VA Loan / Veteran Mortgage News
Bruce Reichstein (NMLS #273132) is Sr. Loan Officer specializing in VA Home Loans with Emery Federal Credit Union and VALoans.com. Bruce has originated and underwritten VA loans in all 50 states for over 25 years and is a Nationwide Lender.
NOVEMBER 2004
House OK's Increase for Veteran Home Loan Amount
On November 17th, 2004, the House gave final approval to Bill 2486
(The Veterans Benefits Improvement Act of 2004) which includes an important new provision to
increase the maximum home loan amount which VA will guarantee under its home loan guaranty program.
Currently, VA will guarantee 25 percent of a qualified home loan up to $240,000; under the new law,
the maximum qualified home loan would rise to $333,700, the maximum level allowed by the
federally-chartered Freddie Mac program. This level would be indexed in future years to
the Freddie Mac maximum amounts. The VA guaranty amount has been raised only once since 1995.
The Bill will now head to President Bush for his signature.
Outlook for 2005
Housing market conditions will remain strong in 2005, predict many economists. Ironically, one reason for this health is that America's economic recovery has proceeded at a measured pace.
After a relatively-weak recession in 2001, we've also experienced a lukewarm recovery. While economic growth has been vigorous, companies haven't been confident enough to hire many new workers.
Unemployment is expected to remain around today's rate of 5.3 percent. Although opportunities seem scant to some job hunters now, America's overall rate of unemployment actually is historically low.
Home sales will drop slightly in 2005, yet they still should reach the second-highest total ever, predicts the National Association of Realtors. Interest rate increases in coming months should be modest, due to continued low inflation.
America's Federal Reserve won't be in a hurry to push rates markedly higher as long as job creation is weak. However, the Fed will keep gradually raising short-term rates.
Higher short-term rates mean that adjustable-rate mortgages will see their rates increasing faster than long-term fixed-rate home loans do.
If you're considering using an adjustable loan to buy, it's probably best to move quickly. You still can lock in great rates on a "hybrid" adjustable mortgage, which gives you an initial period of low rates lasting up to ten years.
Taking The First Step
Considering the big picture first can keep buyers from making a mistake when deciding on a house
or picking a mortgage. Here are ways we'll insure you're taken care of when purchasing:
- We'll review your credit report together to make sure you aren't being shortchanged. Borrowers with lower credit scores often find they must pay a higher rate in order to obtain financing.
Yet many credit reports contain errors that lower those scores. On-time payments you've made may not have been recorded.
Or someone else's bad habits may be reported on your credit score! Additionally, some credit card companies don't tell the credit reporting bureaus what your credit limit is.
Your report may then assume you're using all of your available credit, and lower your score as a result. Syndicated real estate columnist Kenneth Harney reports that your mortgage payment then could be unnecessarily increased by thousand of dollars annually.
- We'll also make sure you understand how a loan will work both today, and in the future. Some buyers use adjustable-rate mortgages because these loans allow them to gain affordable monthly payments on the home they want.
But they may not know how much their payment could rise in the future. We'll go over these issues with you, and show how several loan options would work in your situation.
Contact us first when you're ready to buy a home. We'll work on your behalf so that you obtain attractive home financing.
How Owning Works for You
Most owners who will stay in their house for years pay off their home loan over time. Doing so frees up funds which used to go to mortgage payments.
Paying off your home loan makes retirement financially easier. An owner who doesn't have a mortgage essentially is living rent free.
On the other hand, renters see their earnings reduced by income taxes before writing a check to the landlord. Rent also tends to rise as the years go by.
Someone with $1,000 per month rent today will be paying more than $1,200 monthly just four years later, if their rent goes up five percent a year.
Most homeowners will spend less on housing over their lifetimes than renters do. In addition, rapid home price appreciation in recent years has rewarded owners.
Homeowners with fixed-rate mortgages will never see their payments increase. Once their loan is paid off, they can enjoy greater financial freedom.
Continued appreciation of their property's value then is just icing on the cake. For homeowners, life truly is sweet.
Low Rates Help More Buyers
America's homeownership rate reached a record level of 69 percent of all households in the third quarter of 2004. A decade ago just 64 percent of us owned our homes.
Great mortgage rates in recent years have helped buyers. Rates on 30-year home loans this fall were lower than a year earlier, and just half a percentage point above their lowest point since the 1950s.
Home sales also are expected to record an all-time high once the 2004 totals are in. Heavy demand for housing has kept the inventory of homes for sale low, and that will cause average house prices to go up by seven percent in 2004, says the National Association of Realtors.
Our ability to match a home loan to your specific needs means you'll obtain financing that will work in your favor for years. Call us when you're considering a real estate purchase, and we'll show you how easy that can be.
Homeowners Win!
Many homeowners keep improving their property as they live there. Doing as much of the work as your time and skills allow offers several benefits.
First, you save money on your upgrades by using contractors only when absolutely necessary. You also can enjoy living in a renovated home.
Finally, the extra profit your improvements provide when you sell will most likely come to you tax-free! Married couples can claim up to $500,000 in home sale profits without tax, if they've lived in a house as their principal residence for at least two out of the previous five years.
Owning a home is the best tax shelter available to Americans. Income tax deductions of mortgage interest payments and property taxes can save you thousands of dollars annually.
You also generally can deduct "points" paid directly by you at your loan closing when purchasing a home. If you're moving because of a job change, you can deduct some of your moving expenses.
Talk with a tax professional to see how these breaks apply to you. But it's important to remember that the U.S. government offers all of us incentives to own our home.
