VA Loan / Veteran Mortgage News

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JULY 2004

Introducing VA ARM Products

We are excited to announce that we can offer our Veteran customers the best ARM options ever. The new VA government loan fixed to adjustable hybrid ARM products are here! The addition of the 3/1 and 5/1 ARM options to our VA product menu will allow us to be competitive in the market while offering Veterans adjustable rate options with the stability of initial fixed terms.

NEW VA HYBRID ARM PRODUCTS

30-year ARM Fixed 3-year with 1-year adjustments
30-year ARM Fixed 5-year with 1-year adjustments

PRODUCT HIGHLIGHTS

• You can get a purchase or refinance loan with zero down
• Adjusts maximum 1% annually after initial fixed rate period
• Adjustable rate is based on weekly average yield on US Treasury securities plus your margin
• When you sell your home, the buyer can assume your ARM loan
• Private mortgage insurance is not required

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Lower Your Payment with a VA ARM

Adjustable rate mortgages (ARMs) save borrowers money, since their rates are lower than fixed-rate home loans. Yet ARM rates will change in the future, since they mirror interest rate movements in the overall economy.

Choosing an ARM is more complicated than deciding on a fixed-rate loan, since you need to understand how your payments could adjust in the future. Here are some important elements to go over when evaluating ARMs:

• Consider different interest rate indexes. Your rate will fluctuate according to the movements of a financial market index. Some indexes are more volatile than others, and will cause more change in your monthly payment.
  
  
• Find out the "margin" that will be added to the index each time your loan adjusts. The sum of your margin and index rate determines your actual mortgage rate for that period.
  
  
• Know when adjustments will happen. Depending on the mortgage you choose, a first adjustment can occur anytime between one month and ten years after your loan begins. Also be aware of how frequently your loan will adjust from that point onward.
  
  
• Caps limit the size of your interest rate changes. Generally you have caps both on how much your rate can change each time the loan adjusts, and how high the rate can go over the life of your loan.
  
  
• Payment options also affect your monthly housing expenses. Some ARMs keep payments artificially low even when rates are rising. But to do so they add unpaid interest on to your principal balance, making your loan larger.

Matching an ARM to your specific needs and financial situation is important. We'll show you what your future payments would be both if rates stay steady, and if they rise sharply. Consider financing with an ARM if you'll save money now due to lower rates, yet also could handle higher payments later on.

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Home Values Rise Higher

The price of an average home went up 7.7 percent in the twelve months ending March 31, according to government figures.

Strong home price appreciation increases homeowners' wealth. A house purchased just last spring for $150,000 typically would be worth about $162,000 now.

Home values have been going up much faster than other prices. Over the period that house prices rose 7.7 percent, the cost of other goods and service went up less than 1.6 percent.

Yet average increases in home prices are slowing down. That's a positive sign, since too much appreciation eventually would hurt the real estate market, by making homes too expensive for many to buy.

However, consumer demand for homes remains strong. Currently the National Association of Realtors is forecasting a record year for property sales in 2004.

Purchasing a home now can mean you'll be enjoying a better life in the future. You'll have a secure place to live, where everyone in your family can thrive.

Obtaining home financing that you can afford is just as important as locating the perfect house. Call us soon to find out more about how you can purchase a wonderful home soon!

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Easy Ways to Improve Your Credit

Lenders consider how well borrowers have paid their bills when going over loan applications. Yet it's important to remember that most households can find home financing, even if they've had credit problems.

But persons with great credit ratings usually enjoy lower interest rates. And that means your monthly payments also will be less. However, you don't have to pay off all your bills to improve your credit score. Restructuring your credit card balances often helps, as these examples show:

• Instead of paying off cards that have low balances, shift debt from cards that have been charged up close to their limits. Your overall credit picture looks better if you are using less than half the available credit on each of your cards.
  
  
• Close any accounts that you've made late payments on. Negative information on an inactive account is less damaging than it is on a card you're still using.
  
  
• Keep accounts open that you've had the longest. Establishing a history of payments is crucial to improving your credit.

We can show you how these suggestions would improve your individual situation. Additionally, we'll go over your credit report with you, so that any mistakes that lower your score can be corrected. People with limited credit histories also can find unique ways to show lenders how they handle debt. Proving that you've paid rent or utilities on time can help you become a homeowner!

Call us soon - we'll help you get the financing you need, on the best possible terms.

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Stronger Economy Helps Americans

Rapid economic growth is creating job opportunities for many American workers. Some economists forecast more than two million new positions will be created this year. Personal incomes are rising as a result, and consumer spending also is going up at a healthy pace. However, our high demand for goods and services is causing interest rates to increase, in order to keep inflation from taking off.

Yet future rate increases shouldn't be severe enough to extinguish America's growth. Right now our economy is humming along, and won't get derailed because of higher financing costs. But could higher rates hurt the housing market?

Economists point out that long-term mortgage rates rose almost two percentage points from 1998-2000. Yet home sales actually increased during that time. Tomorrow's rates will continue to offer buyers affordable monthly payments. And that means now is a great time to consider buying a home!

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