Podcast

Basic Home Loan Types

Body

That beautiful house just down the street, it’s the one you drive by and think to yourself, “If I had that house I would have a huge garden, swings for the kids and a garage to finally work on my bike.” Well, it just went on the market. There is a big, bright for sale sign in the front and on a whim you call the number for the asking price. Surprised at the price you begin to wonder if you could own it and think “Where do I start?”

Many people have driven by a house and wondered, “What if...” and that dream has been the motivation that pushed them into owning their own home. Most new home buyers start this way but don’t know where to start when they decide they are ready to own a home.

The best way to start shopping for a home is to first find out what you can afford and what program works best for you.

The conventional home loan is an option if you are able to afford a down payment of ten to thirty percent of the price. Generally twenty percent or more will exclude the buyer from paying mortgage insurance. Less than twenty percent, and the buyer will be required to pay a pretty hefty mortgage insurance.

Just what is mortgage insurance you may ask? Mortgage insurance is a policy that will compensate a lender in the case a loan goes into default. In other words, if the buyer is unable to pay the loan, then the lender can get compensation back from the insurance.

If you're a veteran, the best option would be to use your VA home loan guarantee. This is our preferred loan option because it has the best interest rates with the lowest amount of upfront costs.

The VA loan is a government backed loan program designed to ease the burden of purchasing a home for military veterans. The VA does not actually lend the money, it simply guarantees the loan for the lender. This allows lenders to give our veterans a chance to own their own home without having to pay a down payment or pay mortgage insurance - a huge savings!

Of course if you are not a veteran then you still have other options. The FHA loan is another Federal Government program that helps by lowering the down payment for a home to as low as three and a half percent. The mortgage insurance still applies though. The benefit is that the buyer can still make a purchase if all they can afford is three and a half percent.

There you have it! Three loan types, now all you have to do is contact us and we will help you find the best program for your individual situation.

The loan process is very simple. Either call or stop by as you will always find a real person to speak with and fill out an application. Your loan officer will then ask for things like work history, bank statements, income statements and look into your credit history. This is to ensure you get the best loan possible. After all, you just might be able to afford that cute little home down the street after all.

Business as Usual

Body

 

 

 

 

The Shutdown and Debt Ceiling

Tuesday marked 8 straight days of the government shutdown, and with an unpredictable end and a looming national debt default, the market is hunkering down and bracing for a big economic storm.

October 17th is the deadline for the two political parties to come to terms and make a decision on the debt ceiling, and it doesn’t look too good. With the two main political parties having reached an impasse, the market is showing that it has little faith that a resolution will happen soon and that it will be good for the economy. Stocks have been falling at a fairly consistent rate since September 18th. But some worry the market’s reaction isn’t big enough to push the politicians “into gear” to finally reach an agreement.

With all this economic uncertainty, mortgage interest rates have had very interesting reactions. While the stock market has been declining steadily, interest rates have been improving, up until monday. Now it appears that rates have started making a switch and are moving higher. It’s unclear what will happen with rates, but until politicians can come up with a solution that will be beneficial for the economy, rates may likely continue to rise.

The Mortgage Industry

Despite the government shutdown, mortgages are still funding everyday - and on time! VA, FHA, and conventional loans are being processed almost the same way they have always been and most of the time you won’t even notice a difference.

In some cases, if you have unusual circumstances that would require your lender to talk to representatives in FHA offices, your loan will most likely be delayed because they are working with a severely reduced staff.

Unfortunately, USDA loans are at a complete standstill until the shutdown is over. In fact, you cannot even access the website. But USDA loans make up such a small percentage of the total amount of loans, that it has little impact on the mortgage industry.

Overall, it’s a bad time for your stocks, but a great time to buy a home or refinance if you haven’t done it in the last year. Rates are the lowest they’ve been since the spike that started in May, and the amount of homes available for purchase is growing everyday.

Creekside Mortgage, Inc is proud to be a Veteran owned and operated company focusing on helping Veterans and military families get homes.

 

Verifiable Income

Body

HOW INCOME IS VERIFIED ON A VA LOAN.
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

-Retirement income

-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.

Creekside Mortgage, Inc is the Northwest number one VA loan experts. Give us a call today and we’ll answer your questions.