be locked in, eliminating that risk while providing consistency and predictability.

BRING YOUR INTEREST RATE BELOW THE 5% MARK
Homeowners with mortgages currently at 5% or greater are excellent candidates for a refinance application.  By reducing the interest rate by even one percent on their loan, the savings can add up significantly and can result in drastic reduction in monthly payment amounts.

INCREASE ACCESS TO LIQUID ASSETS
In light of the current economy, many consumers need an extra feeling of security that comes from having access to liquid assets.  By refinancing your home, you can go from a 5, 10 or 15-year term to a 30-year fixed loan.  This will reduce the payment each month allowing you some extra financial breathing space to help pay bills and create a security fund.

DRASTICALLY REDUCE THE LIFE AND LONG-TERM COST OF YOUR LOAN
For those holding a 30-year fixed rate mortgage that is at 5% or more, this is a great time to refinance into a lower 10 or 15-year loan term.  The benefit is that payments would remain almost the same if not lower than the current amount paid out each month.

REMOVE PREPAYMENT PENALTIES FROM YOUR MORTGAGE
Many loans from the past have a prepayment penalty on them, making it impossible for the borrower to reduce the term and interest charges by making extra payments without suffering fees that go along with it.  There are many online calculators available to map out a new amortization schedule based on making extra payments that will help guide you as to how much you can save in the long run.


Things to Consider Before Applying for a Refinance

Are you familiar with your credit outlook?  What does your credit report say about your financial situation?  Before you apply for a refinance it is important to know where you stand in terms of your credit profile and if it is not optimum or at least at a minimum required level to be approved for a refinance, take steps to make improvements.

Where at one time very low credit scores were entertained in the mortgage industry, in today’s market, lenders are seeking out borrowers with higher scores.  At one time a 650 score used to be a really good one but today you might need 680 or greater in order to refinance.  If your score needs improvement it is critical that you make changes prior to the application process to increase your chances of approval.

Steady employment is a key consideration for lenders.  If you cannot satisfactorily demonstrate at least two years of consistent steady and stable employment with the same employer – there is a good chance you will not be approved.  New graduates who are working full time are also usually qualified for a home mortgage.

One important aspect of a refinance is to know the value of your home.  Loan to value is something that lenders will want to address when considering your application for a refinance.  A 50% loan to value means that the 50% of its value is owed, so for example on a $200,000 house that $100,000 is owed – the loan to value would be 50%.  Though online tools only provide a basic idea of home values they are a place to start.  The way to get a far more accurate estimate of home value is through your Realtor who will conduct a detailed analysis of the area and run some comparables of like-kind homes.  You can also obtain an appraisal by a licensed appraiser – something that is part of refinance process anyway.
~
At the very least, homeowners should definitely meet with their loan officer to determine whether any of these options make sense for them and whether they should avail the fantastic opportunities that are out there right now.