You know you’re a reliable and honest person, but the lender knows other people aren’t always like you. As a result, lenders have several standards to help measure your ability to repay the money you borrow.
It’s easy to see getting a mortgage from a one sided perspective. You know what you want and what your needs are, and you have the right to live in a place that accommodates those needs. But first you’ll need to convince a lender that you’re capable of managing your finances after making what most likely will be your largest purchase of your entire life.
How do lenders determine the risk they take on by lending to you? It’s called an income assessment. A VA lender takes a look at each of your sources of income and then checks it against a few standards. Not all income qualifies to be considered part of your total income, but if it passes the test, then it is considered “verified”.
VA lenders want to see that your verified income meets the following four standards:
-should be steady and reliable
-should be anticipated to continue for the foreseeable future
-should be sufficient to maintain the families financial obligations
-should generally have a two year history or more
If your income passes each of the tests, then it is on its way to becoming verified.
There are several sources of income that usually are verifiable. Here are a few common ones:
-Your salary and your spouse’s salary (if you’re counting your spouse’s salary, then he/she will either need to be co-signing or the purchase needs to be in a community property state.)
-Some military allowances
-Social security and disability
-Child support and alimony
It’s important to understand, that for a lender, determining whether you’re a good borrower or not is not so black and white. There is some flexibility in the process. You can work with your VA loan specialist to see where there is some room to try to make adjustments and help you qualify for your new home or refinance your existing home.
As always, try to remember that the rules about income and other guidelines are there to protect you against taking out a loan that you cannot manage in your current financial situation. As you work closely with your lender, they’ll explain each part of the loan and help you with any questions you have.
Interest rates for home loans have been going crazy, especially this last week. The main driver behind the interest rate spike is the looming pullback that no one seems to know when exactly will happen.
This week’s big driving force was the release of minutes from the Federal Reserve’s meeting in July. Basically the minutes didn’t say anything that would make you believe the Fed would not start pulling out of the bond market in September.
With that fear, mortgage interest rates jumped up again, reminding us that what happened in May 2013, could happen many more times. Where rates sit now, they’re still very low historically speaking, and veterans can still take advantage of lower than average rates backed by the VA.
What all this tells us is that rates are on the up and up. Your chances of getting a home at today’s interest rates a month from now is slim.
Ten years ago the market was setting the foundation to have a major housing crash. Looking back now, for a lot of people, it would have been better to rent. Unfortunately we didn’t know, and a lot of people learned the hard way, that what goes up, must come down.
Well, the rates came down; all the way down. Some interest rates fell below the national inflation rate. Now we’re beginning to see the bounce back from the bottom. Most experts predict that rates will continue to increase for the foreseeable future.
With this upward trend we’re seeing from both rates and housing prices, we’ve never seen a more opportune time to buy.
In most ways, buying a home trumps renting. If not for the freedom, than for the financial investment. In rare cases, like a limited ability/desire to do the maintenance and upkeep, renting may seem more attractive, but in the long run, you will create a more liberating living situation by buying a modest home.
We want to point out something very interesting about renting. If you have a $1200 house payment and your friend has a $1200 rental agreement. Your friend may think he has a better deal, But in ten years with a 3% rate of inflation, his rent will have gone up every year and would be $1475! Plus all that money he paid in rent is gone. You, on the other hand, have been paying the same $1200 and it has been going towards equity in your house.
If you are ever stumped about whether it would be better for you to rent or buy, you can go to our website and use the tools we have available there. You can also give us a call at 1.800.920.5420.
Getting a new home has been a little more difficult the last few months. More people are trying to buy in a market where less homes are available for sale.
Another large factor in the ability to buy a home is interest rates. Interest rates have been increasing incrementally over the last three months.
The relationship between inventory and interest rates has led to a 17 percent increase in home sales in July 2013 compared to July 2012. On top of that, inventory was down 5.2 percent for that same time period.
So the question is, is this going to continue? Most economist and experts agree that we’re beginning to see a curve for the better. In fact, even though inventory was down in July 2013 compared to July 2012, inventory was up 1.4 percent from June 2013.
Two factors are contributing to the improving home buyer market. First is that interest rates are going up which brings the demand down. The rate increase not only scares some would-be buyers out of the market, but it also disqualifies some of the buyers that were on the border line. The second thing is a steadily increasing inventory. Inventory increased because of more new home construction. It also increased because home values have gone up, which has brought current homeowners out from under their homes when they were underwater.
Experts believe that interest rates will continue to rise, especially with the anticipation of when the Federal Reserve will start slowing down the pace of its bond-buying program.
So while the inventory should continue to increase, interest rates will also do the same. This should start to level off the housing prices, but will continue to make homes a little less available for those who only barely qualify now.
We just released this month’s newsletter! We know it’s later than usual, but it’s because we wanted to be able to include the announcement of our new website and video series.
We know that the mortgage industry can sometimes be a little daunting. That’s why we’ve dedicated a lot of time to making sure you have the resources you need to be a well informed buyer. Our goal is to be reliable, so that you can depend on us to be credible resource for mortgage information.
So here is a list of resources you can expect from us...
1. A weekly update about the housing and lending market with a professional opinion about the future.
2. A weekly tip or insight about something related to getting a loan.
3. A monthly newsletter that will have videos and articles about the mortgage industry
4. A regular podcast that describes current market trends and tips about the industry
5. A regularly updated blog post that shares valuable information about getting a loan and updates about our company
6. A website that hosts all our content and tools that help you calculate mortgage payments and fill out forms.
Your life is busy, let us relieve some of that stress by supplying all the information you need to start looking for a home. Plus, if you ever want to talk to a real person, we have a live chat through our website, friendly experts waiting by the phones, and warm smiles in our office for you to physically meet.
You are very important to us. That’s why we’ve allocated so many of our resources to a new tool for you.
Each week, Kerry Greenwald, the owner of Creekside Mortgage, will be doing two videos with topics that are meant to help you. The first video is part of a series called the Week in Review. He spends about a minute sharing with you the important details that happened over the week and gives his prediction for what the future holds for the housing and lending market.
The second video is part of a series that answers your questions about lending. He uses his professional experience and background to explain closing costs, bi-weekly payments, and anything you may ask.
We hope this will become a great tool for you that you can rely on as a credible resource to teach you about mortgages. If you have a question you want answered, just leave us a comment. We’ll do our best to get to it.
We're thrilled to announce our brand new website, loaded with tools and resources to help you prepare to finance your current or new home!
We'll have weekly videos that share insights and tips about the loan process. We'll also have a "Week in Review" video featuring our owner, Kerry Greenwald. In under a minute he shares what the market did during the past week, and what he predicts will happen in the near future.
We also have tools to help you see what the market looks like and to calculate a mortgage. We have explanations for each of the VA loan programs, with links to an application so you can conveniently apply right there online. We even have the documents you will need, available for download.
We’re very excited about our new site. It was designed with you in mind, and we hope that you, your friends, and family will find it to be a very useful resource. We encourage you to take a quick look around, and share the link with anyone you think may be interested in getting a loan.
We’ve talked about it before and you’ve noticed it - housing prices have gone up. In some of the most dramatic circumstances, places in Florida and Nevada saw a 20% increase in home values.
Fortunately the rapid increase in home prices has leveled off. Most analysts predict that home values will continue to increase, but at a much slower rate.
With all the excitement in the housing market, we’ve also seen an increase in new construction. The interesting thing that we’ve noticed, especially in the Southwestern Washington area, is that there aren’t any homes being built at the under $150,000 price point.
In fact, the inventory for homes available under $150,000 is extremely low. This makes it very difficult for people trying to get into a starter home. The limited availability and high demand for homes in this price range appears to be a problem that, for first-time homebuyers, will continue into the foreseeable future.
The best thing to do is to keep your eyes open, and be ready to make an offer. You can get prequalified now, to know what price range you can be looking for. Then the best thing to do is to keep in touch with your lender, they can help you know based on a specific home, what your payment will be and if you qualify for it. Remember this very important thing, your lender should be like a friend to you. They should be willing and happy to help you as you do your home search.