VA loan holders used to be able to refinance their homes with VA streamline loans very easily. Appraisals weren’t done and credit histories weren’t pulled. But that all changed when the housing market crashed. As the economy suffered, so did real estate. VA streamline loans were impossible to get if someone was upside down in their mortgage or who had a low FICO or credit score.

Effective April 18th of 2011, it’s entirely possible to get a VA streamline with no appraisal. So, what does that mean? It means that a person can easily qualify for one of these loans which could lower their interest rate by 1% or even more. Depending on what the house is valued at, a 1% decrease can mean hundreds of dollars in savings every month.

There are many benefits to a VA streamline loan.

- No out of pocket money – closing costs and other fees can be rolled into the total amount that’s being refinanced

- Low interest rates – Enjoy rates that are lower than what the rest of the American population can get because of being a veteran

- Locked in rates – It’s not a variable rate, which means you’re locked into the low rate no matter what

After serving your country, you deserve some great benefits as a Veteran. Being a veteran entitles you to the VA streamline loan. As long as your mortgage was done with a VA loan, you’ll meet the qualifications. Without having a home appraisal or credit check means that you’re more likely to qualify for the loan.

A VA streamline loan with no appraisal is a best case scenario when deciding to refinance your home. Many companies offer low rates, but they aren’t as low as what you can get with a VA streamline. After all, they’re designed to reward veterans. Taking advantage of this kind of opportunity will ensure that you are rewarded with a great rate that surpasses what many people in America are getting. Plus, refinancing is a much better option of getting out of a tough financial situation than bankruptcy or foreclosure.

Getting a VA streamline is much easier since April 18th. Low VA rates are just a click away. You’ll be able to fill out the application and get a response quickly. When there’s no dependency on credit checks and appraisals, you’ll be able to get a response quicker than ever. You’ll then be able to start saving money once your rate goes down.

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.

From the outset the VA has worked to make VA loans both affordable and smart. Many veterans may not have the requisite 15-20% for a down payment on a conventional loan. The home that they are buying may not fall within the guidelines for an FHA purchase. The VA mortgage fills this gap for America’s Veterans and allows a nice home to be purchased with 100% financing. Along with this purchase the VA has services available when times are tough and the mortgage payment is in jeopardy of not getting made. Perhaps the easiest of the programs is the streamline refinance, where without an appraisal the veteran can refinance the loan in to a lower rate or shorter term with no cash out of pocket for the refinance transaction.

By using a VA loan veterans can ensure an increased level of stability, increased cash flow from lower payments, and access to the lowest rates at any given time through the VA streamline program and VA loans are the same whether you are in need of a Texas VA Loan or a California VA Loan.

To help with your purchase or refinance transaction, contact LowVARates.com to see how you can get on the road to home ownership, and lower monthly payments.

Factors in VA’s Calculation for Residual Income

As I briefly mentioned above there are some specific calculations when determining a Veterans residual income.  The way its calculated is all the same, but the outcomes can be very different.  Another term for residual income is balance available for family support.  Here is a list of deductions from a Veterans pay that will be used to calculate the left over balance:  Federal taxes, State taxes, Social Security, Medicare, Debts and Obligations and Monthly Shelter Expenses.

Federal Taxes – We can all count on 2 constants in life, death and taxes.  Anyone who makes money understands taxes so I wont go into detail about it.

State Taxes – See comment above.

Social Security – This is a depleting fund the government has set up to pay for others retirement and maybe your own.  I doubt in my life time I will never see any money from SS when I retire.

Medicare – Another Government health insurance plan.

Debts and Obligations – This is all the debt – example – car payments, credit cards, installment loans, etc.  This also includes child support and alimony. 

Monthly Shelter Expenses – VA uses this to determine the amount of monthly expenses for the utilities like gas, electric, water/sewer and garbage.  How much a Veteran actually spends each month for these housing expenses can and are obviously different from one Veteran to another, so the VA set the standard by multiplying the square footage of the home by .14 cents.  For example if the SQ footage of a home is 2500 X .14 the monthly housing expense would be $350 per month. 

Now that we know what to deduct from a Veterans pay, lets actually calculate the residual income. 

Veteran (Mike) makes $4875.25 GROSS every month and has a wife who doesn’t work and 1 child and lives in the state of Utah and wants to buy a home for $150,000 that has 1850 SQ feet.

Federal Taxes Deducted	$361.29
State Taxes Deducted	$225.14
Social Security	$301.27
Medicare	$70.69
Debts and Obligations (including new mortgage payment PITI)	$850 for debt $1072.23 for mortgage Total debt $1922.23
Monthly Shelter Expense	$259
Total Deductions	$3139.62

So the gross is $4875.25 and the total deductions are $3139.62 which leaves Mike with a total amount balance of $1735.63 available for family support.  In the last post I gave a table for residual incomes required by region and loan amount.  The amount required for Mike is $990 (West, loan amount over $80,000 and family of 3).  Based on this scenario Mike would be able to qualify for his home.

With this post and my last post I would think I have hit on all points of VA Residual income and can be used as a reference.

I’d like to preface this post with a disclaimer.  I am not Milton Friedman.  I do not hold advanced degrees in any academic discipline that might lend my suggestions here intellectual credibility.  To say that my writings lack the philosophical rigor and insight into the nuances of governance demonstrated by those of Thomas Jefferson would be a gross understatement.

I am just a guy who has worked for years with Veterans helping them to finance VA home loan purchases, refinances and debt consolidations.  I’ve assisted high-ranking VA homeowners working at The Pentagon as well as members of the Navy JAG core.  I’ve worked with 20 year old veterans returning from the Middle East – some of them deeply scarred and rendered disabled by the horrors of war- yet proud, and in possession of a nobility and stoicism that I will never fully grasp.

I’ve watched the VA lending environment expand and contract, watched VA guidelines tighten and loosen, watched veterans experience the singular joy of first-time home ownership and bore witness to the sobering reality of veterans facing foreclosure.  Mine is an opinion forged in practical experience on the front lines of the VA loan guarantee program; working with veterans, hearing their frustrations, and (at times) lacking sufficient means to address them.  What follows are three components of a Veteran Homeowners Mission Statement– philosophical rules to guide industry policy and practices that I believe will ultimately benefit all veteran homeowners. I invite all veterans, of both the military and mortgage industry alike, to sound off on what I write here so that we might evolve our collective understanding of the issues and form more practical and efficient solutions to address them.

#1 Less Is More

Throughout the loan process, veteran homeowners are flooded with loan disclosures. These disclosures were all created with a noble goal in mind- to ensure homeowners emerge from the home loan process better informed of their rights and made more aware of the details of the transaction. But with respect to the average homeowner there is an argument to be made that the collected loan disclosure documents often result in the opposite effect. Over time these disclosures have been amended and supplemented by others, at the Federal and State levels. Whether they will admit it or not, there are many borrowers who find themselves confused and intimidated by the number of documents which require their signature, to say nothing of the verbiage within them. I firmly believe that regardless of the imperfections of the process, it is the responsibility of the loan originator to not only properly disclose to homeowners, but to ensure that homeowners understand the documents they are presented with. An originators job is to guide borrowers through the loan process, represent their interests, and to ultimately provide them with sufficient knowledge by which to make a decision. But I believe there is a better way to deliver this knowledge. For example, any person who has ever entered a polling booth on election day knows that when they open the election guide they will find a list of the measures and candidates on the ballot accompanied by common sense breakdowns of each. Measures are summarized and supplemented by endorsements or criticisms offered by relevant parties on either side of the issue. Candidates up for election are described by their experience and political positions and are similarly endorsed or criticized by editorial commentary. Furthermore, there are links and references listed so that voters can learn more about the issues beyond the content contained in the booklets. This method allows voters to make reasoned judgments by translating their options and framing the impact of their choices. I would like to see the closing disclosure package for home loans treated in a similar fashion. By consolidating the number of disclosures and translating the relevant information into common language, homeowners will be able to better grasp the knowledge. I imagine a 1-3 document where rights associated with each disclosure are summarized in bullet points and organized by the relevant subject. They might include: Veteran Disclosures, State Federal Rights for all Homeowners, Transaction Specific Disclosures, etc. This document would require a signature by the homeowner acknowledging receipt of an accompanying pamphlet which would contain the full text of all the disclosures, greater analysis with examples, a glossary of related terms, and a procedural breakdown of the loan process.

#2 Give It To Them Straight

Numbers can be misleading. The Truth in Lending Disclosure mandated under the Truth in Lending Disclosure Act provides borrowers with amortization schedules, details the amount of interest that will be paid out over the life of the loan, loan specific terms and restrictions, and of course the APR, or Annual Percentage Rate. The APR calculation is provided to help borrowers determine how loan financing costs factor into their “effective” rate. The APR does not factor in title charges, appraisal costs, tax/insurance reserves or other “third party” charges, which could be underestimated to make a particular loan seem more attractive than another. But the issue with the APR,(especially on refinance transactions) is that it only functions as a means by which the borrower can compare offers between loan companies. The APR does not effectively help the borrower decide if they should refinance in the first place. An additional and more meaningful metric would be a “breakeven” analysis. The calculation would include the total settlement charges, adjusted for escrow refunds and interest added to their loan payoff, divided by the Principle & Interest savings on the loan. This number would then be adjusted to reflect the number of months it would take to both cover the cost of the closing charges and any principle reduction the borrower would have seen without refinancing over that time. The “breakeven” or “recoup” number would better frame the short AND long term benefit of the loan. Borrowers could measure this number against the number of months they intend to keep the mortgage. Too often borrowers will chase rates blindly, simply because they are lower than what they have, despite the fact that the recoup time eats into the advantage of the loan.

#3 Get Behind The Numbers

While a borrowers recoup time might at first appear disadvantageous, a borrower might choose to refinance in an attempt to redirecting mortgage payment savings to pay off higher interest rate debts. I believe that most borrowers intentions with regard to mortgage transactions are implied but not clarified. A “cash out” transaction, or “debt consolidation loan” might appear specific enough on paper, but requiring the borrower to clarify their intentions with worksheet/questionnaire helps the underwriter get a better sense of the net benefit of the loan and the credit worthiness of a borrower. The questionnaire/worksheet would clarify why the borrower decided on a particular rate/fee/loan program combination over alternatives, how long they intend to stay in the property and how the borrower plans to handle the resulting loan savings. This information may strike some as irrelevant and invasive. But this idea helps an underwriter keep both the borrower and the loan officer accountable. By completing the questionnaire/worksheet the borrower is framing the reason why they are applying for credit. It is widely accepted that recording ones goals or intentions often results in a higher probability that they will see them through. This helps involve the borrower into the loan process, and establishes a kind of ethical accountability that goes deeper than simply signing ones name. It gives both the borrower and the underwriter a chance to evaluate how well the loan originator guided the borrower to an appropriate loan. Lenders would enjoy the disclosure simply because it would be a specific declaration of intention and purpose by the borrower, one that could later be referenced should an allegation arise that the borrowers were misled.

This is all I have come with for now. I hope you see the value in these philosophical guideposts. If you as a reader finds these ideas lacking or ill conceived, I want to hear your feedback. My goal is to evolve these ideas with your help. What else have you found frustrating/helpful in your experiences as an originator, underwriter, or veteran homeowner?

Now, to make matters worse lenders are pulling the rug out form under the nations veterans. Recently, AME Financial Corp decided that not funding loans already closed by veterans was in their best interest. Yes, that is correct. Loans that have CLOSED but not FUNDED will not be funded by AME. This means that Vets are left in a lurch on their VA loans. The locks that were guaranteed, are no longer valid. All time low rates are lost due to ineptitude on the part of the lender. A press release can be found here.

What does this mean for the everyday veteran?

It means that taking advantage of all time low rates just got that much more difficult. Sadly this sort of behavior is not uncommon of banks that are ready to implode. ml-implode.com tallies a running list of failed banks, and do not be surprised when AME becomes the next.

What you can do.

Start the process now to take advantage of historically low rates. We may never again see fixed rates below 5%. Take advantage before further tightening occurs. Contact your LowVARates.com preferred lender, Flagship Financial Group, as soon as possible to get started. The Streamline loan process takes about 5 weeks start to finish and can save you hundreds each month. And with the holidays upcoming you can forgo 1-2 mortgage payments with no penalty.