Adding Value by Dennis O'Hagan

5 Things to Know about Getting a VA Mortgage...

RISMEDIA, Wednesday, March 12, 2014— (MCT)—As banks tighten lending standards, demand has increased tremendously in recent years for Veterans Affairs mortgages, known as VA loans.

The VA loan remains one of the few mortgage options for borrowers who don’t have down payments. Available to more than 22 million veterans and active military members, VA loans are somewhat easier to qualify for than conventional mortgages.

The U.S. Department of Veterans Affairs is not a direct lender. The loan is made through a private lender and partially guaranteed by the VA, as long as guidelines are met.

The VA has guaranteed nearly 500,000 loans this year, says John Bell, assistant director of loan policy at the VA. That’s 30 percent more than the number of VA loans issued last year and nearly three times the number of VA loans issued in 2008.

If you think you may be eligible for a VA loan, here are some must-knows about the program.

ELIGIBILITY: Most members of the military, veterans, reservists and National Guard members are eligible to apply for a VA loan. Spouses of military members who died while on active duty or as a result of a service-connected disability may also apply.

Active-duty members generally qualify after about six months of service. Reservists and members of the National Guard must wait six years to apply, but if they are called to active duty before that, they gain eligibility after 181 days of service.

“Most reservists are qualifying under active duty,” says Michael Frueh, loan guaranty director for the Department of Veterans Affairs.

Reservists, members of the National Guard and active-duty members generally are eligible after 90 days of service during war periods.

“If you were on any type of foreign soil, more than likely you are eligible,” says Grant Moon, a veteran and president of VA Loan Captain Inc., a loan referral company.

Potential borrowers must obtain a certificate of eligibility before applying for a loan. The form can be submitted online.

ADVANTAGES OF A VA LOAN: The days of no-down-payment mortgages are long gone, but not for veterans. Loans guaranteed by the VA can be obtained without any down payment.

“That’s a huge plus,” Frueh says.

Another plus: A VA loan doesn’t require mortgage insurance, as do Federal Housing Administration and conventional loans with less than 20 percent down payment. The benefit translates into significant monthly savings for VA borrowers. For instance, a borrower who takes a $200,000 FHA-insured mortgage pays more than $200 a month for mortgage insurance alone.

“And with a VA loan, you don’t have to save all the money you would have to save for a conventional loan,” Moon says.

FEES: Although the costs of getting a VA loan are generally lower than other types of low down payment mortgages, they still carry a one-time funding fee that varies, depending on the amount of the down payment and the type of veteran.

A borrower in the armed forces getting a VA loan for the first time, with zero down payment, would pay a fee of 2.15 percent of the loan amount, Frueh says. The fee is reduced to 1.25 percent of the loan amount if the borrower makes a 10 percent down payment. Reservists and National Guard members normally pay about a quarter of a percentage point more in fees than active-duty members pay.

Those using the VA loan program for the second time, without a down payment, would pay 3.3 percent of the total loan amount.

“And if you receive disability compensation, the fee is waived,” Frueh says.

UNDERWRITING REQUIREMENTS: Veterans Affairs does not require a minimum credit score for a VA loan, but lenders generally have their own internal requirements. Most lenders ask for a credit score of 620 or higher, Moon says.

“There are players that would go lower, but they would probably charge a higher interest rate,” he says.

Borrowers must show sufficient income to repay the loan and shouldn’t have excessive debt, but the guidelines are usually more flexible than for conventional loans.

“We always tell underwriters to do their due diligence, but this is a benefits program, so there is some flexibility,” Frueh says.

VA guidelines allow veterans to use their home-loan benefits a year or two after bankruptcy or foreclosure.

“We look at the whole credit picture, what was the reason for the credit bankruptcy, and where the borrower is now,” Bell says.

VA loans are available only to finance a primary home. A VA loan cannot be used to purchase or refinance vacation and investment homes.

The limit on VA loans vary by county, but it’s $417,000 in most parts of the country and up to $1,094,625 in high-cost areas.

WHAT IF I STOP PAYING THE MORTGAGE? Another advantage of a VA loan is the assistance offered to struggling borrowers. If the borrower of a VA loan can’t make payments on the mortgage, the VA can negotiate with the lender on behalf of the borrower.

“We have dedicated staff nationwide committed to helping veterans who are experiencing financial difficulty,” Bell says.

VA’s financial counselors can help borrowers negotiate repayment plans, loan modifications and other alternatives to foreclosure, he says.

Last year, the VA helped about 73,000 veterans avoid foreclosure, he says.

Regardless of whether they have VA loans, veterans who are struggling to make their mortgage payments can call 800-827-1000 for assistance.

©2014 Bankrate.com
Distributed by MCT Information Services

Financial Reasons to Buy a Home

There are a number of personal and emotional reasons to buy a home. But there are also some strong financial reasons to make the investment. Here are just a few of those reasons:

Increase Net Worth: Few things have a greater impact on net worth than owning a home. In a comparison of renters versus homeowners, the Federal Reserve Board of Consumer Finance found that the average net worth of renters was just $4,000 compared to homeowners at $184,400.

A Big Tax Deduction: One of the largest tax deductions available is the amount of interest paid on a mortgage. In fact, a $150,000 home at a 5.50% interest rate can add up to approximately $8,000 in first year's interest. This amounts to a significant savings – effectively reducing the amount of a homeowner's monthly mortgage payment.

Long-Term Appreciation: Over the last few years, home prices have corrected and become more affordable. While that's good news for potential buyers, it has overshadowed the long-term appreciation of a home's value. The reality is, despite market ups and downs between 1950 and 2002, US home prices appreciated at an annual growth rate of 4.8%. Even if you calculate a modest appreciation of 3%, a home purchased today for $150,000 will grow in value to $364,000 over 30 years.

In addition, don't forget that the government is offering an $8,000 tax credit for first-time buyers and a $6500 Step-Up Buyers through June 30, 2010,

Restrictions apply see the details here http://www.mortgageprosus.com/HomeBuyerTaxCredit

Big thanks to Richard Woodward for providing the above article:

Richard Woodward
Banker / Senior Manager
Envoy Mortgage
Phone: 972-661-5136
[email protected]
www.Envoy-Mtg.com

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Fuel Saving Driving Strategies

Gas prices are sky-rocketing across the nation and there is no indication that they are going to be going down in the near future. In light of this, I have decided to include some non-real estate tips in this months newsletter that will help you to stretch your fuel budget a little further.

Observe the speed limit. Those of us with a lead foot should look to our gas gauge rather than our speedometer. Over 50 percent of the energy required to move our vehicle is exhausted overcoming aerodynamic drag. The faster you drive the more drag you can expect. Studies have shown that when you drive over 60 mph, ever 5 mph can be equated to paying an additional $.10 per gallon for gas.

Use overdrive. Most automatic vehicles come equipped with an overdrive gear. The overdrive gear allows the driver to maintain freeway speed while decreasing engine speed. Using the overdrive gear will enable you to reduce fuel consumption and engine wear.

Cruise Control. Cruise control will enable you to maintain a constant, steady speed rather than a variable speed and as a result helps reduce fuel consumption.

Anticipate Traffic. In these times it is almost impossible to avoid traffic. However, careful planning can help minimize the amount of traffic that you get stuck in. By avoiding traffic you will subject yourself to less stress and at the same time reduce fuel consumption by eliminating stop and go driving.

Avoid Unnecessary Idling. Most modern cars do not need to be warmed up. If you are waiting in the car at the drive-in or picking up a friend, think about turning off your car rather than leaving it running. In the long run, this will help you reduce fuel consumption, save money, and is more environmentally friendly.

Tire Maintenance. Properly inflated tires are important. Though your tires may appear properly inflated, you should check your air level frequently in order to ensure recommended inflation. On average, tires lose one psi per month and one psi for every 10-degree drop in temperature. Under inflated tires can cause fuel consumption to increase by as much as six percent, cause tires to wear faster, and make it harder to handle your vehicle.

Replace Oil Regularly. By regularly replacing your car's motor oil you will increase the life of the engine and increase engine efficiency. Some oils also contain additives that reduce friction and may increase fuel economy by as much as three percent. Such fuel efficient oils are usually labeled with the Energy Conserving API label.