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Posts Tagged ‘mortgage’

Pre-Approval: The gateway to your New VA Loan

Friday, November 13th, 2009

Before any buyer is to be taken seriously in a real estate transaction, they must first obtain a pre-approval letter from a lender.

The purpose of this letter is two fold. First, you as a prospective buyer are able to get an idea of what you are actually qualified to buy in the current market conditions. This allows, you the veteran, to search out the home that best suits your needs and your budget. Second, this shows a real estate agent that you are not only a serious prospective buyer but also qualified to purchase the home that you are viewing.

By working with a VA approved lender such as Flagship Financial Group, you ensure yourself the best possible service for the specifics of a VA loan, and it doesn’t matter if your are looking for a Florida VA loan or a Georgia VA loan. Veterans are entitled to a number of benefits through the VA that many run of the mill mortgage loan officers may not know about. Benefits of a VA loan include: no down payment, 100% financing, relaxed credit requirements, No monthly mortgage insurance, & the ability to refinance to a lower rate through a streamline refinance.

In order to get a pre-approval letter from a LowVARates.com approved lender a few things are required. Copies of your last two years W2 forms as well as a months worth of paystubs & copies of your ID’s (military or drivers license and Social Security card). Armed with this information a loan officer will be able to determine how much you could be approved for on your new home.

A pre-approval is not a guarantee of a loan, however, with it you will be better prepared to finance your new home through the VA.

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Posted in VA Loan, VA Purchase | No Comments »

Bi-weekly Payments. What are the benefits and is it for me?

Monday, November 2nd, 2009

GET OUT OF DEBT

At a recent family gathering the patriarch of our family gathered us around to espouse the virtues of getting out of debt as quickly as possible. He shared stories of the Depression that were shared to him by his father of how families lost everything they did not own outright. He declared, “The time is now! Don’t wait. Manage yourselves and get out of debt.”

Right. But how? If, like the recent administration, we could print our own money we would pay off all of our obligations and eliminate our debt. Or would we? We will save that conversation for another day. That said, without limited resources it becomes extremely difficult to get out of debt – especially the millstone hanging around most of our necks called our home mortgage. Sometimes it feels a 30 year mortgage might as well be a 100 year mortgage – the never ending story. And to make matters worse many families are struggling with increased expenses and decreased income. How can we get out of debt when the cards are stacked against us?

Obviously there is no silver bullet. If there was, this conversation would not be necessary. So how do we attack our debt assuming our income is not going to increase?

BI-WEEKLY MORTGAGE PAYMENTS

One option well-disciplined families have been using for years is called the bi-weekly payment program. The program is simple but determining the benefit can be tricky. Here is the idea . . . Instead of making one full mortgage payment per month a family would make half of their monthly payment twice per month. Making half a payment twice a month works well for families that get paid every two weeks. The power lies in the 13th payment! When making one full payment per month you make a total of 12 payments per year. Making half a payment every two weeks your make a total of 13 payments per year. The 13th payment goes directly to principle-nothing goes to interest.  During the first seven years of a mortgage when 80-90% of a payment goes to interest these principle reduction payments make a huge difference in total interest paid to the bank. Keep in mind, the bi-weekly mortgage payments require you pay more toward the principle balance of your mortgage every year. A bi-weekly program can easily be substituted by making a 13th payment at the end of the year. Setting up bi-weekly payments helps with the discipline aspect.

HOW MUCH WILL YOU SAVE

Scenario without making bi-weekly payments

$100,000 mortgage

5.5% interest rate

30 year fixed

$568 Monthly Principle & Interest Payment

$204,480 Total Principle & Interest Paid over 30 years (ouch)

Scenario with making bi-weekly payments

$100,000 mortgage

5.5% interest rate

30 year fixed

$568 Monthly Principle & Interest Payment ($284 twice per month)

Making bi-weekly payments will cut 5 years off of this mortgage leaving your term with 25 years

$170,400 Total Principle & Interest Paid over 25 years (ouch. But better)

$34,000 Saving compared to not making bi-weekly payments

The best bi-weekly payment calculator I have found is at:

http://www.vlender.com/cgi-bin/calc/biweekly.cgi

If you need any help using it you can call me (Ryan Johnson) at 888-657-2848 ext. 228

A FEW POINTERS:

  • There are high cost third parties that charge families for setting up bi-weekly payments. In my opinion it is more cost effective to set this up on your own. No need to pay someone for something so simple. To get the ball rolling call your lender and they can give you direction on how to do this
  • Make sure there are no pre-payment penalties on your loan. If you are on a VA loan there are no prepayment penalties and this is a moot point. If you are on a conventional loan there is a possibility you can be penalized for paying down your principle balance before it is due (most pre-payments last between three and five years). If there is a pre-payment in place you will be penalized for making bi-weekly payments and the benefit will be eliminated

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Posted in VA Loan | 1 Comment »

Top 5 concerns a veteran has when thinking about refinancing and how to answer

Tuesday, October 20th, 2009

1. Am I getting the lowest rate possible?

Answer: We offer the lowest rates possible and we put a money guaranty on it. If you find a better rate out there and close on it and can show proof we will pay out $250. Depending on how much you want to invest cost wise into your mortgage determines how low of an interest rate you will get with the current market.

2. What are the Closing Costs rolling into loan?

Answer: On a VA streamline refinance all the closing costs are financed into the mortgage so you do not have to pay anything out of pocket at closing. Closing costs consist of an Origination which is what the broker charges for their services, Discount which is what the lender is charging you to buy down to the lowest rate possible and is tax deductable. Max discount on a VA loan is 2%. Other fees include Title, and escrows that need to be gathered to insure that you do not have an escrow shortage on your new refinanced mortgage. You will receive a refund of your current escrow balance after funding.

3. Is it beneficial to do the refinance?

Answer: Yes, as long as you are saving enough money either in the long run or monthly. If you shorten your term (going from a 30yr to a 15yr term) your payment will go up in most cases but the long term savings are substantially higher. Each lender has a net tangible benefit that it has to pass in order for approval and also if not a benefit to the veteran they will not allow the refinance.

4. How long is the process of refinance from start to finish?

Answer: On average the process takes around 3-4 weeks to process, underwrite, close and fund. In some cases it may take longer if the veteran has judgments or other liens on the property.

5. When will I receive my refund of escrow balance?

Answer: After the refinance has closed and funded the previous bank or lender has a maximum of 30 days to send the escrow balance refund to the veteran after the loan has been paid off. The veteran should take the initiative and call their previous bank or lender and ask when exactly they should receive the escrow refund.

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Posted in VA Loan, VA Refinance, VA Streamline Refinance | No Comments »

Veterans are being robbed of their hard earned loan benefits

Friday, June 26th, 2009

I might get fired for posting this, but its worth it to me to explain to Veterans what is happening in the mortgage industry and specifically what so called new requirements many of the Nation’s Top Lenders are requiring to approve VA streamline refinances.  One of the main benefits of getting a VA loan is the option or ability to do a streamline refinance.  Basically a streamline refinance is where a Veteran gets a new mortgage at a lower rate without going through the hassle of credit check, appraisal and income verification.

HERE IS THE VA’S DEFINITION OF A STREAMLINE or IRRRL

“A Veteran who obtained a VA loan may refinance it with a VA guaranteed loan at a lesser interest rate without using additional entitlement.”  They go on the list restrictions and instructions with this refinance.  Here they are:

1. The new loan must be at a lesser interest rate than the old VA loan EXCEPT when refinancing an existing ARM with a new fixed rate mortgage.

2. The dollar amount of guaranty applicable to the prior VA loan is transferred to the new loan.

3. Although no underwriting IS REQUIRED, approval of new credit may be required by the trustee in a Chapter 13 BK

4. NO APPRAISAL IS REQUIRED.

5. The Veteran may not obtain cash proceeds.

6. The new loan is limited to the balance of the old loan, the funding fee, up to $6000 of energy efficient improvements, and allowable closing costs including not more than 2 discount points.

7. The term of an IRRRL any not exceed the original term of the loan being refinanced by more than 10 years.

The one that I want to draw attention too is number 4.  The no appraisal option is what makes this one of the best ways for a Veteran to refinance his/her home.  Some Lenders have taken upon itself to overwrite the VA’s policy and start instituting appraisals on VA streamline refinances starting July 1st.  Here is the email I received from them:

Non-XXXXXXX  (lender name removed) VA Interest Rate Reduction Refinance Loan (IRRRL) Transactions

May Require A Conventional Appraisal – Effective 7/1/09

In an effort to mitigate the risk of declining home values on VA IRRRL transactions, effective with registrations on and after July 1, 2009, for non-XXXXXXX serviced VA IRRRLs, XXXXXX  Wholesale Lending will require the Broker to obtain and deliver to XXXXXXX:

• A conventional appraisal that supports the total loan amount (appraised value >= base loan amount plus VA funding fee), or AVM that supports <=95% LTV

Note: Conventional appraisals ordered for non-XXXXXX serviced VA IRRRL transactions are not subject to Home Valuation Code of Conduct (HVCC) requirements. Additional comments and/or reminders:

• If a conventional appraisal is not in the loan file upon receipt, XXXXXX will order an AVM to verify the value. AVMs are not allowed for condominiums, manufactured homes, multi unit properties (2-4 unit), investment properties and second homes. If the AVM does not return an acceptable result, XXXXX will condition for a full appraisal. • It will be the responsibility of the broker to order the full conventional appraisal.  VA has indicated this appraisal should not be ordered with the case number assignment through VA’s The Appraisal System (TAS) and should not be submitted to VA with the guaranty package.

o VA’s Jurisdictional Maximum VA Appraisal Fee Chart must be met. The Veteran may not be charged an appraisal fee exceeding VA’s maximum.

o The 1004 MC (Market Conditions) form is required when an appraisal is required.

o XXXXXX  Appraisal Policy applies (Broker Guide Section 300).

This change in policy (even though VA does not require it) will limit thousands of Veterans from refinancing their homes.  Look at what is happening in the market today.  Job loss is at an all time high, taxes are going up, inflation will be a huge factor.  Right now people need to save money more than ever.  I also find it interesting that the Federal Government which VA is a part of, is dumping so much money in the market to help with rates and stimulation, yet the biggest bank is instituting this which will keep our VETERANS WHO FOUGHT FOR THIS COUNTRY unable to refinance to better their situation.  Who now days has equity in their home?  I don’t.  Wells Fargo states that “in an effort to mitigate the risk of declining home values on VA IRRRL transactions”.  Give me a break.  What’s more important to a Veteran – equity in their home, or risk losing their home because of a financial situation change when a lower monthly payment is needed.

My advice is to all Veterans – write your congressman and contact the Dept of Veteran Affairs and let them know your feelings.  Hopefully if enough people respond the 100 pound gorilla (XXXXXX) will wake up and realize they are not doing anybody any favors.

To Contact your Congressman CLICK HERE

To Contact the VA via email CLICK HERE

To Call your VA office CLICK HERE

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Posted in VA Loan News, VA Refinance, VA Streamline Refinance | No Comments »

Road Blocks to Purchasing A Home With A VA Loan

Friday, June 26th, 2009

When it is time to live the American Dream and buy that first or last home, there are many decisions to be made.  Probably most important is the financing, unless you are planning on paying with cash…LOL

With that, the VA has offered home loan financing for many years and their program is considered by many to be the best financing option available in the country.

Now as with anything there are certain circumstances where due to limitations set by the VA obtaining that final loan can be difficult.   I wanted to bring out the most common ones and explain up front that these road blocks are in force to protect not hinder veterans.   The VA is looking to protect them and not the lenders with these guidelines.

1.  On every VA purchase loan there is a pest inspection required.  These are normally routine but sometimes they can be a pest…yes pun intended.   But again, if something is wrong with the pest inspection how much better for the home buyer to know upfront instead of after they have already moved in, committed funds to the new house and be stuck with sometimes very costly procedures.

2.  If the property has a well for the main source of water for the home then it will also be required that an inspection be completed.  Again to protect the veteran home buyer the VA needs to legitimize that this water is fit to drink, etc. so there will be no problems as they move in.

3.  The VA also requires a full VA-approved appraisal inspection.  This is done by a VA-certified appraiser and is even more strict then normal conventional ones.  In most cases there isn’t any problems but every once and a while the appraiser will find items that don’t meet building codes,  on really old homes the VA is particularly careful so that the veteran buying the property won’t have unexpected costs associated with older homes.

4.  When purchasing a home using the VA eligibility, one of the calculations preformed is a residual income test.  Basically, it determines how much left over cash is available after all the bills have been paid each month.  The requirements vary by region and in the more expensive parts of the country sometimes this ratio prevents veteran home buyers from qualifying for the home loan.

5.  Eligibly for a VA loan is also based on a honorable discharge from the military and anyone without that also can’t qualify to use their loan entitlement.

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Posted in VA Loan, VA Purchase | No Comments »

Repeat clients and why they come back

Tuesday, June 16th, 2009

For me and I think many others the true measure of any good business – the place you buy tires, your favorite place to go out to eat, where you shop for groceries and so on, when you finish the transaction, when it is all said and done – you feel good about the experience.

I have done VA loans for nearly 7 years, and during that time have had many repeat clients and they are in fact some of my favorites.   When you have a relationship with a client they expect a great deal – and they should.  Not only do they expect professional, prompt service, but they also want to be treated fairly and feel that they matter – everyone no matter how small or big is important and it is nice to be treated as such.  After all, when you are out to eat and the server goes that extra bit to be sure your food was hot, your drinks filled and they gave you excellent advice about what to order you appreciate that.  On a larger scale, of course, in the refinancing process you want to feel valued and that the treatment and service you receive are the best that your money can buy.  We all pay for services everyday, and at the end of each transaction you either feel taken or satisfied.  Being upfront about any process is always the best policy.  I always try to explain the process, how long it takes, what to expect, how we are directly connected and communicate with the VA as an approved lender.  Understanding how the process works, being kept in the loop as the VA refinance progresses and being part of the whole process in general helps many people feel more comfortable with something they aren’t necessarily familiar with.

Finally, there are many VA lenders in this great country, no doubt.  But just as you make a decision to deal with your accountant, or your favorite mechanic, you choose Flagship Financial VA Pro Division for your VA refinancing needs because you know they know what they are doing.  It may finally boil down to opportunity cost -  the opportunity to do business and get a great rate in a timely manner, as opposed to dealing with someone who doesn’t know the intricacies of VA loans and how they work and then you are left high and dry with no refinance on your largest investment – your home.  We understand the ins-and-outs of VA loans, and we get them done, so time after time our clients return to us for the same service they have come to expect.

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VA Streamline Refinance: How Veterans are Taking Advantage of Low VA Rates

Monday, April 20th, 2009

If you read my last post regarding VA refinancing, you are already aware that there are essentially two main types of refinance loans for veterans. I am wanting to focus on the VA streamline or Interest Rate Reduction Loan (IRRL) for this post.

Why would a veteran want to do a streamline refinance?

The most simple and straight forward answer is because the interest rates being offered now are lower than when the veteran purchased the home or refinanced last. If a veteran had purchased a home in 2004, it is likely the interest rate at that time would have been somewhere between 6.25% to 7.0%. Interest rates offered to veterans at this time are closer to 4.5% to 5%. When I was a loan officer I would be amazed at how many people had no idea how much a small drop in their interest rate could save them. I recall one conversation where I was told, “unless I can drop at least 3% points, then it is not worth refinancing.” Attention please veterans reading this blog; DO NOT make that same mistake. The general rule of thumb is that a 1% decrease in your interest rate will normally be worth your while.

How do you get started with a VA streamline refinance?

The most important thing to do prior to contacting a VA approved mortgage lender or bank, is to prepare yourself for the conversation that will take place once you contact your VA mortgage company or lender of choice. Here is a checklist of information or documentation you should gather, prior to contacting a lender:

Gather this information – Step 1

1. Your current monthly mortgage statement. This could be a statement that you get monthly in the mail or you can print current loan details off the lenders web page.
2. Your Mortgage Note. The mortgage NOTE, will normally be found in the binder or folder of information you received when you closed on your home or last refinance. In large bold letters at the top of this document it will say NOTE: NOTICE THIS LOAN IS NOT ASSUMABLE…..
3. Your home owners insurance information. This could be the Declarations Page or just your agent’s contact info, but you will need to have this information available.
4. Survey of property. If you live in TX, FL or OH you may be required to have a survey.

Contact an approved VA lender or bank – Step 2

It is important to understand that the Department of Veteran’s Affairs (VA) does not lend money. The VA approves or authorizes mortgage companies, that have fulfilled certain criteria, to make loans to veterans. Each approved or authorized VA lender will be given a VA LENDER ID # from the VA. Make sure to ask whoever you decide to use for their VA ID number. The internet is a great way to find approved VA lenders and as you may be aware from reading this blog, we are confident in Flagship Financial Group and their ability to get you approved for a VA streamline loan.

I look forward to sharing more insights into the VA streamline loan on my next post. Veterans, thanks for your dedicated service!

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Posted in VA Refinance, VA Streamline Refinance | No Comments »

Learn how Veteran Home Owners can Save Thousands

Tuesday, April 14th, 2009

With interest rates at all time lows, many home owners today are found wondering if a refinance is something that would benefit them and/or if they are even eligible to refinance in today’s crazy housing and credit markets. Here at LowVARates.com we make it our goal to shed light into some of the most pressing concerns and topics of high importance among our nation’s military and VA home owners.

Why should a veteran refinance?

  • There are numerous reasons for which someone might want to refinance but here is a list of the most common
  • Lower your interest rate
  • Lower your monthly payment
  • Shorten your term or pay off home faster
  • Pay off consumer debt
  • Do home improvements

Veteran home owners need to understand that when trying to refinance a VA home loan, there are two primary questions that must be answered in order to first determine what kind of refinance makes the most sense. 1. Do you currently have a VA mortgage on your home? 2. Do you want to do home improvements, pay off debt, or take cash out of your equity? If you answered “yes” to #1 and #2 then you will be taking part in a VA cash-out loan. If you answered “no” to #1, and “no” to #2 you still will be doing a VA cash-out loan, even if you are not really taking out cash etc. If you answered “yes” to #1 and “no” to #2 then you are going to participate in the VA streamline refinance or the IRRRL.

What is a VA streamline or IRRRL?

This loan is the most popular loan among current VA home owners. The Interest Rate Reduction Refinance Loan (IRRRL) is a special government-endorsed refinance that eliminates all the red tape and difficulties that can normally arise with a normal refinance or a cash-out. In a nutshell, the theory from the VA and the mortgage lender is this; if you currently have a VA loan, then the Department of Veterans Affairs does not require you to re-qualify to simply lower your payment, rate or term. Now on the other hand, if you had been approved for a loan a few years back when you bought your home, and now you want to build an addition onto your home, then the VA would require you to get approved again, even if the interest rate is lower, because you are taking on additional debt, and the VA and the mortgage lender need to make sure you can afford that new responsibility. The VA streamline or IRRRL will normally carry out the following benefits to the VA home owner. Benefits of a VA streamline refinance are:

  • Immediate payment reduction from the lower interest rate
  • Ability to pay off your home years faster with no extra money
  • You may be able to postpone or defer your next two mortgage payments
  • Most veterans will get a cash refund of their current escrow account

Future posts will get into more of the details on this unique program for veterans.

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Posted in VA Refinance, VA Streamline Refinance | No Comments »