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VA Loan / Veteran Mortgage News
SPONSORS:
Pioneer Military Loans offers responsible military lending solutions that can help
service members avoid or break the debt cycle. Pioneer serves active-duty and career-retired military service members,
as well as Department of Defense employees.
Military Hub is about building wealth and saving money. It's about helping you make the best military financial choices while you're in the military, and fully leverage your military salary to support your military family now and after military retirement.
AUGUST 2003
U.S. Housing Market Stays Strong
Demand from record home sales is causing property values to rise at a fast pace this year.
Average price increases for existing houses should be six percent in 2003, says the National
Association of Realtors. A typical homeowner will see his wealth increase by $10,000 this year
as a result, adds NAR. Owners also gain deductions on their property tax and mortgage interest
payments, which cuts their annual tax bills.
Recently mortgage rates have risen from half-century lows as investors have seen signs that the
U.S. economy is improving. Funds have moved from bonds into stocks, forcing bond issuers to pay
higher interest rates to attract buyers. Yet mortgage rates remain attractive for America's
homebuyers. A stronger economy also will create more jobs, making it easier for households to
purchase the home they want.
Interest rates will fluctuate in the future, but should stay around levels that keep homes
affordable for most consumers. Still, the decision to buy real estate is a big one. Remember
that we're your advocate in today's mortgage marketplace. We'll help you choose a loan
that will work well for you both now, and in the future.
Going Back to School with VA Home Loans
Many veterans and active duty military don't spend a great deal of time reading the Department
of Veterans Affairs Lender Handbook. So we thought we would highlight a few points for you.
Here are some basic guidelines for VA loans:
- The purpose of the VA Loan Guaranty is to encourage lenders to make VA loans by protecting lenders / loan holders against loss, up to the amount of guaranty, in the event of foreclosure.
- The VA has a table for guaranteeing a VA loan. It is based on the lesser of a) the veteran's available entitlement (plus $24,000 for purchase and construction loans or interest rate reduction loans greater than $144,000) or b) the maximum potential guaranty being $60,000. This amount of guaranty is shown on a certificate of eligibility issued by the Department of VA and the form can be sent to you just for the asking at our Web site at www.valoans.com.
- Lenders who sell VA loans in the secondary market or place these loans into Ginnie Mae (GNMA) securities must limit the size of those loans to the maximums prescribed by GNMA. GNMA currently limits the size of VA loans acceptable for its program to $240,000. VA Jumbo Loans are available up to $322,700, yet some equity is needed.
- Because VA loans can be for the full reasonable value of the property as evidenced by a VA appraisal, no down payment is required by VA except in the event the purchase price exceeds the reasonable value of the property.
- The law requires a veteran obtaining a VA guaranteed loan to certify that he or she intends to personally occupy the property as his or her home. This applies to all types of VA guaranteed loans except Interest Rate Reduction Loans (IRRRL'S). For IRRRL'S, the veteran need only certify that he or she previously occupied the property as his or her home.
- The veteran must have satisfactory credit and repayment ability which includes stable income, residual income (net effective income minus monthly shelter expense) and acceptable ratio of total monthly debt payments to gross monthly income not to exceed 41%.
- VA no longer prescribes interest rates for VA guaranteed loans. The interest rate and points are negotiated between the lender and veteran. The Veteran and seller may negotiate for the seller to pay all or some of the points, the points must be reasonable and may not be financed into the loan except for IRRRL'S.
- The veteran must pay a funding fee to help defray costs of the VA home loan program. However, some people are exempt from paying this funding fee.
For all the requirements and facts, either go to our website at
http://www.valoans.com/va_facts_whatis.cfm
or look at the VA Lenders Handbook at
http://www.homeloans.va.gov/chapter.htm.
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The Big Picture
Once you've narrowed your home search down to a few candidates comes the hard part of
deciding which house you really want. You'll make a better decision by considering how
you'll live in a home before making an offer. Here are suggestions to go over:
- Think through which rooms you'll most likely be in at different times of the day.
What is the natural light and view like at those times? How will that change with the seasons?
A house may have a great view, but you won't appreciate it if you can only see it from the
garage. Or glare from the windows may make it hard to enjoy your favorite tv show.
- How will you use the house? It makes no sense to pay for lots of storage area in basements and
attics if you don't need that. Many homeowners have impressive entry foyers. But because
they always come in through the garage, they rarely enjoy that special spot in their house.
Or you may not want the commotion of children coming in and out of the backyard if that doorway
is right next to your kitchen or home office.
- Will the home's features meet your needs now, and in the future? Make sure daily living will be
simple and comfortable there. Don't get carried away with exciting features when choosing
a place to live. A home that enchants you with its landscaping may have bedrooms that
are too small for your needs.
- Is the home structurally sound? Few experiences are more disappointing than moving into a new
home, only to later uncover serious problems such as a leaky roof or termite infestation.
Guard against this by having the home inspected prior to purchase. The seller should correct
any major defects - or you can negotiate a lower price.
Considering various mortgage options also will help you obtain financing that fits your
financial needs. Contact us soon to learn how different loan programs would work in
your situation.
Be Careful Out There!
Consumer scams are being reported in record numbers today. New ones involve using telemarketing
and e-mail to gain personal information, such as credit card numbers. Scammers then can run up
large bills using your cards and name. We're aware of the importance of keeping your personal
information private when you apply for a home loan. Feel free to ask how we safeguard the
information that's required to process your mortgage. We want to make sure you're safe,
and that you feel secure, as well.
Making Credit Reports Less Mysterious
Small advantages can pay off big when you're looking for a home loan. We understand how
crucial it is that you have an affordable mortgage, and we'll work hard to accomplish that.
Some borrowers pay higher rates because of a blemished credit history. Yet if their credit
record is incorrect, they'll needlessly be spending extra money every month.
Consider two homeowners with 30-year home loans for $300,000. However, one pays an extra
three-fourths of a point because of credit issues. Each month that borrower is spending
close to an extra $150 as a result. That adds up to almost $1,800 a year!
Yet it's possible that homeowner's credit report was incorrect. Perhaps negative
information was wrongly put in it. Or positive bill-paying habits hadn't been recorded.
If that's the case, the borrower is paying extra for no reason. Here's how we'll help
you avoid that situation:
We'll let you know if you're paying above today's lowest rates due to credit problems.
You won't be misled, and will know the full status of your loan file.
We'll go over your credit report with you. We'll explain it, and help you correct any errors
before you apply for a loan.
You'll then be able to obtain the most-advantageous rate possible. But it's important to
talk with us about mortgages before you start looking for a new house, to allow us time
to fix any credit report errors. Additionally, it's best to avoid so-called "credit repair"
services. Typically they have consumers obtain business identification numbers and illegally
use them to replace their Social Security number.
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