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.
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.
LowVARates is providing up to $250 of Christmas presents for a fortunate military family. To nominate a family, please submit a 200 word essay to PR@LowVARates.com stating why the military family should win the contest.
(Lehi, Utah, Dec. 10, 2009) – Christmas is just around the cornerand the season of giving is sweeping through the nation. As the famous carol states, “It’s the most wonderful time of the year.”
LowVARates is adding to the Christmas spirit this season by providing a military family with up to $250 of Christmas presents.
Please submit a 200 word essay telling us why the military family should receive the prize. Essays must be submitted by Dec. 22nd at midnight to enter the contest. The goal of the giveaway is to help a military family going through tough times receive some good fortune.
According to the Department of Defense, the U.S. military is deployed in over 150 countries with around 25% of its active duty soldiers serving in foreign countries.
President Obama just announced another 30,000 troops are deploying to Afghanistan in the next six months. Many of the troops will spend Christmas and other holiday’s fighting for the freedoms we enjoy.
The holiday season and particularly Christmas can be a difficult time for the men and women of the U.S. Armed Forces and the families they leave behind.
“Many valiant men and women don’t get to spend Christmas with their loved ones,” Owner of LowVARates Eric Kandell said. “Hopefully the giveaway can provide a deserving military family a Merry Christmas.”
LowVARates recently provided the Chesney family with a free Thanksgiving Dinner. The husband Tim is deployed in Iraq and missed his first Thanksgiving with his wife and two daughters.
“The Thanksgiving dinner giveaway was such a great success that we decided we wanted to do another contest for Christmas,” Kandell said.
To enter the contest, please submit the following information to PR@LowVARates.com:
1) Name
2) Address
3) Contact Information (Phone or Email)
4) 200 Word Essay
5) Name of the family you are entering in the contest
Individuals can nominate their own families or other military families. We also encourage individuals to submit more then one family.
The family must be associated or enlisted with the military or they will not qualify for the prize. Once again, all entries must be submitted prior to December 22nd at midnight to enter the contest.
The Chesney Family, the mother Brandie and two children Ella & Amelia.
(Layton, Utah, Nov. 30, 2009) –
A local Utah military family received a free Thanksgiving dinner at Mimi’s Café on Thanksgiving Day courtesy of LowVARates.com.
The Chesney family has endured various challenges in the past year and deserves Lady Luck to shine upon them. The family was chosen after submitting a short essay stating why they deserved the free Thanksgiving feast.
Tim Chesney, originally from Michigan, is currently deployed in Iraq and will not be able to spend Thanksgiving with his wife Brandie and two twin daughters, Ella and Amelia.
“Deployments are hard.” Brandie Chesney said. “It’s always one day longer that you have not seen your husband, but that also means that it’s one day closer till you can see him again.”
The Chesney’s moved to Hill AFB in April and Tim was deployed to Iraq shortly after. Tim is an Airman First Class working in Computer Operations in the 729th ACS Squadron. He is expected to return home in March 2010, but his squadron currently deploys every other six months.
“My family means more to me than anything in this world and I love them more than words could ever explain,” Tim said. “It’s hard to be away from them during the holiday season.”
Tim and Brandie were married in March of 2008 and shortly after Tim began basic training in Texas. A few months later the couple was assigned to Hill AFB.
Military life can provide a large amount of time away from family, but the Chesney’s understand that is major part of enlisting in the military.
“The hardest thing about him being gone is just the support he provides for our family,” Brandie said. “It’s also hard seeing our daughters grow up and learn new things every day and know he can’t be there.”
Brandie and her two daughters fortunately speak with there Dad through video conferencing on a regular basis. Every night before Ella and Amelia go to bed, they both kiss a photo of their father and tell him they love him.
This is the second consecutive Thanksgiving Tim and Brandie spend apart. Last year Tim was in basic training the entire holiday season. However, Brandie and the children still keep a very positive attitude and understand the nature of the military.
“Two Thanksgivings in a row is definitely hard,” Brandie said. “But I also feel very honored to have a husband who is willing to be away from his family and home to be in Iraq where he is most needed.”
This Thanksgiving Brandie and her two daughters will enjoy a free thanksgiving dinner at Mimi’s Café compliments of LowVARates.com. Even though Tim will not be at the dinner, he is grateful his wife and daughters are being cared for.
“I know it’s very hard for her taking care of our kids all by herself, especially over the holidays,” Tim Chesney said. “It makes me feel so much better knowing that she’ll be able to have a nice meal on Thanksgiving.”
The family enjoyed the free meal at the Layton Mimi’s Café on Thanksgiving Day.
My father has always told me that I need to keep it simple. I tend to ramble when writing, so I’m going to take the high road and make this short and sweet for everybody reading.
If you haven’t refinanced yet, and the proposed loans will positively save you money within the first five years… Just do it.
If you’re “thinking” about it but haven’t even figured out whether it’s worth your while? Just do it. Either it is, or it isn’t.
Truth be told, I’m keeping this message simple because I don’t have the time to go on and on like I’ve done in prior posts, about the countless reasons why you should refinance. I’ve been putting in 60 hour weeks just trying to ensure that my borrowers get their loan closed in November. Everyone I speak with already knows about the two deferred payments; everyone knows about escrow refunds, energy-efficient mortgages, and no-out of pocket costs. The VA Streamline is about as simple as it gets when it comes to home loans.
Simple requirements = tons of qualified applicants, right? These days, e-mailing applications and exchanging information via fax has made it easy for me to get these loans into underwriting in as little as 2-3 days in some cases.
However, for as simple as the VA loan is, and as great as these rates are, by sharp contrast these lenders are equally, if not more difficult than ever.
They sure were an easy-going group until recently. They were like that rich, drunk friend who acted recklessly, but seem to have cleaned up their act to some extent. But even after taking all that bailout money, that hasn’t kept them from being the profit hungry machines they are.
Profit-hungry lenders, unfortunately, are exactly who we have to deal with when we’re looking to deliver the best rates. Hence, selectivity has entered the equation. The more selective a lender is in choosing borrowers, the more profitable his loan portfolio will be. It’s nothing short of price discrimination, much like health insurance companies. Minimum credit scores, valuation requirements (appraisals), tiered credit pricing, and exclusions for investment properties, manufactured properties, etc. have all become the standard qualifying procedures for many lenders. The domino effect only worsens the our odds of qualifying you with time.
Luckily, with the spectrum of lenders we work with, we can still find a home for just about anybody’s loan. But it’s getting tougher and tougher every day.
It seems that just about every month, I have interested borrowers who find out that the lender we were hoping to use has just disqualified them based upon new criteria.
And every month, I am able to qualify fewer of my valued clients, with fewer of these competitive lenders. The VA Streamline loan used to be an easy solution. It’s becoming a meritocracy.
So much of my time it seems, is spent trying to communicate the urgency to my borrowers that there is no time like the present to get this refinance done.
In fact, right now I’ve got some borrowers whose loans need to close ASAP. If they close even one week behind schedule, they will be disqualified under this lender’s new standards.
So like I said… I’m short on time, I’m keeping the message simple. Don’t wait. Your opportunity will not last forever. It doesn’t cost a thing to process your application and lock in a rate.
You’ve got nothing to lose. 30 minutes of your time is a small price to pay for all that the VA Streamline loan brings.
See, I’ve already spent too much time telling you this.
A fortunate Utah military family will receive a FREE Thanksgiving dinner courtesy of LowVARates.com. Families can apply by submitting a 200-300 word essay to PR@LowVARates.com.
Nov. 3, 2009, Lehi, UT- Thanksgiving Day dawns the beginning of the holidays and represents the season to give. It’s almost as if giving and the holiday season have become synonymous.
However, the men and women of our U.S. Armed Forces dedicate the entire year in our behalf, giving their lives to ensure our safety and comfort.
This year LowVARates.com has decided to give back to one of our loyal military families through the “LowVARates.com Thanksgiving Feast Giveaway.”
The winner of the giveaway will receive a free family dinner on Thanksgiving Day November 26, 2009. The restaurant chosen will include an exclusive banquet room for the winner and their family.
Owner of LowVARates.com, Eric Kandell, hopes the contest will give a deserving Utah military family an extravagant Thanksgiving dinner.
“Hopefully we can help a family in Utah receive a Thanksgiving dinner that otherwise would not get one,” Kandell said. “Everybody deserves a Thanksgiving feast and we want to make that a reality for a Utah military family in need.”
According to the Department of Defense, the U.S. military is deployed in over 150 countries with around 25% of its active duty soldiers serving in foreign countries.
Many military families spend holidays, like Thanksgiving, with a family member deployed on military service. This can make the holiday season a particularly tough time to have a loved one away from home.
The contest is designed to help a Utah military family to have an enjoyable Thanksgiving Day dinner even amidst sad or tough times.
Families can nominate themselves or another military family in need. To enter the contest, please submit a 200-300 word essay to PR@LowVARates.com and tell us why the military family should be selected.
Please include the following information:
1) Your Name
2) Address
3) Contact Information (Phone # or Email)
4) 200-300 word essay
5) Name of Family You are submitting for the contest (You can submit your own family or another family in need)
“If we can just help one military family have a happy Thanksgiving that will be worth it,” Kandell said. “We just want to thank the men and women of the U.S. Armed Forces.”
The family must be associated or enlisted with the military or they will not qualify for the prize. All entries must be submitted by November 20th to enter the giveaway. LowVARates.com will pay for dinner for up to 10 individuals. Any number more then 10 will not be compensated.
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.
If you would have asked me a year ago if VA loans would see massive amounts of overhaul and guideline changes, I would have laughed at you and said “NO WAY”! You see I have been in the mortgage industry since 1997; I have been doing VA mortgage loans the entire time also. As the housing market heated up and everyone was jumping on the sub prime and/or option arm band wagon, I stood my ground and built my business around good old fashioned VA home loans. It was a regular occurrence in my office to have representatives from banks, mortgage lenders, and all types coming into our office to try to convince me and my loan officers to start “pitching” or “selling” these unique new and “profitable” loans. I never once swayed. A good friend of mine named Garret had stopped doing VA loans and began building a very successful mortgage operation around the option arm loan. We had many opportunities to change our model from VA loans to something else, and frankly I may have made a lot more money in the short term. I however, was not purely motivated by money like many that were doing loans at that time. Was an option arm or a sub prime loan good for the homeowner? Those loans kind of came out of nowhere and what would happen if they disappeared one day? When I looked at VA loans I realized they were cut and dry, black and white and had stood the test of time and it didn’t matter if you were talking about a Georgia VA loan, North Carolina VA loan, or any other kind of VA loan. I enjoyed serving American soldiers both active and retired and had confidence in knowing I was offering these people a solid loan that I could count on never going away or changing.
Lets now fast forward to 2009 and the soon to be 2010. Option arm loans are non existent, sub prime loans are shunned and gone. VA loans are more popular than ever and are being utilized like never before. Do you think my ideas and thoughts on VA loans have been unscathed or unchanged in light of the mortgage meltdown or real estate implosion? They have changed quite a bit! I still think the VA loan is the best loan by a long shot. If you are an eligible veteran, then you should always use your VA entitlement and get a home with the help of a VA loan. However, I sometimes feel at this point that the never changing, black and white, old fashioned VA loan will change and could essentially fall from grace if the big wig government law makers keep trying to get involved in mortgage regulations.
Here is a short list of POSITIVE attributes of the VA loan program as it was/is and a list of what possible changes may be coming/already have come
Positive Attributes of the VA Loan Program
Current Status
Comments
100% no money down purchase option
Still available
FHA canceled the no money down option and some think VA may follow suit. Let’s hope not.
No minimum fico score required
all major banks and lenders require a 620 score. VA does not take a stance but is allowing banks to add this requirement.
We feel this is a HUGE slap in a veteran’s face. Suppose the VET got hurt in battle and has medical expenses that are hurting his/credit but all other accounts are to date and clean. In the past banks took that into account and now they don’t.
Streamline refinancing with no appraisal or employment verification.
Most banks or lenders want an appraisal or other form of verification of property value. Wells Fargo is a big proponent of this dumb rule.
You cannot name a single city in out country where the home has NOT lost value. Why allow a veteran to buy a home with no money down, then force them into a high rate during low rate periods, by telling them, “sorry your home is not worth what it used to be!” Give me a break.
1-2 30 day late payments are okay on your mortgage if you want to refinance.
NON EXISTENT.
Why are we seeing all this talk about bail out the home owner and make housing more affordable, yet America’s veterans can not get a break? In the past banks were ok with a late or two if the veteran was current at the time of refinance.
NO employment verification on VA streamline refinance.
almost non existent, banks and lenders are all verifying employment.
On a streamline as long as the veteran is making payments on time they should be allowed to refi to a lower rate. Un employment is at an all time high and we need to help those that are still making payments and trying to keep their houses.
So veterans if you are reading this, please don’t be bummed out but please be alarmed. Your hard-earned VA benefits are being jeopardized by people in Washington and Big Banks that took bail out money. I will fight this fight along with many others to protect your hard-earned benefits and I will keep doing loans for Veterans as long as the market allows and tells us loan officers that Veterans deserve special treatment!
I’ll admit it with a twinge of shame, I’m a particularly frugal guy. I prefer to buy most of my stuff in bulk (At Costco or Sam’s Club) and break it down using my Foodsaver to minimize waste. Almost all of my light bulbs are fluorescent, and I just recently applied a tinted film for my downstairs windows to block the glare and insulate better. I buy most of my clothes from the sale racks, I’ll frequent Ross and hold out for sales when I go to regular stores. I prefer eating out with a coupon, but if I don’t, you’ll often catch me ordering from the dollar menu.
This guy knows how to stretch a dollar. I know there’s folks even more hard-core than I am, to the extent of making their own laundry detergent; but I digress…
Saving money is always a priority of mine. “Waste not, want not” and “A stitch in time saves nine” were the types of phrases that struck with me when I decided early on that I wasn’t a fan of needless expenses. Buyer’s remorse has taught me well enough and early on, it pays to shop around. But don’t get me wrong, I love spending money… my approach just allows me to spend more of it in the long run.
Over the years, I’ve found some great ways to save green, and although some of this comes from my personal experience – most of it didn’t address how Veterans in particular can save money. Needless to say, a lot of these results came from my own research in finding out just how much better you can benefit financially when you apply the advantages of a Military Service record. Your dedicated service came at a price, but it also came with a load of benefits to show America’s appreciation for our armed forces. The following list of five are the top benefits I have found for Active-duty and retired members of the US Military.
1. Education
If there’s any sure way of getting more bank for your buck, it’s in higher education. This is one of the best investments you can make in your future. Former servicemen and women may find that their experience, training and discipline will give them a leg-up on the rest of the general student body in pursuing a degree. The best part about it though, is that through the GI bill it’s not much of a burden in getting started. Many private and public universities have counseling departments specialized in assisting Active Duty Military and Veterans in finding ways to finance or subsidize their education. Look at it this way, Uncle Sam is willing to fund your education for one big reason… he’s counting on you to make more money with a degree than you would have otherwise, and through the income taxes you’ll pay on your higher income, your subsidized education will have paid for itself. There is a strong correlation with the opportunities open to a job candidate and the level of education he or she has attained. In any case, this is one sure way you can improve the general quality of life for yourself and your loved ones.
For many veterans, the subsidized health care ended shortly after active duty. For many others, it will continue on for life. If any part of your healthcare cost is subsidized by the US Government, you will want to take advantage of all benefits it has to offer. Healthcare is a cost that is only increasing with time, and with many fears that the Medicare system could potentially be bankrupt within 10 years, one must feel lucky to have some of these costs covered by Uncle Sam.
This doesn’t just mean using your benefits to head off to the ER once your steak and french fries diet has caught up with you; this means going in for annual physicals, getting your blood pressure, cholesterol, and other things like bone density tests, melanoma biopsies and prostate exams. Benjamin Franklin once said “An ounce of prevention is worth a pound of cure.”
Making the necessary changes through preventative medicine to avoid diseases like cancer, heart disease and diabetes is all something you can start on NOW, and it will be cheaper than treating the disease later. Personally speaking, I’ve enjoyed employer covered insurance, but at the present time, I am self-insured. My rates are better than many men my age, but the prohibitive cost still makes me think twice on whether or not a doctor’s visit is necessary. If any part of your healthcare is free, seize the opportunity!
3. Financial Benefits Assistance
There is a myriad of associations and resources in helping veterans to get the most of the benefits guaranteed them by the Department of Veterans Affairs and the U.S. Government. Sometimes, one must work with assistance to navigate the difficult and cumbersome systems required to obtain full benefits. The following sites appear to have a theme centralized on helping Veterans capitalize on the benefits to which they’re entitled.
For those who qualify for the VA Loan or the VA IRRRL/Streamline line, the benefits are obvious; especially when compared to conventional and FHA loans. For starters, the VA Loan is one of the only loans that will allow you to borrow up to 100% loan-to-value. The VA loan does not require mortgage insurance, and offers 30 year, 15 year, and Hybrid rates. One of the sweetest benefits of the VA loan is the Streamline Program, which allows borrowers to refinance their home without having to re-qualify with assets, income, debt, and value calculations. No appraisal is required, and closing is always nothing-out of pocket. Although some restrictions apply, this loan offers options where thousands of traditional homeowners would otherwise have none. Flagship is a specialist in the VA’s lending program, and is one of many entities in helping Veterans to take advantage of all their benefits provide.
I had no idea about this, but apparently Veterans can travel on the cheap. You will have to inquire with most of the major Airlines directly to determine if they have discounts offered (seasonal) for our Veterans. Many cruise lines like Carnival also offer discounts for Military as well. Amtrak offers 15% discounts, and even Greyhound offers a 10% discount to Military and their family. Most travel search engines do not have a Military discount option built-in, so your best option is to do your travel shopping with the regular search engines, and then see what type of rates you can pull up from the various institutions that come up in a Google search on military travel discounts.
I’m a big fan of getting things on sale. I’ll never go to Bed Bath & Beyond without the 20% coupon they send me every month. Last night, I found a deal on a computer monitor at Staples that was not only on sale, but had a $25 coupon I could apply at checkout, all thanks to a great website I found while researching this article – The Top 10 Money Saving Sites. Now, that’s a website that anyone can use, but one website in particular stood out, Veterans Advantage – because it caters directly to Military and their Families, much the same way USAA caters banking and insurance to our Veterans.
Here’s a quick summary of what membership with Veterans Advantage includes:
Target – save 10%
Dell – save 10%
AT&T – save 8%
T Mobile – save 10%
For most of us, the cell-phone discount itself would pay for the membership, not to mention the other hefty discounts offered in travel and retail.
Nobody is immune to the effects of our recent economy. Anyone resourceful enough and patient enough can save a whole lot of money, but it’s clear that with a little more digging, today’s Veterans can find ways to save even more than the typical American. I’ve always known about the VA Loan and it’s superiority in providing options to borrowers including those with difficult circumstances. It’s great to know that beyond the VA Loan, that there are numerous options available to our dedicated servicemen and women to get more for their money. I hope you find this list helpful in getting the most bang from your buck.
