FHA

The FHA loan was developed as a way to help lower credit home buyers with little money to put down on a house. Where they might not have qualified for a conventional loan, they could qualify for an FHA loan. This boosted the housing market tremendously and had been a mainstay for lower credit homebuyers for years…until recently. Changes in credit qualifying and mortgage insurance payment increases have made qualifying for an FHA loan more difficult than ever. Below are the general points of an FHA loan.

1. Down payment requirement is 3.5%
2. In most cases, FHA limits the loan size to $271,050 (much lower than VA’s $417,000)
3. An upfront Mortgage Insurance Premium is required on 30 year fixed, ARM and some 15 year fixed FHA loans
4. Monthly mortgage insurance is required
5. Generally the minimum credit score for an FHA loan is 640
6. FHA loans are generally not assumable
7. There are less restrictions on fees charged to the borrower than VA loans

VA

VA loans were created to help assist returning wartime veterans by offering federally guaranteed loans with no down payment requirements. In doing so, it transformed the economy and society by allowing millions of veterans the opportunity to own a home that might not have been able to prior to the act being passed by congress. Today it has become the number one loan for veterans and current qualifying military personnel in the United States.

Below are some main points to the VA loan. Compare to the FHA loan and you will see that if you qualify, VA is a much superior mortgage product.

1. If you are purchasing a home at or below the county loan limits, there is Zero down payment required.
2. Most county loan limits are $417,000, which is much higher than FHA’s $271,050
3. Generally the minimum credit score of 620 is lower than FHA’s 640
4. There is an upfront funding fee required, however in cases where the veteran has a service connected disability rating by VA, there is NO upfront funding fee. FHA requires their UMIP on EVERY loan regardless
5. You can streamline refinance your existing VA loan into a new lower rate VA loan with no appraisal AND not be restricted by loan size
6. In most cases, you can refinance your FHA, Conventional and Subprime loans into a new VA loan at 100% of the value of the home
7. VA loans are assumable, which can make your home very attractive when you go to sell in a higher rate environment
8. VA regulates the fees that can be charged to the veteran but in some cases, veterans pay ZERO fees

An example can be seen here:

Purchase price ($500,000) – VA County Loan limit ($417,000) = $83,000 x Guaranty (25%) = Down Payment required ($20,750)

In counties where VA has set the limits higher, a veteran can borrow more with the same zero down. These loans are referred to as Jumbo VA Loans. These loans are extremely popular as they often have lower rates than Non-conforming Jumbos and even Fannie Mae Conforming Jumbo loans.

If you are in the market for a Jumbo VA loan, feel free to fill out a quick No Obligation Rate Request form here and you will be connected to a VA Loan Specialist that will get you all of the information you need quickly and with no pressure at all. Remember, any VA loan you do with the lender you are connected to, will be done FREE of charge from that lending institution…GUARANTEED.

A VA loan may be one of the best lending options on the market today. They began as a way to help returning service members achieve the dream of homeownership. Today, with the many benefits VA loans offer, they have become more popular than than any loan product on the market.

Benefits of a VA loan

Above all other benefits of the VA loan is the fact that the veteran does not have to put any money down. Aside from the government’s UDSA Loan (Rural Development home loan) or Fannie Mae’s Home Path, there aren’t many options available any longer for 100% financing.

One of the other benefits is that VA loans come with less strict underwriting standards and requirements than most other loans. In fact, with PMI guidelines tighter than ever, over three quarters of VA borrowers could not have qualified for a conventional loan. This leads to the third most important benefit of VA loans….they come with no private mortgage insurance (PMI), a monthly expense that conventional borrowers are required to pay unless they put down at least 20 percent of the loan amount.

Another little known, but huge benefit to VA loans is that they are assumable. Why is this a benefit? Should you look to sell your home later in a higher rate environment, the buyer can assume your loan at the lower rate you obtained when you purchased or refinanced the home. This could make purchasing your home very attractive and possibly allow you to sell for more than you might get if not assumable.

Other benefits of VA loans:

• Competitive interest rates that are most always lower than conventional rates
• No prepayment penalties
• Sellers can pay up to 6 percent of closing costs and concessions
• Higher allowable debt-to-income ratios allowing easier qualifying
• Ability to Streamline refinance your VA loan with no income verification and in most cases, no appraisal

Aside from all of the benefits mentioned, one that many veterans miss out on is NO LENDER FEES WITH NO PENALTY TO THE RATE. VA allows lenders to charge a 1% origination fee to do the loan for you but this is not required. Many veterans don’t realize this. To find out more about VA loans or to inquire about a No Cost VA loan, fill out our 45 second VA Loan Inquiry Form and a VA Loan Specialist will call you by the next business day.

You might ask, “If I were to refinance into a VA loan, what benefits would I expect to see?” Below are some examples of how refinancing into a VA loan could benefit you. If any of these examples fits your situation, you should seriously look into your options and consult a VA Loan Specialist soon.

VA Refinance Example #1

Veteran had purchased a house using a conventional loan, thus had to put 5-10% down and as a result, is currently paying mortgage insurance. The veteran can refinance into a new VA loan up to the lower of 100% of the value of the home or the payoff amount on his/her conventional loan plus any allowable fees, reasonable rate discount and new escrow.

VA Refinance Example #2

Veteran purchased a home with an 80/20 loan combo. S/he does not currently pay mortgage insurance; However the rates or combined blended rate is above the current VA refinance rates. So refinancing and lowering the rate and payment with a new VA refinance would be a benefit here.

VA Refinance Example #3

The veteran has a Jumbo loan and wasn’t made aware that when the house was purchased, a VA loan would have been the best rate scenario at that time. With Non-conventional and even conventional Jumbo rates being higher than VA Jumbo rates, the VA refinance makes complete sense as it would decrease the payment significantly and with no mortgage insurance.

VA Refinance Example #4

For one reason or another, the veteran purchased a house using an FHA loan, putting the standard 3.5% down at closing. With the fact that there is monthly mortgage insurance on FHA loans, and with a even the slightest drop in rate, refinancing into a new VA loan could be a big benefit on the monthly payment…especially when there is no mortgage insurance on VA loans.

Overall, there are many benefits of having a VA loan, but more importantly, refinancing into a VA loan that offers a lower rate and payment than your current loan only makes sense.

Inquire about a No Cost VA Refinance here

Factors that affect the APR, along with the amount of fees associated with the loan, include the actual note rate (the simple interest rate offered by your lender), any rate buy down (discount point) and the time period for which the loan is calculated. The latter is why a consumer should never compare a loan with a 30 year loan duration to the APR for another loan with a shorter loan duration (25, 20, or 15 year).

In addition, most APR calculators assume that an individual will keep a particular loan until it is completely paid off resulting in the up-front fixed closing costs being amortized over the full term of the loan. If the consumer pays the loan off early, the effective interest rate achieved will be significantly higher than the APR initially calculated. This is especially problematic for mortgage loans where typical loan durations are 15 or 30 years but where many borrowers move or refinance before the loan period runs out.

In theory, this factor should not affect any individual consumer’s ability to compare the APR of the same product (same duration loan) from lender to lender. APR may not, however, be particularly helpful when attempting to compare different products, like ARM loans. However, you may want to compare VA loans to other types of loans, (FHA or conventional), to see how the VA funding fee affects the APR on a VA loan in comparison to the FHA loan or conventional loan that has mortgage insurance.

Again, because there are no lender fees on VA loans you get from your FreeVAloan.com lender, the APR will always be lower than other lenders who charge fees, offering the same rate. For more information on a lower APR, No Cost VA loan, Click Here.

Here’s How:

1. First you will need a COE (Certificate of Eligibility). If you don’t have one, you can complete VA Form 26-1880, (Request for a Certificate of Eligibility) and submit it to the VA Eligibility Center along with copies of your most recent discharge or separation papers reflecting an honorable discharge from active duty service after September 16, 1940. Most lenders can acquire your COE for you quicker through the VA ACE system.
2. Obtain a credit pre-approval/pre-qualification from a certified VA Lender.
3. Find the house you want and sign a purchase agreement.
4. Submit your contract, application and required documents to the lender.
5. You will close your loan with a specified title/escrow company or attorney.

Tips:

It’s best to have the lender order the appraisal right away as VA allows a specified time to the VA appraiser to complete the report. This time can be up to 14 days depending on the state. Of course, if you are building a new home, the appraisal does not need to be ordered until the home is 95% complete. If the appraisal is ordered sooner, the appraiser may charge an additional “trip charge” to go back out to complete the report. If the lender is a LAPP lender, or in other words, authorized by VA to issue the Notice of Value (NOV), the loan can be approved and closed without waiting for VA’s review of the credit application. This can save some processing time over non-LAPP lenders that have to wait for VA to issue the NOV.
Even though many veterans have already used their loan benefits, it may be possible for them to buy homes again with VA financing using remaining or restored loan entitlement.
For more information or to inquire about a No Cost VA loan, submit a No Obligation Inquiry Here.

Here is VA’s guideline on EEM’s>>>

For EEM rates or more information, Inquire Here>>>

The VA Hybrid ARM is a product that allows a lower fixed rate and payment for the veteran than the more commonly used VA 30 year fixed rate loan or even the 15 year fixed.  The initial fixed interest rate will be good for a period of three (3/1 ARM) or five years (5/1 ARM), and then adjusts annually after the designated fixed period. The 3/1 and 5/1 VA Hybrid ARM programs allow up to a 1% annual interest rate adjustment after the initial fixed interest rate period, and a 5% interest rate cap over the life of the loan.

INDEX AND MARGINS
The index is the weekly average yield on U.S. Treasury Securities adjusted to a constant maturity of one year. Also known as the 1-Year Constant Maturity Index. VA ARM loans have either a 2.00% margin or a 2.25% margin.

ADJUSTMENT CAP
One percent (1%) annually after the initial fixed rate period of 3 or 5 years. This differs from a conventional ARM or even an FHA ARM loan that has a higher adjustment cap of 2-5%.

LIFE CAP
The most the interest rate can adjust during the life of the VA ARM loan is 5% above the initial note rate. So for example, if the initial note rate is 3.75%, the very most it could ever be is 8.75% and this could not happen until at least 5 years after the initial fixed rate period.

FIRST ADJUSTMENT DATES
Government loans only adjust 4 times per year (January 1, April 1, July 1, and October 1). The first adjustment will occur within the period that follows the initial fixed period. For example, if the initial period ends in February, the rate will adjust in April and then annually thereafter until maturity.

3/1 VA Hybrid ARM: the first rate adjustment will occur between the 36th and the 42nd payment due date.

5/1 VA Hybrid ARM: the first rate adjustment will occur between the 60th and the 66th payment due date.

QUALIFYING RATE
Unlike Fannie Mae ARM loans (Conventional) that uses the greater of the fully indexed rate or the note rate + 2.0% to qualify the borrower when the fixed periods are 5 years or less, VA ARM loans use the initial note rate. This is a huge benefit for veterans with higher debt ratios that would not qualify for a loan otherwise.

As an example, let’s say you’re purchasing a new home for $300,000 but for some reason, (high debt balances, single income, tax write offs reduced your yearly income, etc.), you cannot qualify for the higher payment on a 30 year fixed rate loan. So you’re only option is an ARM. With a conventional ARM loan, you would need to qualify on a payment with a rate at least 2% above the initial note rate. So if you could not qualify for the 30 year fixed rate loan, you are sure not to qualify for the conventional ARM loan as that qualifying rate would be at least 1% higher than the fixed rate loan.

BENEFITS

• Lower Rate
• Lower Payment
• Lower rate adjustments than Conventional and FHA ARM products
• Easier to qualify for
• Greater monthly savings

All in all, the VA Hybrid ARM is a very good product but if you have a choice, you should consider carefully. Get more information from a VA Loan Specialist and save thousands when you use FreeVAloan.com.

To speak to a VA Loan Specialist and obtain VA Loan Financing, Inquire Here>>>

No Down Payment Requirement on VA Loans

Obviously this is a big factor for those who don’t have the money to put down on a mortgage loan. Conventional loans require 5% down payment which can certainly add up quickly the larger the home you look to purchase.

VA Loans Don’t Have PMI

This can lower your payment significantly compared to the high priced PMI charged on conventional loans and also make it easier to qualify for a loan as your debt to income ratios will be lower.

Lower Credit Requirements for VA Loans

This is a huge benefit vs the conventional loan. A customer can get approved for a VA loan with a credit score as low as 620. In most cases, customers looking for conventional loans will have to look for a different product if their credit score drops below 660 and in some cases, 680.

Higher Debt to Income Ceilings on VA Loans

This too is a tremendous benefit for Veterans and current military who might not be able to show a significant monthly income to qualify. Conventional loans, in most cases, will deny the borrower that has a total debt to income ratio of over 45%. This ratio is figured by taking the TOTAL MONTHLY DEBTS including property tax, home owner’s insurance, home association dues and minimum non-mortgage debt payments, and dividing it by the TOTAL GROSS MONTHLY INCOME.

So on a conventional loan payment of $1,100 (Principal and Interest), Monthly tax and insurance of $400, PMI payment of $100 and total monthly debt payments of $400, your total monthly payments would be $2,000. For a conventional loan, your monthly gross income could not be less than $4,444.44 or $53,333 per year. However, on a VA loan, your income could be as low as $3,333.33 or $40,000 per year and qualify for the same loan.

VA Loans Are Assumable

This is a tremendous benefit for Veterans looking to sell their home. The buyer can literally have a rate lower than the market rates making purchasing the house much more attractive. You can see how this would help sell your house in a tough market and gain an advantage over some other homes in your area.

No Lender Fees

If you fill out an Inquiry Form Here, you’ll be connected to a VA Mortgage Specialist that will charge you Zero Fees for your VA loan. That means NO Bank Fees, NO Broker Fees, NO Processing Fees, NO Underwriting Fees and especially NO ORIGINATION FEES.

INQUIRE ABOUT A FREE VA LOAN HERE>>>

Members of the military and certain other federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and qualify for the credit. Thus, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2011. If a binding contract is entered into by that date, the taxpayer has until June 30, 2011, to close on the purchase. Members of the uniformed services, members of the Foreign Service and employees of the intelligence community are eligible for this special rule. It applies to any individual (and, if married, the individual’s spouse) who serves on qualified official extended duty service outside of the United States for at least 90 days during the period beginning after Dec. 31, 2008, and ending before May 1, 2010.

This is a much deserved benefit given to military families. All that qualify should take advantage of the First time home buyer tax credit before it is no longer available.

To get pre-qualified for a VA Loan and take advantage of the extended First Time Home Buyer Tax Credit, Inquire Here>>>