Best Choice For Veterans – A VA Mortgage Loan Or An FHA Mortgage Loan?
July 24, 2010 by admin
Filed under Home Loans
The federal government rewards veterans of the US army in several ways. Many packages, from education reimbursement to incapacity compensation, employment services and life insurance can be found to active and former members of the armed forces. One other benefit of army service is residence mortgage help in the type of the VA Loan.
Of the 23 million+ residing veterans, less than 10% have used the this opportunity offered to them.
In case you are a veteran, member of the active army and even the surviving or present spouse of a veteran, you may be in need of more details about the two most popular government-backed mortgage loans out there to you today. These loans are the VA Mortgage Loan & the FHA Mortgage Loan. Shopping for a house or refinancing is a big choice, so it is best to be totally informed.
VA Mortgage Loans versus to FHA Mortgage Loans
* VA Loans are almost similar to most typical loans, solely they offer many additional benefits reminiscent of: no down cost necessities, decrease qualifying credit scores and mortgage charges will be packaged into the mortgage.
* FHA Mortgage Loans are a preferred option amongst many non-veterans. Simple refinancing, more lenient qualifying credit criteria and low down fee requirements attract many people who could not otherwise qualify for a standard mortgage.
* VA Mortgage Loans have eligibility requirements that should be met earlier than a veteran or active navy member can be accredited for the loan. A certificate of eligibility shall be issued to qualified individuals and can include an entitlement amount (the portion of the mortgage that the VA will guarantee for each service person). The VA can problem the eligibility certificates or your mortgage lender can acquire a certificate for you.
* Nearly anybody can get an FHA loan. There are no revenue limits, nonetheless there are limits on how much you can borrow. VA Mortgage Loans have limits also, but they are available as much as $729,000 in most areas.
* Mortgage loans for veterans do not require you to pay private mortgage insurance (PMI). FHA loans require you to pay the federal government equal of PMI, called MIP (mortgage insurance premium). Getting a VA mortgage lets you avoid this extra expense.
In case you’re a qualifying member of the military, a VA mortgage is an effective way to reap the benefits of at the present’s low mortgage rates. Many people aren’t sure if they need to deal with the perceived problem of a mortgage for a veteran. In case you are a veteran with no VA entitlement, FHA loans can make common sense. Whichever possibility you select, be sure you work with a trusted mortgage lender with the intention to lock in a competitive rate.
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Advantages of a VA Home Mortgage
July 16, 2010 by admin
Filed under Home Loans
In relation to applying for a mortgage, there are various several types of programs. With the various totally different mortgage loan plans accessible, it is very important choose one of the best programs in your particular mortgage needs.
One of many dwelling mortgage plans you possibly can select from is a VA loan. One of these program is designed for veterans to purchase a major residence or refinance an current mortgage loan. Beneath are the many advantages to the VA residence mortgages.
No Down Cost
A VA mortgage offers veteran buyers a program with a zero down payment. This means the loan will equal the gross sale price or the appraised worth of the home. The VA mortgage loan program permits veterans with qualifying income and credit to amass a house with out a down cost in direction of the gross sales worth of the home. However, Veterans do want money towards closing prices, which the seller can help the buyer with.
Seller Concessions
VA loans enable the seller to contribute as much as four% towards the buyers closing costs. That is exceptionally important in assisting a veteran buy a new property and reducing the amount of cash required for closing. For instance, if a purchaser purchases a property for $100,000 the vendor can contribute $4000 towards the buyers closing costs. Seller concessions pays pre-paid items, title, mortgage firm fees in addition to the VA funding fee. The veteran shouldn’t be allowed to pay for the termite report, which is generally paid by the seller.
Reduced Mortgage Loan Rates
For a lot of veterans, VA mortgages provide the most aggressive rates. VA mortgage loan rates aren’t tied to the credit scores the way in which conventional home mortgage charges are. For example, if a consumer has a credit rating of 660, on a VA mortgage the speed can be the identical if their credit rating was 780. However, on a traditional residence mortgage, the credit rating of 660 compared to a 780 would see a rise in the rate.
Mortgage Insurance
Another huge profit within the VA dwelling mortgage program is there is no such thing as a Mortgage Insurance. Not like Typical mortgage loans and FHA mortgage loans, VA mortgage loans do not cost month-to-month mortgage insurance. That is a mean savings of anyplace between $30 a month to $200 a month, depending on the scale of the house loan.
Mortgage Loan Size
VA mortgages do have a set loan limit. To find out the loan restrict in your space, contact your mortgage officer. For instance, the Dallas – Fort Value space VA loan limits are $417,000
With many several types of mortgage loans, it is very important understand all of your options. For a veteran, VA mortgages are an effective way to buy or refinance a home. It is at all times essential to understand the benefits of every home loan program that you qualify for and to be sure to are getting the best possible mortgage loan. Seek the advice of a mortgage professional to see which program is best for you!
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Balloon Home Loans – Be Careful
September 5, 2009 by admin
Filed under Home Loans
In this modern economy, lenders provide loans tailored to just about any situation. Balloon loans are one such loan, but carry a serious downside if you’re not careful.
Balloon Loans
A balloon loan has nothing to do with hot air or floating around the world in 80 days. Fail to plan very carefully when using one of these loans, however, and your financial world will definitely go down in flame like the Hindenburg.
A balloon loan is a mortgage with a fixed interest rate for a set period of years. Unlike traditional fixed rate home loans, the interest rates on balloon loans are nearly as low as those found on adjustable rate mortgages. The problem with balloon loans, however, is the term.
While balloon loans provide a low fixed interest rate for a set period of years, those years are not in abundance. Instead of a fifteen or thirty year repayment term, a balloon loan typically has a term of seven to ten years, depending upon what the lender was willing to give you. At the end of the term, you must repay the balloon loan in full. Yes, in full. Let’s take a look at how this can play out.
In 2005, you find a home you love but can’t qualify for a loan. You are so engrossed with the loan that you eventually locate a lender willing to write you a balloon loan. The loan is for $400,000 and has a 7 year term. At the end of the seven years, you’ve paid the loan down by $50,000, but still owe $350,000. Somehow and someway, you must come up with that $350,000 to pay off the loan. If you don’t, the lender will foreclose on the home.
Every borrower that goes with a balloon loan fully intends to refinance the property before the balloon blows. While this makes sense, you have to keep in mind that refinancing is no sure thing. Maybe you can, but maybe you can’t. Also, we are experiencing some of the lowest loan rates every seen. Chances are very strong that in seven years, rates are going to be much higher. Are you really going to be able to afford those rates?
Balloon home loans are all about seeing the future. In essence, you are pulling out the tea leaves and betting on rates in 2012 or so. If you get it wrong, your financial life can become a nightmare.
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Owner Financing Mortgage – Safety Tips
July 19, 2009 by admin
Filed under Home Loans
Why offer owner financing when you sell?
A higher price, to start with. Add to that a good return on your money, a faster sale, and an easier sale of a “problem property.”
Good reasons, but how do you do it safely?
1. Ask for a large down payment. This is the most obvious way to be safe, but not always possible. The point of owner financing is to help the buyer get the property, and down payment is one of the areas most buyers need help.
2. Ask for other security. If a buyer wants it with little down, and you like the return you’ll get, make it safe by putting a mortgage on other property that the buyer owns. Agree to release the mortgage when they’ve paid down the balance to a certain level.
3. Credit checks. Ask them to pay for and bring you a credit report. Bad credit might be okay, but type of bad credit is important. An unpaid hospital bill they’re disputing is obviously not as relevant as their unpaid loans.
4. Use your instincts. Are you usually right about people? If so, give some weight to your judgement of your buyer’s character. Personally, I’d trust a man who felt morally obliged to pay his debts over a playboy that happens to have decent income at the moment.
5. Look at the whole picture. Let’s suppose that a bank will loan your buyer 90%, and is okay with you taking back a second mortgage for up to 5%, allowing the buyer to get in with only 5% down. If you’re getting 6% more than you expected by accommodating the buyer’s needs, where’s the potential loss? You’re okay if he never pays, right?
6. Talk to a lawyer. In some areas it may take two years to foreclose on a mortgage through the courts, and only six months to foreclose on a “contract for sale.” Knowing these things can help you structure the deal in the safest way.
Owner financing makes it easier to sell, and to get a higher price. You just have to be safe about it. Let a real estate lawyer review your paperwork, and use the tips here.
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Interest Only Home Mortgage Loans – Good Or Bad Idea?
July 19, 2009 by admin
Filed under Home Loans
Is an interest only home mortgage loan a good or bad idea for financing a home? These loans have become very popular and are one of the many different kinds of financing available for property. Opinions vary as to whether an interest only home mortgage loan is a good idea for the average home owner, with valid points being made on both sides. If you are in the market for a home you need to consider all the finance options available to you, together with your ability to repay them. Here are some interest only mortgage loan pro and cons to look at both sides of this kind of financing. If you are employed full time, single and making a good salary then an interest only home mortgage loan may not be the best financing for you. That’s because you could pay off your loan at a lower rate of interest and in less time with a different kind of loan program. On the other hand, you could save a lot of money by only paying the interest. It is possible that if you invested this in a safe investment you would not only have enough to pay off the principle on the mortgage, but would also gain a little capital for yourself at the same time. This of course is a gamble, because how many people will actually invest the savings? However, if you have no other financial responsibilities, it’s one you might find attractive. If you work in seasonal employment, like in the tourist industry, you may find that paying an interest only monthly mortgage payment allows you the freedom to pay a minimum amount when you are in “off season”. But during the time you are working, you can make accelerated payments off the principle in addition to the interest. The risk of paying an interest only mortgage loan repayment is that the principle is not being repaid. Unless the price of homes in your area rises, you don’t build up any equity in your home. Paying the monthly mortgage payment on an interest only mortgage can become like paying rent. You don’t have the safety net of being able to sell your home to raise cash if you are faced with some emergency in your life. As a young professional just starting out on your own, this might not be an issue you need to consider. But if you are married and have a family, you should seriously consider the implications of not having the kind of mortgage that allows you to build a financial safety net. Home equity gives you a form of financial security that can come in handy if you really need to use it. This should be a consideration when deciding which home loan to choose. A lower monthly mortgage payment will always look attractive on paper, but consider all the implications carefully before taking the option of an interest only mortgage loan as a way of financing your home.
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Tips on Looking for a Home Loan Mortgage Company
February 10, 2009 by admin
Filed under Home Loans
People who need to get a loan will soon realize that banks are not the only ones who can lend money to a customer. There are also home mortgage companies who can also offer the same service to the person. There are two ways for the individual to find a home mortgage company. The first will be to do this without anyone’s help. The second will be looking for a middleman or a broker who will do all the legwork.
In any case, the applicant will have to shop around for a firm that is offering it at a reasonable rate. Those who have never done this before should be accompanied by a friend because the lessons learned will prevent the individual from making the same mistakes. The person will notice that home mortgage companies can be found in the phone directory, the newspaper and on the Internet.
The best of these is probably the one found on the web since there is a home calculator that can be used to figure out the amount that has to be paid monthly if the individual chooses to get a loan from this firm. Regardless where the home mortgage company was found, the person will have to narrow this down perhaps to five from the ten or twelve that have sent a proposal to the home.
This will make it easier to review before meeting a representative and asking some hard-hitting questions. This includes finding out how these firms are compensated. Some of these home mortgage companies will charge a flat fee while others make money by getting a percentage from the amount of the approved loan. If the payment is reasonable, the individual should also ask for a few names of past customers who have transacted with this firm.
These people will be able to tell if the service provided was adequate enough to suit the needs of the customer. Should there be no problems, the person should also check with the agent if this is the best package to get. The home mortgage company may have something better to offer to the client. Getting a home mortgage loan is easy.
The challenging part is finding a company that is there to help and not just get money from the customer. Those who are successful will just have to fill up the forms and wait a few days to find out if the request has been approved.
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Home Equity 101 – What You Need To Know
February 10, 2009 by admin
Filed under Home Loans
People who are not able to earn that much working or have bad credit will have a hard time getting a loan from a creditor. The only way to borrow will be through home equity that uses the house as collateral.
Lenders perceive home equity loans as relatively safe. This is because the bank can simply confiscate the house of those who fail to pay. Studies have shown many avail of this to consolidate high interest debts, finance the purchase of a second home, pay for the tuition in college and renovate or remodel the house.
Despite the risk of losing the house for those who are unable to pay, many still avail of this because it is for anyone to qualify for and get a huge amount. The interest rates are very affordable and this can be written off as a tax deductible. One program that is gaining popularity is the 125% equity home loan.
This is considered to be a second mortgage that allows the individual to borrow one fourth of the value of the home. If the house is worth $100,000, this allows the person to borrow up to $25,000. Many of these firms can be found online.
The individual may only qualify after achieving a certain credit score and under certain guidelines, which is up to the lender. The basis for those who qualify for this loan will be up to the lender.
These firms can look at the length of time the homeowner has lived there as well the individual’s current credit score. These things will influence the amount that will be given when the application has been approved.
The lender will not require the applicant to have the property appraised when requesting for a home equity loan. The purchase price will be used as the indicator if the person has lived there for less than a year.
An automated value model, recent tax assessment or simple drive by appraisal will be utilized if the applicant has lived there for a number of years. A home equity loan may last from 10 to 30 years. It is best to shop around and compare the rates of various lenders before signing anything on paper.
Everyone in the household must understand what will happen in getting this type of loan. This means making some sacrifices to cut down on costs to be able to pay on time rather than losing the house.
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Qualifying For A Home Mortgage Loan
February 10, 2009 by admin
Filed under Home Loans
Is Now the Best Time to Buy that House?
Find Out First If You Qualify Buying a house is both exciting and scary, especially for the first-time buyer. Most people prefer to factor in timing, in order to get the best rates. But other than being able to understand market trends, there are other things you need to look at to see if you qualify for that home mortgage. You have a steady source of income. Examine carefully your current cash flow.
Qualifying for a home mortgage means you are capable of a long-term payment commitment so you will need to consider your situation years from now. Try to foresee future expenses, plans, job movements and changes. You have enough money saved to last you at least three to six months in case your income source is cut or interrupted.
This means that you can continue to pay for your mortgage (along with other bills) and the lender has nothing to worry about. Your debts are under control. Sure you still make monthly payments on that student loan and that credit card and you still haven’t paid up the car loan, but if your debts are consistently paid with no bad marks at least a year or two from today, then you’re looking good.
That means you can be trusted. Your monthly total debt payments (mortgage, loans, credit cards) remain below or well below 38% of your gross monthly income. This shows the lender that you are capable of paying responsibly and that a home mortgage will not drive you to bankruptcy. If your credit history is less than perfect, it will not automatically disqualify you for a home mortgage, but a good history means paying lower interest rates and monthly mortgage payments.
Before talking to a lender, check your history from one of the three credit bureaus. There might be some errors you need to correct or you might want the best arrangement that can lift your credit rating a notch higher. You can afford to pay downpayment. You will need a sizable amount of cash to pay downpayment for your house of choice. That’s 20% of the total price. You may also choose a low or zero downpayment scheme, but it may not be cost effective in the long run. Decide to buy when you’re ready.
A house is probably the biggest financial decision you will ever make in your life so be sure you go into it when you yourself feel that you can handle the responsibility. All that timing in order to qualify really depends on you.
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How to Pre-qualify for an FHA Home Loan
February 10, 2009 by admin
Filed under Home Loans
FHA home loans are mortgages that are insured by the United States government, more particularly the Federal Housing Administration. FHA in itself does not make the loans. What they do is that they insure the loans that were in turn, given out by their qualified group of commercial lenders.
With the introduction of the FHA home loan, a lot of low-income Americans were able to secure a loan to purchase their homes. FHA home loans are conceptualized in 1930′s during the time of the Great Depression. The government acted to subsidize loaning programs through FHA in response to the growing rate of defaults and foreclosures.
The good news is that FHA is for every American. But they have to follow the set guidelines in applying for it. To know if you qualify for an FHA home loan, here is a checklist that you can use. See for yourself if you can take advantage of FHA’s easy mortgage loan plans.
1. First and foremost, you should have a steady employment history. By this, you should be able to prove to the agency that you have at least two years of service with your current employer. Stability of job and income is the main factor. That’s the primary requirement of FHA.
2. You should have an increasing income, or at least, a consistent one. So that FHA can correctly assess your capability to pay, you should show them that in your current job, you are earning a fixed amount. And if in case it is not the case, your income should follow a steady rising pattern, not a fluctuating one.
3. You should be able to boast about your credit history. Your credit report definitely says a lot about your financial status. It is FHA’s requirement that all their applicants are in good credit standing. And not only that, they also require that there is not a single payment over due for more than a month within the last two years in their credit reports.
4. You should also show that you’ve got no history of bankruptcy. Or even if you had, it should be at least two years before. You should also show and that you already had regained financial stability for the past two years. You should be in a good credit standing for two consecutive years.
5. Your foreclosures, if any, should be three years old at the very least. This one follows the same principle as the bankruptcy rule stated above. It is a must that for the past three years, what you have is a good credit standing.
6. You can only apply for a loan that is 30% of your total monthly income. If you have everything else worked out, remember this last important detail: FHA will approve you a loan corresponding to your gross income. So, do not apply for one that exceeds 30%. Your application will just be denied. Look and settle for a house that is just within the set limits.
These are the different points to consider when applying for an FHA loan. You should qualify in the every step stated here. These are the exact guidelines that FHA is currently following.
But you have to know that pre-qualifying for the loan is just the first step. It is not a guarantee of anything. All it means is that FHA will merit a review of your application and proceed from there. Your dream of buying the perfect house is still in the cooking stages, so to speak.
Pre-qualification is the first step to getting a loan, though. Needless to say, it is an important step altogether. If you don’t pass the pre-qualification stage, there is no way that you will be able to purchase the house that you always wanted, at least not through FHA.
What the pre-qualification step really does is that it assesses your income, your assets, and your ability to pay. After which, you are to show it to the lender waiting on the wings. Then they further study your case. You’ll get the loan once they see that you are indeed, financially stable.
With all these said, go ahead and start evaluating yourself for an FHA home loan. Take advantage of what they are offering today. This is your chance to own the house of your dreams. Take it while it is still there.
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