VA Loan / Veteran Mortgage News
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Military Hub is about building wealth and saving money. It's about helping you make the best military financial choices for your future.
SEPTEMBER 2009
Veteran Education Program Funds Up to 50% of Tuition Expenses
The US Government created the Yellow Ribbon GI Education Enhancement Program through a provision of the Post-9/11 Veterans Educational Assistance Act of 2008. The program allows (degree granting institutions) of higher learning in the United States to voluntarily enter into an agreement with VA to fund tuition expenses that exceed the highest public in-state undergraduate tuition rate. The institution can contribute up to 50% of those expenses and VA will match the same amount as the institution.
Click here to see details on the entire program.
Understanding Your Mortgage
Federally-mandated mortgage disclosure forms require lenders to give standardized information to all borrowers. One piece of information which is prominent is the annual percentage rate (APR). Consumers frequently find APR confusing because it's not the same as your interest rate. APR also incorporates closing costs into the calculation of your borrowing rate.
“However, APR does not tell the whole story,” notes the Research Institute for Housing America. APR calculations assume the borrower stays with the same loan until it's paid off.
Yet that's not the case for most homeowners. It's more typical for someone to refinance or move and obtain a new loan, rather than holding the same mortgage for 30 years. A borrowing approach which is ideal for you also could cause the APR to move higher or lower.
For instance, you can pay “points” as a fee to cut your interest rate. Or someone in different circumstances may select a higher interest rate in order to purchase with reduced closing fees. Paying points will lower a mortgage's APR. But if you stay in your home just a few years, you won't realize much benefit from paying a fee to reduce your interest rate for three decades.
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Gain from Buyer Tax Credit
Government policy is actively helping first-time homebuyers, by providing a tax credit worth $8,000 for Americans who purchase a principal residence by the end of November. It's a huge incentive to buy a house now, especially since mortgage rates and house prices also currently are attractive.
First-time buyers can claim the $8,000 tax credit even if their parents are co-signing their loan. Having the parents' credit backing up their loan application can make approval easier to obtain.
Savvy buyers can use this approach to help children purchase a duplex. Half of the property then can be rented out, while the children live in the other section. Having rental income makes it easier to make monthly mortgage payments. First-time buyers also are becoming both owners and investors with the help of the tax credit and their parents.
Contact us soon to discuss this strategy, and to see how it would work in your family's situation. Even if you don't plan to purchase a duplex, buying now is easier due to the tax credit. Anyone who hasn't owned their own home for the past three years is eligible for the $8,000 credit. But it's important to act soon, since the credit is scheduled to expire at the end of November.
We're always available to answer your real estate financing questions, and help you discover ways to reach your housing and financial goals. Together we can find long-term opportunities in today's marketplace.
Low Rates Help Consumers
Most economists believe the economy starting to expand again, after experiencing a deep recession. Generally at this point in the financial cycle rates would start picking up, as investors become more concerned that growth will lead to higher inflation. But a surprising development is that although the U.S. economy is gaining strength, mortgage rates have remained near all-time lows. Our current new recovery hasn’t influenced rates much. A big reason is that the Federal Reserve is determined to keep rates low until it’s certain that economic growth is strong enough to be self-sustaining. Raising rates too soon could discourage businesses and consumers from investing for growth.
Time of Opportunity
Late this summer rates on 30-year home loans remained more than one percent below where they were a year earlier. Someone borrowing $250,000 would save $200 each month as a result. Home purchasers are finding it’s easier to move into a house they’ll love for years as a result of today’s loan opportunities. Existing owners interested in refinancing can save hundreds of dollars every month now.
Some owners are choosing to move into a 15-year mortgage, so they can pay off their home loan faster. Rates on 15-year mortgages are even lower than what’s available on 30-year loans. Yet these beneficial conditions won’t last indefinitely. Interest rates will move up next year, predicts the Mortgage Bankers Association.
We’ll review today’s mortgage products with you, and go over how their features suit your needs. Talk with us to find out how these developments could help you reach important housing goals. We’ll show you the results you can expect, and then guide you through the borrowing process.
Today’s Buying Guidelines
Now is an excellent time to purchase a home you’ll love living in for years. Rates are low, prices are attractive – and there are plenty of great properties to choose from. Yet because the market has been weak for some time, it’s natural to hesitate before moving ahead. Some people you know may be telling you that home prices are bargains now, while others insist they’ll be moving lower.
Because it’s impossible to know where home prices and interest rates will be at any point in the future, you’re better off basing your housing decision on other factors. Here are two guidelines to consider:
- Purchase when it’s a smart life decision for you. Buying a home shouldn’t be about trying to time the market.
Real estate generally rises in value a little faster than the inflation rate, so over time most houses are worth more. Yet choosing a home is different than purchasing a financial investment.
You’re looking for a special place which will enhance your life. When you find it, don’t hesitate to buy it.
- Make sure your purchase makes sense financially. It’s important to know how your payments will fit into your budget, both now and in the future.
For that reason we’ll work with you to explain different home loans and show how they’ll fit into your specific situation. Count on us to focus on your goals as you prepare to take an important step.
The GI Bill Can Change Your Future.
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