What is the benefit of doing a VA loan versus a conventional loan. We often think of VA loans, which are designed for active duty military and United State Veterans, as a loan that gets you a better rate. While this is usually the case, there are several other reasons that a VA loan is the right way to go.
First, let me address the interest rate. VA loans are backed by the Veterans Administration, or in other words, the federal government. This means that the government guarantees up to 25% of the loan. This guarantee frees up lenders, giving them the luxury of offering highly competitive interest rates. This doesn’t mean they are always the lowest, but as a general rule of thumb, they are lower.
Another great thing about VA loans is that there is no private mortgage insurance (PMI). This benefit is in my opinion far more important than saving a fraction of a percent on your interest rate because it can amount to hundreds of dollars each month saved on your payment. PMI is insurance that you pay to a private company so that they will back a certain percentage of your loan. This insurance isn’t for you, it’s for your lender and usually adds between $150-$250 per month to your mortgage payment. Can you see why this is so amazing? By not having to pay mortgage insurance, all of a sudden you’ve freed up a couple hundred dollars per month to either go towards a nicer home or to better manage your finances.
The final benefit I want to bring up today is the closing costs. In most cases, closing costs amount to thousands of dollars and they need to be paid in the form of a down payment. But with the VA loan program, the seller can pay those closing costs and you’re not required to have a down payment. Now don’t get too excited, you will need to have some cash reserves built up to buy a house through the VA loan program, but instead of the normal tens of thousands, you normally only need a few thousand to cover things like earnest money and home inspections.
Ultimately the VA loan program is there to thank military families and US Veterans for their service. The program does this by offering a program that saves Veterans thousands of dollars and makes getting into a home a little bit easier.
We’re happy to provide help to Veterans and military families as they search for homes. Feel free to give us a call today and we’d be happy to help answer your questions and get you on your way.
For most people, buying a home is a very important decision that is only made a few times in a lifetime. So how is the average person supposed to know all the possibilities and options available when buying a home? You simply can’t because it’s not your job, and that’s why we highly recommend using a realtor.
Good realtors usually have years of experience and know the area you want to buy in very well. It’s their job to get you a good deal and they do it for people everyday.
More than just being experienced, realtors also have some extra resources that can help you. For example, they usually will have a network of mortgage and real estate professionals that can help you as you select a home. They also have access to the Multiple Listing Service, or MLS which has information about homes in your area that you don’t always have access to online.
A realtor is on your side, technically speaking, the realtor is called the buyer’s agent. Your real estate agent represents you as the buyer and uses his/her experience to negotiate the sale of the house. They can work within your needs to help secure a deal that best fits your requirements and limitations.
One of the main reasons people are hesitant to use a realtor is because of cost. But sit back and relax - realtor fees are usually paid by the seller. The system is designed so that you don’t have to try to go out and conquer the world on your own, realtors are there for you.
VA Loan Experience
At Creekside Mortgage, we pride ourselves on our commitment to Veterans. When getting a VA loan, it’s important to get a realtor who has a good understanding of the VA loan. The VA loan has something called minimum property requirements, or MPRs. MPRs are standards that the VA says a home must meet in order to qualify for their loan program. VA experienced realtors can help you avoid the most common MPR violations - saving you a lot of time and headache.
We have a network of realtors that we trust and highly recommend to our clients. They have prior military service and lots of home buying experience. You can get visit our list of prefered realtors here to find one in your area.
Summer is coming to an end and while it may be sad, it has brought some pretty nice changes in the market. Ok, we’ll be the first to admit that the start of Summer brought some very unpleasant changes including a drastic spike in interest rates. But with Summer winding down and Fall starting on the 22nd of this month, we did see some improvements.
Wednesday the Federal Reserve announced that they would continue to make the large $85 billion monthly asset purchases. The market had already made adjustments assuming they would announce that they would stop making these purchases, so we immediately saw the market re-adjust and mortgage interest rates dropped.
The month of August was a big month for home sales. The best month since 2005 according to some sources. The total number of home sales were up to 5.47 million! It’s been speculated that the main reason purchases were up is because rates appear like they’re on the incline. So homebuyers were eager to get into homes before the rates got too high.
With all these mortgage market improvements flushing out the rough start to summer, we’re excited to announce that it’s a fantastic time to get a home loan. Rates have dropped enough to make more people eligible and we’re seeing the market start to shift again. We highly recommend speaking with a loan expert soon so that you can begin the mortgage process now.
The Federal Reserve announced Wednesday that they would continue their asset purchases at the rate of $85 billion per month. Ben Bernanke, chair of the Federal Reserve said that there is no calendar for when they will begin to pull back from their asset purchases, but that it’s all based on the data.
What will allow the Fed to begin the pullback is a “significant improvement” in the market. There are a few key indicators that help the Fed decide if there has been improvement. One of those indicators is the unemployment rate. It’s currently right around 7.3 percent and the Fed said they would like to see it closer to 6.5 percent. The Fed would also like to see a rate of inflation get up to 2 percent as a goal to start looking at pulling out.
The goal of the Fed is to pullback its asset purchases in such a way that it will not dramatically affect the market. What that means is that if the Fed does begin to start pulling back, and the market overreacts, the Fed would then make an adjustment to compensate. Their goal is to make things move as smoothly as possible.
So the big question is, what does this mean for mortgage rates? Well it should be good. Rates should make a slight adjustment because it had anticipated that today would be the announcement of the pullback. We’ve already seen improvements and many experts believe they will continue to improve.
This means that the Fed has bought buyers a little bit more time to get low rates, making it an ideal time to go out there and try to find a home before the Fed officially begins it’s pullback. As always, we recommend speaking with your lender early on to find out what you qualify for and then begin your house search.
Wednesday is quickly approaching, and it’s the day that we’ve been waiting for since late May. Ever since the word leaked that the Federal Reserve might begin reducing it’s monthly $85 billion bond market purchases, September 18 was considered to be the day that announcement would most likely happen.
Some people believe the market has already made it’s adjustment for the announcement. If that’s the case, if the Fed really does begin pulling out, then we shouldn’t see too much of a reflection in mortgage interest rate changes. If the Fed announces that it’ll postpone the pullback, then it is likely rates will actually improve.
Of course, the market could have room still to react to the pullback announcement. Rates could see year highs, but ultimately know one knows for sure how the market will react.
The most interesting thing that has happened recently is that on Sunday evening, Larry Summers pulled out of the running for the next Fed Chair. The market has reacted very positively to this because, of the two candidates, Summers was viewed as the one with the most aggressive approach to the quantitative easing or pullback. As a result, we’ve seen a real rally in the market. Hopefully that’s evidence that the market has adjusted to the announcement and that it’s more concerned with the end of the pullback than the start.
If you’d be interested in more information about mortgages and loans, check out our website www.va-loan-specialist.com. We have all kinds of resources to get you on your way toward homeownership.
Due to service, military personnel are often removed from what is considered traditional circumstances. Whether its being deployed overseas or stationed on a military base stateside, our military end up with limited opportunities to build tradition credit histories and live in traditional financial situations.
With that in mind, in 1944 the government developed an idea to provide a home loan guarantee program for qualified US Veterans and active duty military personnel. The hope was that the program could help our servicemen and women get funding for homes through a simple and streamlined process.
As it turns out, the program has had a huge amount of success throughout its history. The VA loan program has proven itself against conventional and FHA loans time and time again. In the recent 2008 recession, VA borrowers foreclosed far less than most other borrowers. Now, 20 million veteran homeowners later, the program is still strong.
Military families and Veterans get many amazing advantages when they use the VA loan program. One of the primary benefits to the VA loan program is that there is no down payment required. This helps military families who may not have been able to build the savings normally necessary to get a home, to qualify for a VA mortgage.
All of this is just one of the ways that we as a country have decided to thank our military for their service. As an organization of lenders, we are proud to extend our hand to help US Veterans and their families as they start their path to homeownership.
If you listen to the news and politics, there is a lot of controversy and political agendas surrounding 9/11. Especially when you look at the 2001 and 2012 attacks together.
We want to step back from all the rhetoric and agendas, and share our appreciation to all the service men and women who help keep our country safe. We know that being a military Veteran is not always easy, and we want to express our deepest gratitude for your selfless actions and courage.
Life gets busy and complicated. So many things fight for our attention. It’s times like these, that we need to take a moment to stop, and reflect. We have so much to be grateful for and so little to complain about. We as the American people owe our safety and freedom to those who risk their lives to uphold the American ideals.
To those who have lost love ones to acts of terrorism, we thank you for your sacrifice. Please know that our prayers are with you. We hope you can feel our love and the love of those around you as we rememebr the loved ones we all miss.
God bless the USA and be with our troops.
The team at Creekside Mortgage, Inc
Over the last five years or so, there were an increased number of short sales because of negative economic situations for millions of people. For many people, these foreclosures and short sales have ruined their credit and made it extremely difficult to get back into a home.
Previously the Federal Housing Administration (FHA) requirements for getting into a home after a bankruptcy or foreclosure was between two to three years. With the revised rules, a borrower may now qualify for an FHA backed loan after 12 months from the time of the discharge of the bankruptcy or foreclosure.
There are some stipulations in order to qualify for an FHA backed loan after only 12 months. First the borrower needs to prove that the foreclosure or bankruptcy was a result of external economic factors that reduced income by at least 20% for six months or more. After meeting that requirement, then the borrower needs to show that during at least the last 12 months, they have been making all their rent and credit payments on time.
The FHA change is designed to help people who were negatively impacted by economic circumstances outside their control, while maintaining stringent requirements for people who poorly managed their finances.
If you ever have any questions about when you can qualify for a loan, feel free to give your mortgage broker a call. Of course we have experts that are trained to help answer your questions as well.
In the mortgage industry there are many acronyms, and they make it difficult and intimidating for Veterans to get loans. So we’ve put a list of terms on our website that are commonly used in a VA loan transaction. But before we direct you there, we’d like to explain one term in more detail.
You’re probably aware that an ARM is not talking about a body part, but do you know about the reasons people do them and why others don’t?
An ARM is an Adjustable Rate Mortgage and is a loan type where the interest rate changes one or more times in a given period of time based on the market or the lenders costs. An ARM transfers some of the risk of lending from the lender to the borrower, and as a result, the initial rate is frequently lower than a fixed rate mortgage.
A lot of borrowers like ARMs because they allow you to get a lower initial rate and monthly payment. Other’s like them if they know they will be moving before the period for a rate adjustment happens.
The problem with ARMs is that at some point in the future your rate will likely increase. Even if you think you know that you will move within a certain period of time, unexpected events and life changing things happen, and you may get stuck with an adjusted rate that you can no longer afford.
At Creekside Mortgage, Inc we strongly encourage you to go with a VA fixed rate mortgage instead of trying to play the ARM game. In the end, Veterans and Military families will take on a lot less risk by going with a fixed rate mortgage backed by the VA.
There are several reasons you should use your VA benefit to buy a home. Veterans and military families all over the country are taking advantage of the huge savings that a VA loan brings, and we want to tell you why.
In many cases, buying a home using a VA loan is opening doors for families who might have otherwise been unable to qualify. So what is it about the VA loan that helps these families get into homes?
1. The VA loan program does not require a down payment
Unlike conventional loans and nearly all other home mortgage programs, the VA loan does not require the borrower to pay any money down. This means that you can finance up to 100 percent of the value of the home. Other loans require you to pay a certain portion of the value of the home, and if you don’t reach the required down payment, there’s private mortgage insurance.
2. The VA loan program does not require private mortgage insurance
With a conventional loan, if you don’t put down 20 percent of the home value, then you will usually be required to pay a monthly private mortgage insurance (PMI). Many veterans and military families struggle to build the required savings to avoid PMI, but with a VA loan, there is no PMI.
PMI is an insurance that helps cover loss for the lender if the borrower defaults on the loan. The reason VA loans do not require PMI is because the VA actually guarantees to the lender up to 20 percent of the value of the home in the case that a Veteran defaults. So all the money (usually between $115-300 monthly) you would be spending on PMI is actually chiseling away at your loan balance instead of protecting the lender.
3. The VA loan program allows for extremely competitive interest rates
Because the VA backs your loan with a guarantee to the lender, the lender can offer Veterans lower interest rates. This is because the lender is assuming less risk when they lend to you. In general, a borrowing Veteran or qualified VA benefit recipient will get a .5 to 1 percent reduction in interest rate compared to if they would have gone with a conventional loan.
Using your VA benefit to secure a VA loan can add up to thousands of dollars over the life of the loan. Military families all over the country are enjoying this mortgage lending program and you can too, just call your VA loan specialist and they’ll help you get started.