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.
APRIL 2005
VA Loan Lending Limits: Maximum Guaranty Amount
The Veterans Benefits Act of 2004 was signed by the President on December 10, 2004. The law changes the maximum guaranty amount of $60,000, for certain loans in excess of $144,000, to an amount equal to 25 percent of t he Freddie Mac conforming loan limit determined under section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act for a single family residence, as adjusted for the year involved.
To illustrate, the maximum guaranty for 2005 would be $104,250. This is for 25 percent of the 2005 Freddie Mac conforming loan limit for a single family residence of $417,000.
The maximum eligibility for each veteran is $104,250 and the maximum loan amount with no down payment is $417,000.
The Law on Occupancy
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. As of the date of certification, the veteran must either (1) personally live in the property as his or her home, or (2) intend, upon completion of the loan and acquisition of the dwelling, to personally move into the property and use it as his or her home within 60 days after the loan closing (reasonable).
The above requirement applies to all types of VA guaranteed loans except Interest Rate Reduction Refinancing Loans (IRRRLs). For IRRRLs, the veteran need only certify that he or she previously occupied the property as his or her home.
Co-signors or Joint VA Loans
The VA guidelines recognize legally married spouses of qualified veterans as co-signors on VA loans and can include their income. These loans can be fully guaranteed by the VA.
The VA guidelines will allow for more than one eligible veteran(s) to purchase a home. If more than one eligible veteran is involved, VA divides the entitlement charge equally between them, if possible. These loans can be fully guaranteed by the VA.
While the VA guidelines may allow for a non-veteran to co-sign for a mortgage loan, they will not fully guarantee the loan. The VA Guarantee is limited to that portion of the loan allocated to the veteran's interest in the property. That means the VA will not fully guarantee this type of loan and our company cannot originate loans that are not fully guaranteed by the VA.
Home Prices Keep Rising
Average house prices went up more than 11 percent nationally in 2004, states a recent government report. But that rate of increase fell during the last three months of the year. You can see in the map here how values rose in different regions.
A typical home's value has gained 50 percent over the last five years. Average prices have gone up nationally every year since 1968, adds the National Association of Realtors.
Low rates have helped many buyers obtain affordable monthly payments in recent years. Owning a home gives us a stable store of wealth. While factors such as interest rates and the local job market will affect home values, a constant trend for decades has been for home prices to go up faster than inflation.
Buyers today can proceed confidently, since attractive mortgage rates remain in their favor. Home buyers who plan to stay in their house for years typically enjoy both a great lifestyle and healthy price appreciation.
You rarely hear homeowners wishing they had waited longer to buy or move up. Having a home you love and financing that works for you allows you to enjoy your house without worrying about real estate prices and interest rates.
Contact us when you're ready to make an important home purchase. We'll guide you through the steps, and insure you have mortgage payments you're comfortable with.
Avoid Borrowing Mistakes
Many of us regularly receive phone calls, letters, and e-mails telling us that we're approved for a home loan at an unbelievably-low rate. What's interesting is that these approvals come despite the fact that we haven't even applied for a mortgage!
Often these e-mails come from countries outside the U.S., which aren't affected by our anti-spam laws. Additionally, most typically aren't from legitimate lenders.
Instead, they're from marketing firms who sell information on prospective borrowers to lenders. Providing information about your loan needs can mean that numerous lenders then will contact you. So the loan terms you thought already were approved actually were just a come-on to gain personal information!
Who Can You Trust
You can see why working with a professional that you trust is essential when you're obtaining a home loan. Many lenders are aggressively looking for business now, since rates are going up and fewer homeowners will benefit from refinancing. Below are suggestions to go over when choosing a mortgage provider:
- Make sure your lender will provide you with references from satisfied borrowers who are similar to you.
- Make sure your lender wants to help you, rather than pressuring you into a loan that is profitable for his company.
- Make sure your lender explains a variety of borrowing options to you, and helps you decide on one that fits your needs.
- Make sure your lender will keep your personal financial information safeguarded at all times.
It's important to be cautious today, and remember that any deal that sounds too good to be true most likely should be avoided. You'll achieve positive results once you've found an experienced lender who will work hard on your behalf.
We can help you get through the difficulties in today's lending environment. Feel free to call us whenever you have questions about real estate financing.
We'll ask about your borrowing goals, and show you ways to achieve them. Our professional knowledge and interest in you will be evident as we proceed.
How to Get a Great Deal
Everyone wants to negotiate well when purchasing a home. Use these suggestions to become better at real estate bargaining:
- Have other options. Locate several homes that you're interested in buying. You'll feel free to negotiate harder if you don't have your hopes set on just one house.
- Set the stage. Avoid becoming too obviously excited about a home that you're strongly considering. If you do, you might lose your perspective and not consider the property's shortcomings.
A house that looks great may not meet your everyday living needs. You also could lose a negotiating edge if the owners or their real estate agent see how enthusiastic you are about the house.
Avoid being too negative, as well, since that can establish a harsh negotiating environment. Making comments such as, "I like the house, but they'll really have to come down on their price!" tends to make sellers dig in their heels.
- Find out why the home is for sale. Often people need to move because of an important life event - ranging from a child's birth to reaching retirement. Understanding a seller's goals allows you to fashion your offer to make it more appealing.
Someone who is moving because of a job transfer may be in a hurry. Going to a new position quickly then is their objective, and obtaining the highest possible price on their home is a secondary matter.
Any seller who has another home picked out is likely to want to move quickly, as well. Having their current house under contract makes it easier for them to make an offer on a move-up property.
A sale resulting from a divorce could mean you'll be dealing with two parties who aren't getting along. One may be more eager to sell than the other, so understand the deal isn't final until everyone has agreed to it and signed the purchase contract.
- Never make a concession without asking for something in return. Some sellers won't budge on their price. You can agree to that, but then negotiate for them to pay some of your closing costs.
- Money isn't the only issue. A household moving a long distance or to a much larger or smaller home may not want some of their furniture and appliances. They could be happy to leave them for you, if you simply ask.
- Sellers will treat your offers seriously when they know home financing is assured. Call us before you start looking at houses, and we'll strengthen your negotiating power by pre-approving you for a mortgage!
