Statistics show that only 25% of all eligible VA home buyers actually utilize their hard-earned veteran loan benefits. I have dedicated my entire professional career to assisting veterans use and understand these VA benefits as they pertain to buying or refinancing a home mortgage. Life is full of difficulties and even things we may feel are unfair, and if I can play a role in making something less difficult for our Nation’s veterans then I will do all I can to assist!
I have put a lot of thought and effort into this article and hope that all those that come across it feel that it has made the VA home loan process much easier to navigate from start to finish because truthfully, the VA home loan is a very simple and straight forward tool that can make home ownership a reality for hundreds of thousands of eligible veterans and active military.
Step 1 is getting your preapproval letter.
Getting a preapproval letter from your VA lender is one of the first steps that all veteran homeowners should take when trying to purchase a home. Before you go out and try to start buying a home you need to get a preapproval letter from your VA loan officer. The reason it is so important to have a preapproval letter in your possession is because sellers and real estate agents will not take you seriously until you have the preapproval letter. Once you have your preapproval letter you can start making offers on different home. Have you ever seen the movie Willy Wonka’s Chocolate factory? In this movie, those lucky holders of the golden ticket are granted access to Willy Wonka’s chocolate factory. I like to compare your preapproval letter to the golden ticket given to these lucky recipients in the movie. Without the golden ticket there is no entry into the chocolate factory; however once the golden ticket is presented the doors to this amazing chocolate factory are opened. Veterans, you will notice once you have received your preapproval letter you too will have many more doors opened to you. Realtors and sellers will be much more likely to take you seriously with your preapproval letter.
What will you need to send to your mortgage representative to get your preapproval started?
For a VA purchase loan you will need the following:
· your last two year’s W-2 statements.
· One month’s worth of pay stubs.
· Form DD214 (not necessary but helpful)
This information is needed on all applicants which is normally the veteran and his/her spouse.
The reason we need your last two years W-2 statements is to verify how much money you make on average each year. The reason we will need eight months worth of pay stubs is to get an idea on average of how much money you are currently making with your current employer. In addition, to determining how much money you make your pay stubs also verify current employment. Your form DD 214 allows your VA lender to expedite ordering process of your certificate of eligibility. Approved direct lenders with the Department of Veterans Affairs have the ability to order your certificate of eligibility, which will determine if you can or cannot get a VA loan, over the internet directly from the VA. most veterans or active duty military who are applying for a home loan do not realize that the speed upon which they are getting approved is determined by how quickly they can get these necessary documents to their VA loan officer.
What will the VA loan officer or VA lender do once they have your information as described above?
Once your VA loan officer has the three items outlined above, he will plug all of your information such as employment, income, assets and liabilities if applicable into his loan origination software. Once your information is entered into the software a VA loan analysis must be run by an approved VA processor or loan officer. The VA loan analysis is a form which will indicate to the lender whether or not you can afford the home that you were trying to purchase. The VA loan analysis is a relatively simple calculation. The calculation is outlined below:
(Monthly Income)- (proposed mortgage payment+insurance+taxes+utilities for that house+monthly credit card payments due) = RESIDUAL INCOME.
What is residual income?
Reschedule income is how much money you have left over to survive with after having paid all of your necessary obligations. The VA does not want someone to buy a home that is so expensive that home does not allow them to make all of the necessary payments on time. The VA has set up certain criteria for necessary residual income based on what part of the United States who have been, how larger family is, the age of your children and older variables. For example, the amount of residual income needed for a single person living in eastern Ohio will be lower than the residual income required for a family of six living in Northern California.
The VA loan process from application to loan closing/funding.
Once your VA loan officer has done your VA loan analysis and determine whether or not you can afford your home your loan will be submitted to an automated underwriting engine. The most common used automated underwriting engine is DU or desktop underwriter. Within moments of submitting your loan to the automated underwriting system, your loan officer will know whether or not you are eligible for the loan and at that point you will be denied or preapproved! As you are already aware if you are preapproved venue will be issued a preapproval letter so you may start making offers on different homes of your choice.
Let’s now assume you have made offers on a bunch of different homes and decided to pursue the home of your choice. At this point in time you will need to be working with a real estate agent and you will need to execute a purchase contract or purchase agreement with the seller. After you have unexecuted purchase agreement you will return that purchase agreement to your loan officer and your loan process will now begin. Your loan process could take anywhere from about two weeks to five or six way depending on a couple different variables. Though it is very easy to blame your VA loan officer should things not go as quickly as you have intended, there is a lot that you can do to speed up the process. The following is a list of things involved in the loan process that may take time over the next 2 to 5 weeks:
· Title insurance must be ordered and issued
· An appraisal of the property must be done
· Home owner’s insurance must be set up and put in place
· Verbal and written verification of employment will be done on applicants
· any adverse credit may need to be cleaned up or discussed
· a VA underwriter needs to review all documents and issue final approval
· closing needs to be scheduled
though the list above may not appear complex or detailed, it is important to understand that in today’s tight economy with increased financial guidelines your loan approval and processing will take longer than it has in the past.
So what can you do to make sure you are well prepared to buy a home with a VA loan?
As I mentioned in the very first paragraph I have spent my entire professional career working with veterans and active-duty military in getting approved for their hard earned VA home loan benefits. If you take anything away from this article it is that you should be educated and make sure you’re working with a legitimate VA approved lender, bank or mortgage company. Here at www. lowVArates.com we have taken the guessing game out of your hands. If you submit your loan in Cory for preapproval on our website you can rest assured that we will put your information into the hands of an approved VA lender in your area. Our website is designed to educate all those looking to find out more about their hard earned VA home loan benefits.
This blog post will be short and sweet because I want the video above to do the talking. That said it is very important that any veteran home owner eligible for a VA streamline loan or even a VA cashout loan be aware that 4.5% VA rates have returned once again to the market! Most of the approved loan officers here at LowVARates would have never guessed that we would have seen this low 30 yr fixed rate return, but we are all certainly happy that it has. The FED will stop buying mortgage backed securities is just about a month, so we do not expect interest rates to stay this low much longer. If you have been waiting to refinance, YOU BETTER DO IT NOW.
If you aren’t careful about your credit, you could end up paying dearly for a low credit score. Not only can a low score stand in the way of getting a loan for your dream home or dream car, but even if you do get the loan, a less-than-stellar score will make it expensive. As your credit score decreases, you become more of a credit risk in the eyes of lenders. This means they’ll attach a higher interest rate to your loan, and your monthly payments will jump. On the other hand, a high score will lower that interest rate.
Although the score has a big impact, keep in mind that there are other factors that influence the interest rate you get for a loan besides your credit score. These might include things like the type of property you are using the loan to buy, how much of your own money or equity is going into it, the costs the lender pays to make the loan and so on.
In addition to banks and lenders, there are landlords, merchants, employers and insurance companies jumping on the credit score bandwagon. Of all of these, the fact that insurance rates are being determined by credit scores is causing consumers the most alarm. To most, it seems that your credit history and your driving record have little in common. Insurers, on the other hand, have found that credit scores help them predict how likely someone is to file claims. The rule of thumb is the lower the score, the higher the likelihood of filing claims. They don’t use the same score that banks and lenders use, however. They use a slightly different formula for their calculations and actually call it an insurance score.
Insurers’ use of credit histories to determine rates is under scrutiny nationwide. Many states are passing laws restricting this practice. In a few states, insurance companies can’t make decisions based solely on credit. In some others, if an insurance company makes a decision that negatively affects your policy based on your credit, it must disclose to you the reasons behind the decision [source: CreditInfoCenter].
Another practice that particularly upsets consumers has to do with credit card companies’ policy of universal default. Although we’ve already learned how a credit score can determine your interest rate, in the case of credit cards, your interest rate can change at the drop of a hat — or rather, at a drop in your score. Even if you always pay your credit card bill on time, if you default on a completely separate loan, your interest on your credit card debt could rise dramatically.
Prospective lenders aren’t the only ones who judge you based on your credit report and credit score. Potential employers check out your credit report too. Why is that you ask? After all, they’re in position to pay you, not the other way around. But businesses reason that the way you handle your finances is a reflection of your behavior in other areas of your life. If you’re late paying bills, you may be late to work. If you default on your car loan, you may not follow through with an important assignment.
Even if your credit woes can be explained, bad credit is a distraction from the employer’s perspective, and it detracts from worker productivity. Recent research shows that employees with credit problems are significantly less productive on the job than those without. So, the easy way out for the employer is to not bother to find out what’s going on, but to hire someone with good credit instead.
Increasingly, credit checks are a standard part of hiring and even promotion process at companies large and small throughout the United States.
All this adds up to say that credit scores are enormously important. So putting a little thought into improving your score could prove a good investment.
There is good news for the VA mortgage market as of February 24, 2010. The Chairman of Federal Reserve, Ben Bernanke, announced to Congress that “record-low interest rates are still needed to ensure that the economic recovery will last and to help ease the sting of high unemployment.” He seemed certain that recovery would continue, but it would be a slow process. He insisted rates need to stay low for time being, but didn’t indicate how long that would be.
It was then reported home sales hit a low in January, making a new record, which goes to show it will be hard to improve our fragile economy even with the government’s assistance. It fell 11.2% in January, which is the third consecutive month it has dropped, even though Economist was predicting an increase. Not only that, but unemployment is at 9.7%, foreclosure of homes are still at record highs, and it is extremely hard for businesses and individuals to get loans.
It also was reported that as an effort to increase the economy’s situation, that a bill was passed to help produce more jobs. Not only that, but legislation is planning to help businesses by giving tax breaks to those who choose to help our economy by hiring more employees.
Ben Bernanke promised that the Fed would keep the interest rates as low as possible (near zero) for an “extended period.” Some think that this “extended period” will last a few months. There will come a time when this will have to reverse once the economy is on more solid ground. The timing is tricky, as waiting too long can cause problems such as inflation, whereas raising rates too soon can disrupt the improvement that will be made. Bernanke also urged the Congress to act on restoring the nation’s financial structure to avoid events that, in Dec 2007, put us in a recession.
Due to Chairman Ben Bernanke’s speech on February 24, 2010, the Tuesday drop of 101 points was raised on the Dow Jones on Wednesday (the day he gave his speech) by 100 points. This has been great news to the mortgage market! These lowered rates will continue to improve our economy. Our economy is recovering, but since it is still very weak and fragile, the lowered rates need to stay low.
Veterans please keep in mind that interest rates on VA home loans are normally .25%-.50% lower on VA loan than loans made to civilians.
When discussing some of the top military geniuses recorded in the history of mankind, a lot of people have similar opinions, but many do vary. There are leaders that have been very successful for the good they’ve accomplished and others have proved to be tyrannical to their own nation as well as their enemy. It is important to understand both sides so we can learn from our history and build our society rather than experience another downfall.
Some great military leaders might include Alexander the Great, Julius Caesar, Hannibal, George Patton, George Washington, Napoleon, or Ghengis Khan. They are known for the mastermind of their military tactic and strategies, whether on defense or offense. I will discuss the latter three, starting with George Washington, who we have all heard about.
I talk about George Washington being one of the greatest military leaders not because he was the greatest in battle or the most intellectual strategist, but because he was one of the most influential. His soldiers were in rags, starved, and not paid. With this inexperienced army, he still managed to conquer the leading armies in the world and give the United States its liberty.
Washington was born on February 22, 1732 in Virginia. He mostly studied agriculture, geography, military history, mathematics, and surveying when he grew up. He led his first expedition in 1754 where he was forced to surrender. After more experience, he found himself in command of the western Virginia frontier. He then served in the House of Burgesses where he stayed for seventeen years. In 1775 Washington was appointed commander in chief to the Continental army due his is ability to unite the American people. He became well-known for his attack on Christmas night on the British in 1776. His mere army of 3,000 (against 34,000) continued to grow. In 1778 the French declared war on Britain and supported Washington’s men with 7,000 soldiers and 36 ships. They went up against Yorktown and forced the British to surrender in 1781, ending the American Revolution.
From there George Washington became the First President of the United States of America in 1789 and served for two terms. He was very successful setting up civilization in the democratic government. He died at 67 years old in 1799. As mentioned before, George Washington wasn’t necessarily best-known for his success on the battlefield like most military leaders, but his “legacy of influence” and respect for becoming the Founding Father of our Nation is of equal value.
Another excellent military leader is Napoleon I, who ruled as emperor of France for over two decades. He conquered most of the Continent and even had control in part of Africa and Asia. He was able to influence governments and armies all over the world with his ideas.
Napoleon was born in 1769 and grew up as a normal child no different from any other. He first attended a military school as a teenager and graduated at 16, becoming second lieutenant in the artillery. He soon made his way up to the commander position. Due to his victory, he was made general at age 26 and was in command of the Italy army as well. He proved victorious against the Austrians at Castiglione, Arcola, Lodi, and Rivoli. He soon controlled all of Austria and Italy with his army of 40,000. This 5’2” leader was becoming very popular as he become the “first consul” and then declared himself emperor.
After defeating the Austrians in Ulm, Austro-Russian army, the Prussians at Jena, and the Russians at Friedland, Napoleon put into operation the Napoleonic Code. This “Code” assured their rights and liberties, freedom of religion, free schooling, and eradicated feudalism. Still, Napoleon’s ambitions weren’t content. He started blocking the routes of the British and caused trouble with the English. He took over Portugal and eventually found himself in the Peninsular War, with lasted from 1807-1813, and took a huge toll on the French with 300,000 deaths.
Napoleon was defeated in April 1814 and was banished to the island of Elba, where he escaped almost a year later. His freedom lasted only 100 days, when he was again put into exile on the British Island of St. Helena. He died from stomach cancer, or perhaps arsenic poisoning, at 51 years of age on May 5, 1821.
Though Napoleon spread destruction and death at incredible heights, he will always be known as one of the greatest military commanders. He was exceptional at adapting, giving instructions and letting his commanders self-govern themselves, taking chances, and always had his strategies and tactics planned perfectly.
The final great military leader is Genghis Khan, who, at birth in 1162, was called Temujin. He was born in what we call today Mongolia to a noble family, but he went through many early hardships in his life. It wasn’t until 1185 that he rose to power and in time experienced some victories. In 1206 he received his name Genghis Khan while he became ruler over Mongolia.
By 1211 he was in war with the Chin Dynasty, which eventually led them to invade central Asia in 1219, destroying the Empire. His army then attacked Xi-Xia, at which his horse reared up, surprised, and Genghis Khan fell from his horse. Though he kept fighting and beat the Tanguts, the internal injuries soon led to his death in 1227 at age 65.
Genghis Kahn was a military genius due to his brilliant line of attacks and organization. He created one of the most obedient and efficient armies in all the worlds history. Without him there would be no Mongolia—the Mongolians revere his as their founding father. Genghis Kahn managed to rule over the largest empire ever known: the Mongol Empire. He is known both for his military and non-military achievements (Uighur script).
There are many great military leaders in the history of the world—some known for the good they accomplished, and others for their autocratic and oppressive nature. George Washington, Napoleon Bonaparte, and Genghis Kahn are some wonderful examples of military leadership, each in very different ways. They have each impacted and changed the way the world thinks and does things today as we learn from their accomplishments and their mistakes.
My name is Ryan Johnson and I will be the VA loan specialist going over this program with you. Now I am a licensed mortgage professional in 37 different states across the country. I have been with Flagship Financial for 4 years and in the time frame I have helped hundreds of families buy homes and refinance their homes and take advantage of these lower interest rates like you are looking to learn about now.
The purpose of this quick overview call is to give you a general idea of what the VA streamline refinance program is, what the different interest rates, programs, terms, that you can take advantage of and a basic understand of what it takes to get started. This overview call is not meant to replace a one on one conversation. In fact, immediately following this overview you will be transferred back to my staff so we can have a one on one conversation to go over your specific numbers on your loan. But at least this will give you a good overview of what this program is about and what it can do for you so that when we do have that one on one conversation you already have an idea of what you can take advantage of and be better informed.
We’ll start off with what this VA Interest Rate Reduction Program is. Back in 1980 the VA came up with this program as a way to put you into a better, lower interest rate loan than you bought your house on. They do that by letting you pay off that higher rate loan and replacing it with a new lower rate loan. Thereby saving you money in interest.
Now there is nothing really special about that process, civilians have been doing that sort of thing since mortgages have been around-they just call it a refinance. But what makes this program special is how you qualify for it. See if you were a civilian and you tried to refinance your house you have to go through that same long, drawn out expensive, frustrating process that you originally went through when you bought your house originally. I’m sure you remember that process vividly because in most cases it tends to one of the least enjoyable experience when it comes to buying something. Well believe it or not everyone has to go through that over again just to lower their rate if that is something they want to do. Everyone has to except you. One of your very special veteran benefit entitlements is this program, the VA Streamline refi where your able to reduce your interest rate with no full appraisal, no full credit report, no income asset or employment verification and no inspection. Quite simply you sign the VA’s application, supply some of your existing mortgage documents and you get a new lower interest rate. That new lower rate will help you to pay off your hosue faster or lower your monthly payments or both. You also get to miss a couple mortgage payments when you take advantage of this program. You are also able to get a cash refund from your existing lender that you are entitled to. So we will go over all of those benefits in a minute.
Now the VA offers four basic options when it comes to buying or refinancing a home. And so each of these options has a different goal in mind and also I’ll go over the details of those and what we are going to do is compare each of these options to an example veteran. We’ll just say for our example veteran who has a 6% interest rate on his loan of $200,000. And we’ll see what would happen if that veteran was to go with each of these different options. Just to kinda give you an idea of what each option can save you. And I’m gonna go over the interest rates of each option for you as well. Now of course your numbers are going to be different when we go over those but at least gives you a general idea of what each of these programs are about.
So we’ll go ahead and look at option 1.
Option 1 is by far the most popular program on this va streamline refinance. The reason why is the number one most popular goal I hear with the veterans that call in, and we get hundreds of calls a day is I want to lower my monthly payment as much as possible. Well option achieves that better than any other option. That is the reason it is the most popular. You can get an interest rate as low as 3.75% on a 30 year loan with option 1. Well if our example veteran was to go with this program it would drop their rate from 6% down to 3.75% That is a 4500 drop in annual interest or 375 dollars per month. That is what makes that program so appealing . Now option 1 is called the VA 3 Year Hybrid Program and here is how it works. The 3.75% would be fixed in and guaranteed for three years. At the end of that time the VA then allows the rate to change but only by a small amount. The VA only allows the rate to go up or down a maximum of 1 percent in any given year thereafter. Now this is not one of those fully adjustable mortgage programs you have heard about in the news the last couple of years that have caused our country so much trouble. The VA would never stick you into a loan like that for one big reason. Your loan is guaranteed by the department of veteran affairs. Now when you bought your house they may have never explained to you what that guarantee is so I will do so now just in case you weren’t aware. What that guarantee means is that the VA guarantees that you will always be able to make your payments, you’ll be able to make them on time and if you should ever have any difficulty making your payments the VA will step in and actually help you or even pay your mortgage payments for you until you get back on your feet and even if that measure should fail and the lender is forced to foreclose on your house the VA is the one that is responsible for paying off the mortgage loan. Now the reason that is important to know is that is the only reason the lender was willing to give you this house with no down payment because that very attractive guarantee. And the VA only puts that guarantee on safe, stable ,reliable, loans that have a proven track record of the veterans being able to pay their payments on time throughout the entire term of the loan. And that is no exception for option 1. You can have confidence knowing the VA is putting you into a safe stable reliable loan because they certainly don’t want to pay off your mortgage loan and they definintely don’t for the tens of thousands of veterans that take advantage of this program every single month. Now the reason they came up with this option 1 is because they are taking advantage of a confirmed US statistic. And that is we as American home owners only keep our mortgages an average of three to five years and then we get rid of them. WE refinance to take advantage of lower interest rates and better loan programs like you are looking to do now. We refinance to take cash out of our properties and pay off debt of do home improvements or we sell our homes do to job changes, job transfers, family changes or we just want to live in a different area. There are many different reasons why we sell or refinance our homes so statistically whether you plan on it or not you are very likely to do one of the items I mentioned in the next 3 to 5 years. Well the VA looked at that and said, Well why in the world are most of our veterans taking these 30 year fixed mortgages and paying on a higher ratethan they have to. Let’s put a loan program together that is just as safe as a fixed rate loan because it is fixed for that important 3-5 years and we can offer it at a significantly reduced interest rate and here you have the birth of this 3 Year VA Hybrid Program at 3.75% interest rate.
Now lets say you get option 1 and you have enjoyed the last three years of 3.75% You’ve saved a bunch of money and year four rolls around and you haven’t made any changes and you are going to be in the loan. No problem. At that point the VA has stated the rate can change. It can go down it can stay the same it may go up .1% but the max it can go up is 1% to a maximum of 4.75%. Well that probably a whole lot lower than what you have right now and if you don’t want the rate to change at all at the end of those three years you can take advantage of this same easy streamline refinance program and lock in at another low three year s or maybe just go into a full fixed rate at that time if you’d like. The VA wanted to have a way for you to lock into a different loan program any time during the three years or after should you choose to do so. So that is option 1 the most popular program of all because it does lower your payment the most.
Option 2 is very similar. It is also a hybrid program, the Vas 5 Year Hybrid program. And youre able to get an interest rate as low as 4.5% on that program. So if our example veteran is at 6% went with option 2 they would save themselves $3000 per year in interest or just about 250 per month on option 2.
Option 3 is the VA 15 year fixed loan. This option will help you pay off your house faster compared to your 30 year term loan. What this option is going to do for you if our example veteran went with this loan it would drop their rate from 6% to 4.5% on a 15 year fixed loan that would save them just under $200,000 in payments and interest on top of the nice bonus of paying off their house in half of the time so this is the program that will save you the most over the term of the loan. Now that does come with a bit of a cost. That cost is in most cases you will experience a higher loan payment than your current payment. But it doesn’t have to be that much more. The typical increase is anywhere from 10-30% of your traditional 30 year payment. So for example if you are paying one thousand per month for your mortgage you would see your payment rise to 1100 to 1300 per month and you would be able to pay your house off in half of the time with this option 3. So if you can afford that payment look no further because this is the best option for you because it will save you more than any of the other options.
And that leads us to the fourth and final option which is just your standard, plain Jane 30 year fixed loan. Just like you’ve probably got right now. You are able to get an interest rate based on today’s rates as low as 4.75% on that particular loan program. So if our example veteran went with option 4 it would drop their rate from 6% to 4.75% which is a 2500 annual savings or just about 208 dollars per month they would save in payments and interest in option 4.
Now those are the four different options with their interest rates and example of the savings they can offer you. On top of that, regardless of which option you choose you will get the following additional benefits
Number one the va allows you to miss your next two months of mortgage payments and that could mean two, three, four thousand dollars in your pocket by missing those next two mortgage payments. The second benefit the va offers you is about two weeks after this transaction closes you are going to get a check in the mail for whatever is in your current escrow account and you get to keep that money and do whatever you want with it. The reason you are getting that check is because part of setting up this new laon for you is the va requires us to fund and establish you a new escrow account to ensure that your taxes and insurance are covered when come due but you already have an escrow account with your current lender so by law when we pay them off they are required to refund this money to you and you can keep that money and do whatever you want with it because like I said your taxes and insurance will be taken care of in your new loan. And so if you add the escrow refund to the two skipped payments you could walk away from this transaction with 2-3-4 5 ive seen as much as 9000 dollars in a veterans pocket in addition to saving 500 dollars a month every month on his monthly payment. So you can get some important financial benefits from this program and that is why the va makes it so easy to qualify for and tries to motivate you to take advantage of these programs.
So at this point I usually get a lot of questions, Ryan what’s that catch, is the program legitmate, it sounds to good to be true. I can assure you this program is legitimate in fact once this overview call is done and we have our one on one conversation I will even give you the vas website so you can look this program up yourself on the vas website and you will notice that web site will be very similar to what you have learned today on this overview call. There is no catch. The VA is trying to help you by giving you a lower interest rate but you do need to be aware of some changes when you do a va streamline refinance. Theres nothing really major it is still a va loan, you still retain all of the same va loan benefits, your taxes and insurance are still included in your monthly payment. Literally everything is identical to your existing mortgage except for these four changes
Number one, you will be paying your payment to a new VA lender because your old va lender is paid off. Number two, you will have a lower interest rate. Number three you will have a lower payment as long as you choose 1 2 or 4. Now regardsless of which you choose another bonus of your new lower payment is the fact that more of your mortgage payment is going to be applied to the principle balance every month. For example when you pay your mortgage payment right now lets say 200 per month goes toward your principle balance every month. Well after this transaction is done more like 250 to 300 per month is going to be paid down on your principle every month so you will actually see your mortgage balance drop more rapidly with this program. Just another benefit there. The fourth and final change you will experience is that you may be financing a little bit of a higher loan balance than you existing loan balance.
There are three reasons your loan balance can change. Number one the two months missed mortgage payment. That is an optional benefit the va offers you . If you take that money to use for your own purposes its not free money, its deferred interest that will be added to the loan. The second reason your loan amount can go up it the escrow refund check. Remember you get to keep that money and do whatever you want with it but its not free money either because we have to establish you a new escrow account to ensure your taxes and insurance are covered and that is just added to the loan as well. And so at this point I get a lot of questions like, Ryan I am adding 2 3 4 5 dollars whatever it ends up adding up to in your case to your loan that you don’t have to. Are you sure that’s a good idea. Well believe it or not the answer to the that question is yes, in most cases it is a very good idea and here is why. You are going to be financing this new loan at such a low interest rate, as low as 3.75%, you would be better off taking that money from the two missed payments and the escrow refund and putting it to good use and paying off high interest rate credit card bill, a car loan, a personal loan something that is financed at a much higher interest rate than 3.75% and now you can save even more money per month on payments and interest on top of the savings from the mortgage. And once again those are only suggestions and these cash benefits are optional and you don’t have to add to your loan but they are there if you like. And a third and final reason your loan can go up is because of closing costs. Whenever you purchase or refinance real estate, regardless of the loan or lender you choose there are closing costs involved.
However there are four very nice things about closing costs when it comes to the VA Streamline refinance. Number one you do not need to pay a single penny of these costs out of pocket. These costs are slimply rolled up into the mortgage and are included in the monthly payment an savings we have already gone over. The second nice thing about these costs is that in most cases, now I am not an accountant so I cant speak for you directly, but in most cases these costs are 100% tax deductible. Meaning you will be able to write these off when you file your taxes. You should expect to get a bigger return from the IRS. So, once again consult your tax professional on that.
The third nice thing about these costs is believe it or not these costs are optional. You don’t need to add any costs to your loan if you don’t want to and here is how that works. Let’s say you take option 1 and you qualify for a 3.75%. Becasure you may be concerned about adding costs to your loan because you may be moving in 6 months you can choose to close your loan at like a 4% or a 4.25% probably much lower that what you pay now but when you take a little bit of a higher rate the va allows you to reduce or even waive the closing costs involved so nothing gets added to your loan. And so we can go over that in detail if those costs are a concern of yours after this overview call. And the fourth and final thing that is nice about those costs is the fact that the va is looking out for you. The va built this program to put you into a better loan than you are in now and that includes ensuring that you are saving more in interest than this transaction is costing you. And so they have a very simple test they run that you must save more in interest than the transaction costs you or they won’t let you do it. Its their way of protecting you to ensure you are putting yourself into a better financial situation than if you stuck to your existing loan so we will go ahead and run that test after this overview call to ensure you are making a good decision by going into this program or whether you should just stick to your existing loan.
Now as far as what closing costs can look like, they should be very similar to what wa involved when you bought the house. You probably don’t quite remember what those were, most people don’t but on a national average they tend to be between 2-3 percent of the outstanding loan balance. Now of course you can reduce or waive those costs by going with a little bit of a higher rate but that typically what they tend to be.
Ok so you have just heard the details of what this program involves and what these changes involve. Now let’s say one of these options is peaking your interest and you like the idea of missing some payments and lowering your monthly payment, what happens next?
This blog post consists of 3 videos and I strongly suggest watching all three in order and in their entirety. If you have ever wondered why to use a VA streamline refinance or if you have been told you cannot save any money because your VA interest rate is already too low, then you need to watch these videos.
I hope you enjoy them.
Video Segment #1
Video Segment #2
Video Segment #3
If you know what option of the VA streamline loan programs you are most interested in I suggest contacting one of our approved VA loan officers right away.
Would you like to gain more appreciation for the veterans of our country? Or maybe you are a veteran and you would like to pay respect to your fellow service men and women? There are places all over our nation to do so.
Arlington National Cemetery is one of the most notable sites for veterans to visit and remember their fallen comrades before them. It is located just outside Washington D.C. on grounds of the estate formerly owned by the family of Robert E. Lee’s wife Mary Anna Lee. It was established during the American Civil War, but now veterans and military casualties from every war since are buried in this cemetery, bringing the total buried to over 300,000. There are over 70 sections to the cemetery remembering different wars. There are also many other memorials, such as a section remembering the military nurses, the men who lost their lives aboard the USS Maine, the crew of the Space shuttle Challenger, and the Tomb of the Unknowns. The Tomb of the Unknowns represents all of those who lost their lives and have never been identified. There is one man from each war entombed and it is constantly guarded each day. This is a great place to visit and remember all who have lost their lives in battle for their country.
The Iwo Jima Memorial is a statue just outside the walls of Arlington National Cemetery. Based off of a photo taken during the Battle of Iwo Jima, it shows soldiers raising the American flag during battle. It bears two inscriptions that explain its importance; “Uncommon Valor Was a Common Virtue” and “In honor and memory of the men of the United States Marine Corps who have given their lives to their country since 10 November 1775″.
The Vietnam Veterans Memorial, located in Washington D.C. is a national war memorial that honors the U.S. armed forces who died during the Vietnam War or who have still not been accounted for. It lists the names of all of those killed during the war. It consists of the Vietnam Women’s Memorial, the Statue of the Three Soldiers, and the most known of the three parts, the Memorial Wall that lists all of the names. It is also surrounded by beautiful gardens.
The Korean War Veteran’s Memorial is also located in Washington D.C. to remember the men and woman who served during this war. It depicts soldiers marching through Korean terrain surrounded by a black wall mirroring their images. In front of them there is a pool of remembrance. Here people can come to pay respect to American bravery.
The Alamo located in San Antonio, Texas, is one of the most historic buildings in the U.S. The building was originally constructed as a mission in 1718, and moved twice before reaching its final destination in 1724. The Battle of the Alamo occurred in 1836, where over 150 Texans died including some of Texas’s folk heroes such as David Crockett, William Barrett Travis, and Jim Bowie. A nice little hint is to go late a night when the lights reflect the bullet holes. It gives it a more intense feeling that a battle really took place.
Pearl Harbor Naval Base in Honolulu, Hawaii was the scene of a major attack during World War II, where the Japanese targeted the U.S. On Dec, 7 1941, six Japanese carriers launched 183 planes at Ford Island, following with a fleet of 170 planes at Pearl Harbor. Unwarned the United State’s Navy had no idea it was coming. Nine ships were completely sunk, along with 21 damaged. Many men died that day to protect the base. Today the U.S.S. Arizona still sits under water in remembrance of this devastating day.
Gettysburg Battlefieldin Pennsylvania remains a historic site for veterans still today. The battle fought betweens July 1-3, 1863 was often considered the war’s turning point and also had the most casualties. It was here that the Gettysburg address was given by Lincoln, reminding us of the equality of all people. This battle changed our country and the fallen are still remembered today.
Fort McHenrylocated in Baltimore, Maryland, is a star shaped fort known for defending Baltimore Harbor against the British during the War of 1812 in the Chesapeake Bay. It was here that Francis Scott Key wrote the “Star Spangled Banner” as he saw the American Flag rise, giving hope to all of the American Soldiers who had given up. Fort McHenry is a symbol of hope and the American Spirit.
West Point Military Academy is a 4 year coeducational federal service academy that was established in 1802. It is located in New York and played a very important role in the Revolutionary War. West Point is the longest continually occupied post in the United States. It sits on the high ground overlooking the Hudson making it a good look out to prevent the British Ships from sneaking up on them. It is home to many historic sites, landmarks, and monuments itself. Candidates must be of the highest caliber to enter, and many times must receive nomination from a congressman.
The Indiana World War Memorial Plaza was constructed to honor the veteran’s of World War I. Located in Indianapolis, Indiana it was designed to be the headquarters of the American Legion and a memorials to the state and nation’s veteran’s. In a five block radius there is an obelisk, a memorial cenotaph, and the Indiana World War Memorial. The memorial houses a museum, the Shrine Room, and an auditorium all designed to honor veterans.
There are many more places around the country honoring veterans. As well there should be. These men and woman have sacrificed their time, families, and sometimes their lives for our freedom and happiness. We should be grateful and show our respect to them. By visiting these places we can gain a greater appreciation for the service men and woman of our country.
For the past 20 years LowVARates.com has been dedicated to serving veteran homeowners. We specialize in providing VA loans to qualified veterans for mortgage purchases and refinances. These loans provide lower interest rates and monthly payments than other traditional loans.
VA loans are currently the only program left that allows no-money-down loans providing a secure mortgage option guaranteed by the Federal Government. Our professional staff and loan officers will assist you to lock in low interest rates and take advantage of the unique opportunity provided through VA loans
When considering if an alarm system is good for you, there are a lot of questions that arise. Some may worry people and immediately turn them away from it, merely because they don’t know the answers to these simply questions. Are they hard to install and use? Will I benefit from an alarm system? How can I afford it? What about false alarms? Let’s go over the answers to these questions so your concerns of having a Home Alarm System are settled.
Let’s talk about one of the biggest concerns of someone looking into an alarm system. How affordable are alarm systems? Will I be able to pay for it? This is an understandable question, especially in today’s economy. Lucky for us, the cost of many systems are reasonably affordable! Some companies only charge a few hundred dollars for a system. Others can charge a fee for installation and the equipment, but make up for it by lowering the monthly rates. And—this is the best part—some places provide FREE installation, and even better, if you qualify, they are willing to donate and pay for the monthly costs as well (for veterans).
Another concern for some people is learning how to use an Alarm System. Alarm Systems have been simplified and less complicated to use, thus alleviated these concerns. All you worry about is memorizing a passcode number that you put in the alarm system after it goes off. They are extremely easy to use, and anyone can do it!
A third concern is with installation. Is it a lengthy process to install? The answer to that is no, not at all! In one workday you can have your system up and running. Count on the process taking as few as 4-8 hours.
False alarms are another concern people worry about. What if it happens so often it turns into a “crying wolf” experience? The nice thing about alarms it that you can immediately cancel them yourself when they go off so this won’t happen. A false alarm can occur for a few reasons. It may be due to a system malfunction or a pet or animal/insect setting it off. You can fix this by getting a newer model, which it can detect the size and weight of what might be setting it off, and will decide if it’s a threat or not.
And finally, one last concern people may have about a home alarm system is that it won’t work if the power goes out or if the phone lines are cut. This is nothing to be worried about because most systems have cellular
Working in the VA mortgage industry for 8 years I get a lot of questions asked regarding everything from credit to inspections. Needless to say I have been around the block a few times. Today I thought I would post a topic because I have recently started focusing on VA purchases instead of the VA IRRRL program. Now credit becomes a factor of approval whereas the IRRRL does not.
POOR CREDIT DOES AFFECT YOUR LOAN
Back when the subprime market was such a big thing is seemed like anyone could buy a home. The only thing that was affected by bad credit was the interest rate. If someone with bad credit got a loan their interest rate would be anywhere from 7.5% to 10%. The idea was lets get a home and then when our credit improved the home was just refinanced to a lower rate. Obviously that wasn’t the case because property values dropped and no one could qualify – thus the housing crisis. Now that the mortgage industry is “back to basics” there are fewer home buyer and an ever increasing need to make sure your credit is in good standing. Because of the housing crisis the VA loan has been effected although the program hasn’t changed. What changed was the lenders and their requirements to lend money to Veterans. Here is how the VA analyzes credit – Its the Veterans past repayment practices on obligations. This is the best indicator of his/her willingness to repay future obligations. The Emphasis should be on the Veterans overall payment patterns rather than the credit score and isolated occurrences of unsatisfactory repayment. In the case of adverse data (late payments) satisfactory credit is considered to be reestablished after the Veteran has made satisfactory payments for 12 months after the date of the last late payment. Here is where the lenders have decided that does not work. They have put minimum credit score requirements on VA loans. Usually if the score is not 640 plus there will be no loan regardless of the payment history.
SO WHAT HAPPENS NOW?
Not all is lost. In fact I have helped many Veterans when they don’t meet the credit guidelines. Over the years we have gotten much smarter to our approach to getting a Veteran approved. LowVARates has created an in house credit repair department. Just because you may think you have bad credit doesn’t mean you should not try to own a home. Giving up would be fruitless and a poor decision. Through credit repair we can increase scores and remove late payments creating a valuable opportunity for a Veteran to own a home.
WHAT ABOUT NO CREDIT?
Having no credit does not automatically disqualify you either. There are several circumstances where a Veteran might be in this situation. Maybe a recently discharged Veteran has not had the opportunity to develop a credit history. Maybe they use cash rather than credit. Some will not use credit after a BK or credit counseling and enough time has pasted that there is no credit. If this is the case then here is what can be considered as credit history: Payment record of rent, utilities, car insurance, health insurance, cell phone bill, etc. If there are in good standing then credit can be issued for buying a home. Keep in mind that this is for Veterans having no credit. These additional payment records will not be used to offset bad credit.
Bottom line is if you (Veteran) are looking at owning a home and you think you have bad credit you still should apply. There are ways to help you and in some cases it might not be right away but through persistence and dedication on both the Banker and Veteran’s part YOU WILL BE ABLE TO OWN A HOME.
If this information has been useful or you have questions about this please feel free to contact me at 1-866-260-1379 ext 222 or email me at Nate@yourvapro.com. Have a great day and as always happy house hunting!
