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VA IRRRL Rates Hit 4.25% And Save You Money!

Tuesday, March 22nd, 2011

Home loans are constantly being defaulted on. However, there is veteran assistance that no other American can benefit from. Serving your country made you a veteran and now the government is rewarding you by offering you a VA IRRRL. An IRRRL is an interest rate reduction refinancing loan, otherwise known as a streamline mortgage loan.

These IRRRL loans are only valid if you currently have a mortgage that’s been financed through the VA and if the VA interest rate on your home is currently over 5%. There is a great opportunity to save a significant amount of money because VA IRRRL rates are hitting 4.25%. These rates are permanent, low fixed rates, ensuring that you save money permanently, not just while the market is down.

There are tons of banks offering refinancing loans. The different is that this one is specifically designed for VA loans. It is a permanent change in your interest rate. Others will still offer a variable rate that means you’ll get great rates now but may suffer significantly if the market turns around.

The streamline mortgage can save you hundreds of dollars. The higher your loan is, the more you can potentially save from this loan. For every 1% in interest rate reduction, you can save between $100 and `0 every single month. Whether your current interest rate is fixed or variable, you can save money from this loan because the federal government is trying to turn the economy around, starting with their veterans.

Often, a refinancing loan costs you money out of pocket. Closing costs and pre-paids are something that you have to shell out to save money in the long run, often outweighing the initial reason to refinance. There streamline VA IRRRL loans however require no cash up front. All of the involved costs can be added to the refinanced loan, making it extremely easy to get these loans. The application process is simple and easy to qualify for.

Saving money on your mortgage has never been so easy. When much of America has felt the results of the housing market, causing mortgages to be under water. You then have the problem of paying on a mortgage that’s more than what your house is actually worth. Qualifying for a loan that can save you hundreds of dollars will make this a whole lot easier to swallow.

Check out the VA IRRRL loans while the rates are still super low so that you can save hundreds of dollars. Then, you’ll have the extra money you’ve been looking for to take care of everything else that’s going on in your life.

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Top 3 Reasons to use a VA Hybrid Loan on your next Purchase or Refinance:

Tuesday, February 8th, 2011

A VA hybrid adjustable mortgage, or VA hybrid ARM, is a mortgage loan with an interest rate that is fixed, which means the loan amount stays consistent, after an initial period and then acts adjusts annually after the initial fixed period, like an adjustable rate mortgage, or an ARM. An adjustable rate mortgage is a loan where the interest rate adjusts based on indexes or prime rates. Lender often set a cap for how high the interest rate can reach annually. Hybrid ARM loans hybrids together both a fixed rate and an adjustable rate mortgage. Also unlike an ARM, VA Hybrid ARM adjust only once a year and are tied to a financial index that averages rate changes over a twelve month period so as not to subject the borrower to wild payment swings, except for the first adjustment which may occur no sooner than 36 months from the date of the borrower’s first mortgage payment on 3/1 ARM or 60 months from the date of the borrower’s first payment on the 5/1 ARM. The cap on the interest rate is 5% for VA hybrid AMR.

There are several different terms for a hybrid ARM. Hybrid ARM term is referred to first by the fixed amount rate and than the adjustable amount rate periods. For example hybrid ARM 3/1 is a fixed mortgage rate for 3 years and an adjustable rate for 1 year. The date the fixed rate switched to the adjustable rate is known as a reset date. A Hybrid ARM transfers some interest rate risk from the lender to the borrower allowing for lower interest rates. The usual Hybrid ARM rates are 3/1, three years fixed rate and 5/1, with a five year fixed rate. These rates are usually 30 year programs.

There are many advantages to a VA hybrid loans. Here are the top three reasons:

  1. VA Hybrids are the best of both worlds, getting a fixed rate at first but than later having more flexibility with the adjustable rate. If you cannot decided between which kind of loan to get, get both! Hybrids are great if you feel that rates will be lower in next couple of years, since you have a fixed rate at first when rates that is usually 1-2% lower than a fixed rate and then the loan amount will adjust to a possible lower rate. Since there is a cap in place from the lender, the rates during the adjustable period will cannot be higher than 1%. Also if you know that you will be making more money in the next couple of years, like if a borrower is in school, a hybrid in another great option.
  2. VA Hybrids are particularly great if a borrower will not be staying in their home long. Since you can get lower interest rate for hybrids, a borrower can buy a home at a lower interest rate with a hybrid and then sell it before the rate becomes adjustable. The VA hybrid loan typically an initial start rate of 1-% lower than the going 30 year fixed rate. This can amount to an extra $100 to $200 a month in savings and if you will not be in your home long, you will never have to worry about rates fluctuating.
  3. VA Interest rates are also lower for an ARM, so it is easier to borrower more. This can help first-time homebuyers afford a larger home.

There are many great benefits that come from having a hybrid VA loan and this option should be looked at by anyone wanting to purchase or refinance their home.

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Advantages to a VA Loan

Wednesday, February 2nd, 2011

A VA loan offers many advantages over a non-VA loan. It can save you much more money and can it is one of the easiest loans to get approved. Below is a list of many of the advantages veterans should be aware of when looking into the VA loan.

· No Down Payment

This loan does not require a down payment.  There are no up-front out-of-pocket expenses with the VA loan.

· Low Interest Rate

VA loans typically have much lower interest rates than non-VA loans. This can significantly lower monthly payments.

· Faster Processing

Borrowers submit an applications and lenders that have VA approval can begin processing. They can finalize the loan without waiting for the VA to review everything, so the loan goes through everything much faster.

· VA Guarantee

The VA provides a guarantee on the loan, which protects the lender if the borrower defaults.

· No Prepayment Penalty

Some loans do not allow you to pay off a balance earlier than the set time without a penalty. This ensures a profit from the loan. Not so with the VA loan. There is no prepayment penalty.

· Cost Limitations/Discounted Fees

The VA loan was designed to lower costs to the borrower. The government actually limits the amount that can be charged in origination fees, closing costs, and appraisal fees on a VA loan. The funding fee may range from .5 to 3.3 percent, and can be paid out-of-pocket or rolled into the loan, (while some are exempt).

· Benefits for Disabled Veterans

If the veteran has any kind of service disability, they have the ability to get their funding fee waived. If the disability is permanent and 100% service connected, they may be able to get a $50,000 grant to have their home modified to accommodate the disability.

· Assumable Mortgage

With a VA loan, the veteran could transfer their loan to someone else. They would assume the loan.

· Loan Flexibility

A VA loan can be used for purchasing a home or buying land and/or to build a new house. It can also be used to refinance or modify a previous loan as well.

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Pros and Cons of the VA Hybrid Loan

Thursday, January 27th, 2011

The current economic downturn has put many homeowners in financial hardship. With many people being financially strapped, a good question to ask is whether or not the VA Hybrid loan is a good option for saving money.

A VA hybrid ARM is a combination of an adjustable rate mortgage (ARM) and a fixed rate mortgage. The introductory rate period is fixed, usually for 3, 5, 7, or 10 years of the loan. Generally the shorter the fixed rate period chosen, the lower the rate. After the introductory period is over the adjustable rate begins.  After this period the rate can only adjust every 12 months and there are adjustment rate caps that protect the borrower from the rate jumping too high right off the bat. There are also lifetime caps of 5% so that the loan will never exceed their fixed rate plus 5%.

Many veterans might be uncertain about this type of loan because of what may happen with interest rates in the future. While it is good to be cautious, present financial issues may be more important than future costs. This loan allows for monthly savings right now, which could allow for savings later as well. There are pros and cons to every loan option. Borrowers must look at each side and decide which the right alternative is for them and their current situation.

There are a few disadvantages to keep in mind. If the interest rates skyrocket after the introductory period, the borrower could end up paying a considerably larger interest rate over the term of the loan. On the other hand, if the borrower chooses a long fixed rate period and the market’s interest rates lower, then they will end up stuck in their high fixed rate. It can go both ways. The borrower has to accept the interest rate risk after the fixed rate period.

However, there are definitely some advantages to the hybrid ARM! First of all the borrower will  gets a guaranteed fixed rate for the first 3 to 5 years, or however long they opt for. Then after that the rate can only adjust every 12 months, and keep in mind that the rate can go down during this time as well! Many homeowners may choose this option for a loan because it hardly makes sense to pay for a fixed rate for thirty years when they will mostly likely be out of their homes and loans before then anyway. If the borrower is looking for a jumbo loan, an ARM is probably the best choice for them. It will offer them substantial savings over a thirty year loan because the rates are normally quite a bit higher, while jumbo hybrid ARM rates are generally much lower.

VA Hybrid ARMs offer safety and savings that seem to be too hard to pass up. Yet, borrowers still need to decide if they need to weigh their options and decide which loan option is the best for them.

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Posted in VA Loan, VA Refinance, VA Streamline Refinance, va hybrid arm, va interest rates | 1 Comment »

Top 3 Reasons to Use a VA Hybrid Loan on Your Next Refinance

Friday, January 14th, 2011

The VA Streamline Loan is one of the most popular refinances right now due to its ease and the benefits that can be received through it. Not only can the veteran basically avoid jumping through all of the hoops that come along with obtaining a loan, but here are just some of the benefits that a streamline offers: no appraisal, an optional down payment, lenient credit requirements, no income verification, the possibility of deferring two months payments, and the possibility of getting an escrow refund of the money that is in the escrow account when the loan is paid off.

Now these benefits do depend on what lender you work with. The VA sets all of the rules in place, but since it is the lender that is lending the money and the VA is only guaranteeing the loan, the lender can determine if they wish an appraisal or a certain credit score is required.

The VA Hybrid loan is becoming more and more widely used for VA refinances now. Now hearing the word hybrid, you may think of a car. It’s actually the same idea. Just as the car combines gas and electric, the hybrid loan combines an adjustable rate mortgage (ARM) and a fixed rate mortgage. The VA took the best of each loan and made this one! Most veterans lifestyles requires them to move frequently and are not able to remain in their home for the duration of their entire 30 year fixed rate mortgage, so that type of loan was not working out the best for them.

Hybrid loans are a combination of a fixed rate and an adjustable rate mortgage. The introductory rate period is fixed, generally for a period of 3, 5, 7, or 10 years of the loan, with the lowest interest rate usually coming with the 3 or 5-year option. After the introductory period is over the adjustable rate begins. Studies show that many home owners only stay in their homes for 7 to 10 years, so a hybrid loan allows these buyers to take advantage of the very low rates in those first few years of their mortgages. After the adjustable rate begins, the rate can only adjust every 12 months and it can only adjust up to a max of 1% up or down per year, with a lifetime cap of 5%.

There are many benefits to this combination loan. Here are the main three:

  1. 1. LOWER INTEREST RATE DURING FIXED PERIOD

One of the main reasons people choose a hybrid loan is for the lower interest rates going into the loan. Hybrid loans typically have an initial start rate of 1-2% lower than that of a 30 year fixed rate. This can lead to savings of $100-200 monthly! The 3 and 5-year options tend to have the lowest rates. These rates are guaranteed fixed for the set option you choose (3, 5, 7, or 10), which is a considerable amount of time.

  1. 2. ADJUSTABLE RATES CAN DECREASE IN A DECLINING INTEREST RATE MARKET

When the borrower’s introductory rate is over, and the rates are lower than what your fixed rate was at then your rate gets even better during that time. This would reduce the payment even more and can save the borrower even more money!

  1. 3. FLEXIBILITY TO END THE LOAN

This may be one of the largest benefits of the loan. The borrower can enjoy all of the benefits of this loan, but avoid a possible rising interest rate. As mentioned before, most veterans and regular homeowners are not in their home for a full 30-year term. Most choose to take out this type of loan and terminate it by refinancing or selling (if they are moving) at the end of the fixed term. This is one of the main reasons they choose a hybrid over any other type of loan.

Of course there are a few drawbacks, but there are to every loan. The rate could jump up and then the borrower would be stuck paying a higher rate, but also as stated before there is an option to refinance and terminate the loan.

VA Hybrid loans offer savings and safety that many veterans are taking advantage of already.

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Common VA Streamline Questions

Thursday, December 16th, 2010

Common VA Streamline Questions:

What is the difference between a VA streamline vs. a normal refinance?

The difference between a VA streamline and other refinances has to do with the qualifications as well as the documents required to qualify. For a normal refinance, you must qualify for the loan and provide all of your income, banking, credit, and liability information as well as an appraisal. Typically the loan cost will be higher than a VA streamline refinance. The VA streamline is a very quick and non-stressful process.

Historically interest rates on a VA loan have never been this low before.

With the way the market currently is,VA interest rates are at an all time low.  With government funding and other factors many people predict that lower rates not to last much longer.  Most investors think that it is wise to hedge the risk of rates going back up and take advantage of the refinance now.

How long does a VA streamline refinance take?

The VA streamline process normally only takes 3-4 weeks. This will vary dependant on the conditions that the lenders ask us for and the cooperation of the borrower.

What is a VA streamline refinance loan?

VA streamline refinance is simply a mortgage refinance of an existing VA loan with limited amount of documentation and qualifications thereby “streamlining” the loan process.

What does a VA streamline cost?

With the VA streamline there are no out of pocket costs, meaning that the borrower doesn’t have to bring anything to the table at closing.  All the costs associated with doing the loan are rolled back into the loan itself.  Making it easier for the veteran to afford the refinance and easier to pay off the house faster.

What are the other benefits of the VA streamline?

Besides being an easy and non stressful process, the VA streamline allows the borrower to defer two payments after closing, and also replaces the escrow account refunding the old one to the borrower making it easier to pay off other debt that they might have.

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Veterans and Military home owners need to refinance now and not wait

Friday, November 5th, 2010

The Federal Reserve Wednesday announced its latest effort to spur economic growth: a plan to purchase up to $600 billion of government bonds through June 2011.  The Fed, as it is called, is trying to lower interest rates, in the hopes that doing so will loosen the supply of credit and spur more economic activity. The central bank’s main tool for reducing rates is to slash the short-term overnight lending rate that banks charge to one another, the so-called Federal Funds rate. Bring short-term rates down, and long-term rates tend to follow. In normal times, that’s as far as the Fed usually goes. In the past three years, the Fed has reduced the Fed Funds target rate 10 times, from 5.25 percent to between zero and .25 percent. It’s been at that extremely low level since the fall of 2008. This is one of the reasons we have seen such amazing rates during the last couple years and why they have remained low.

BUT- that does not mean that VA interest rates will go lower.  In fact, if anything they have reached levels that they can’t break through going lower, with inflation and such.

Investors love to repeat the mantra: Don’t fight the Fed.   Also with as much firepower as the central bank possesses, the Fed isn’t the only dominant economic power in the world. And interest rates can be impacted by all sorts of factors. If China’s central bank cuts back sharply on its purchases of U.S. government bonds, which they could do at anytime, interest rates will rise. Investors’ attitudes about the pace of growth, or inflation, play an important role in determining market interest rates also.  And where we have seen rates low for such a long time, more of the same seems unlikely.

Moreover, what does the Fed believe it will gain by adding more and more government bonds to it balance sheet?   That is the question isn’t it?  There are a couple of risks. First, low interest rates and the expansion of the Fed’s balance sheet tend to weaken the dollar. But the second — and larger — risk is that it won’t work. Interest rates are already exceedingly low, and it’s unclear how “lowering” them a bit more will induce companies and individuals to change their behavior significantly.  In the current situation, Fed Chairman Bernanke is cranking up the volume while the political system is sitting on its hands. Imagine a two-engine jet trying to fly with only one engine working.  We need to really see both entities policies working in tandem to reap the maximum effect.

So where does this all leave us?  What it means is don’t expect rates to be any better tomorrow then they are today.  Now is the time to take advantage of the lowest rates in nearly 65 years.  It is time to realize that if foreign powers decide to exercise their options and Wall Street/investors attitudes are still in the doldrums, and then later could very well be worse than now.  As 2010 comes to an end there are also likely changes to loan programs for 2011 that could also jeopardize refinances next year that you could “get away with” this year.

Eric Jorgensen is an experienced VA loan officer and can help you with all of your VA mortgage needs.

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Time to buy a home with a VA loan

Monday, October 25th, 2010

With mortgage rates near 65 year lows, it could be the best time in the past decade or so to buy a home.  There is plenty of “stock” available in nearly every market and in some markets, like FL, AZ, CA and a few others, prices have come down from near top of the market “values” compared to just a few years ago.

The “bad” news, well it has become somewhat more difficult to qualify for a home loan. The good news however, is that there are less hoops then you might think on VA Loans still.  So for those that do qualify for a VA loan and there are MANY that do, it is still the best option for a purchase or a refinance.

Let’s talk about a few of the hoops, and see how easy they really are to get through.

1.  Income qualifying-  The VA has simplified the debt ratios and allows some of the highest DTI, Debt to Income, ratios in the industry.  I recently had an approval on a 54% DTI, that is 13% higher than current conventional guidelines.

2.  Appraisals- it has to be done by a VA certified appraiser.  This is a great benefit to the buyer.  The VA has more strict guidelines that protect the veteran/active duty buyer from getting into a home that isn’t safe, hasn’t been maintained well or doesn’t adhere to current “livable” standards.

3.  Seller Concessions- the VA offers up to 6% seller paid concessions on purchase transactions.  So if you were buying a $280,000 home, the seller could offer $16,800 in concessions to make the deal work.  That is obviously a HUGE amount of concessions and I haven’t seen the need for that much but hey it’s available and an option if it really came to that.   In addition, almost all purchases currently have some sort of seller concessions to help pay for closing costs.  It is just the way the market has moved with all the volatility in the real estate market.  Sellers are willing to give concessions away so they can sell the house at all, in this kind of market.

4.  100% financing- best of all no money down financing is still available.  Boy that is when I wish I had access to the VA’s loan program.  We had to bring an arm and a leg to close so as to avoid paying mortgage insurance- which also the VA doesn’t have on any of there loans.  On VA loans they charge a funding fee, which goes to guarantee the loan, unless you collect disability from the VA and then they waive the funding fee altogether.

5.  VA Rates- among the lowest in the country, the VA “specialized” for government loans only offer rates as low as 3.25% today.  The best I could get on my own loan was 3.875%.

I hope I have helped to inform and bring up to date what the current market is to allow VA eligible home buyers to buy a house right now.

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VA Loan Benefits

Wednesday, October 6th, 2010

In the current economy, many homeowners have not been doing well. Homeowners who cannot make their monthly mortgage payments are becoming delinquent on their mortgages and facing possible foreclosures on their homes. But in the midst of the mortgage crisis, the VA loan program has still been successful. VA loans, which are exclusively available to veterans and men and women serving in the military, provide multiple benefits to borrowers that enable them to finance their homes and stay grounded in the struggling home market.

VA Loans Have Lower Delinquency Rates Compared to Other Home Loans

This type of financing remains a popular option for qualified applicants who want to finance their home in an affordable way. In 2009, the Department of Veteran Affairs guaranteed 325,673 VA loans, proving that the bad economy was no match for the program. These loans have a delinquency rate of only 5 percent. This is quite low when compared to the delinquency of other types of home loans, which are as high as 30 percent! This shows that the VA must be doing something right with its home mortgage program to be able to maintain such a low delinquency rate.

Why VA Loans Continue to Be Successful

VA loans offer many benefits to both current homeowners and prospective homeowners that allow them to save money upfront and over the life of the loan. This type of financing is unique in that it does not require borrowers to make a down payment on purchases. Many lenders are reluctant to offer this type of incentive because they consider it to be risky in this unstable housing market. The elimination of the down payment saves first-time home buyers thousands of dollars in out-of-pocket costs, which allows them to have more money for other expenses associated with buying a home. Homeowners who already have a mortgage can refinance their loan into a VA loan to receive a lower rate, cash or to consolidate their debt!

Currently, VA mortgage rates are at historical lows, which makes now a great time for individuals to get a VA loan. Compared to other types of home loans, these loans can offer even lower rates. With a low rate, homeowners can reduce their monthly mortgage payment and have more money available for other expenses. This type of financing also does not require mortgage insurance, so borrowers can save even more money over time.

Eligible Applicants Should Take Advantage of This Great Opportunity!

This type of financing is also easy to use because it has lenient credit and income requirements; applicants do not have to have perfect credit to be eligible! This is good news for those who may have been turned down for a conventional loan. Applicants will need to have a credit score of at least 620, and they must have gone one year without any delinquent payments. Consider financing with a VA loan to receive a low rate and save money! Interested veterans and service members should speak with a loan specialist to learn all of their options and how they can get started today! Our office makes it easy and simple to refinance. We have over ten knowledgeable loan officers in our office. They ready and willing to help you and inform you of all the great VA programs offered to you. Make sure to call us to take advantage of the great rates and benefits we can offer you!

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VA Loans for Military Veterans are taking too long to underwrite and get approved!

Thursday, September 16th, 2010

Most of the year 2010 has been easy sailing for most of the approved VA lenders at LowVARates.com.  The mortgage industry had purged out most of the bad apples (Lenders that were doing bad loans) and left standing are generally strong and stable banks and mortgage companies.

Last year in a press release dated 1-28-09 (Mortgage Industry Faces Huge Bottleneck), LowVARates tried to educate and explain to all military and veteran home owners and buyers that the amount of time needed to process, underwrite and approve VA loans would be substantially longer than normal.

Due to recent drops in VA mortgage rates that have hit historically low levels, the mortgage industry is now facing similar issues to those in early 2009.  One approved VA lender, Flagship Financial Group branch 403 has said the following recently, “In the last 2 weeks we have seen our big lenders like Wells Fargo, Freedom Mortgage and Met Life all drastically slow down in the amount of time it is taking them to get our VA loans approved.”  It is tough because the home owner normally does not normally want to hear excuses and just wants the loan to get done quickly!”  “In all honesty our hands are tied.” said Nate Burt, Loan Officer.

All Veterans and military home owners should understand that patience is needed at times like this.  We looked into the published VA underwriting turn times from some lenders and they have almost tripled from where they were just a month ago.  It is important that loan officers educate and communicate with their clients so as to make sure everyone’s expectations and set correctly.

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