NO B.S. VA Loans » Refinancing

Good Faith Estimate 101 for Veterans

themightyquin — Wed, 19 Aug 2009 21:36:56 +0000

One of the most important things that every veteran should know is how to evaluate a Good Faith Estimate or GFE. A good faith estimate is not just a verbal quote of how much you are going to pay but it is actually a document required by the Real Estate Settlement Procedures Act (RESPA).

If you are applying for a loan, the lender or broker should provide you a written estimate within 72 hours after applying for a VA loan.

Don’t get confused if you get multiple GFEs showing different bottom line totals. In most cases, you will receive a preliminary GFE and later, a “Final” GFE after the lender as approved the loan.

Be aware that every bank or mortgage broker will estimate costs differently but it is critical you understand what fees are stated, and whether you are being charged correctly.

Also, remember that a GFE is just an estimate – this is your loan officer’s best guess on how much it’s going to cost you to close your loan.

To make things easier, let’s breakdown the GFE into two categories: lender or broker-associated costs and other costs.

Lender or Broker-Associated Costs – The costs under this category should be more or less accurate. This is basically how much the lender or broker asks you to pay to process your VA loan application. These costs should include but are not limited to: loan origination fees, loan discounts, appraisal fees, credit reports, lender inspection fees, any tax-related service fees, processing fees, underwriting fees, and wire transfer fees. See VA allowable charges for a complete listing of acceptable loan fees.

Other costs – Aside from the lender and mortgage broker, there are also other entities involved in your VA loan application procedure. These bodies require a certain amount to be paid in order to complete your application. Some examples of these costs are insurance premiums, VA Funding Fee, title charges, escrow fees, transfer charges, and any additional settlement charges.

How exactly do you make use of this information?

We recommend you focus your efforts on interest rate AND lender charges because these are the only variables the bank actually controls. All other charges such as taxes, home owners insurance, settlement fees, and escrows will vary dramatically depending on the institution that prepares the GFE.

In some cases, your bank or VA mortgage broker won’t even take the time to quote these third party fees. So, if you get a GFE with very low costs take a second look at what’s actually being charged. You may be surprised to learn your VA lender has omitted 50% of the required information.

Surprisingly, the highest costing GFE can often be the best deal! If your VA lender did a great job, your GFE should be complete. But be aware, this may also translate to a higher bottom line when you compare to other “incomplete GFE’s. A completed GFE will include: all escrows, taxes, home owners insurance. This is also a good indicator that your working with a VA lender that has your best interest at hand and does quality work. Don’t deal with VA lenders that can’t provide accurate documents. That’s the best advice I can give.

In addition to your GFE, and before you make your final decision, ask your VA lender for a performance guarantee and make sure they put it in writing. What is a performance guarantee you ask? This is a document that your VA lender provides guaranteeing your costs on the loan. It will also guarantee your interest rate should you choose to lock the VA loan.

By obtaining a “completed” GFE and performance guarantee you can rest assured your homework is done and your ready to select a VA lender.

Affordable Refinance Program

themightyquin — Thu, 13 Aug 2009 15:54:50 +0000

The Obama Administration has introduced a comprehensive Financial Stability Plan to address the key problems at the heart of the current crisis and get our economy back on track. A critical piece of that effort is Making Home Affordable, a plan to stabilize our housing market and help up to 7 to 9 million Americans reduce their monthly mortgage payments to more affordable levels.

The Home Affordable Refinance Program gives up to 4 to 5 million homeowners with loans owned or guaranteed by Fannie Mae or Freddie Mac an opportunity to refinance into more affordable monthly payments. The Home Affordable Modification Program commits $75 billion to keep up to 3 to 4 million Americans in their homes by preventing avoidable foreclosures.

Here is the link: Affordable Refinance Program

To Pay or Not to Pay? The VA Loan Funding Fee

Vikki P. — Mon, 27 Jul 2009 20:19:27 +0000

For guaranteed loans, the law requires the borrower to pay the VA Loan Funding Fee. A veteran will be asked to pay this upfront during the final stage of the loan application process. Though VA home loans provide veterans a no-money-down benefit, a veteran is asked to pay the VA Funding Fee as a contribution toward the cost of this unique benefit. As a result, the VA Funding Fee reduces the cost to taxpayers.

For first time veteran borrowers, the fee is currently at 2.15% while second-time users who don’t want to make a down payment are asked to pay 3.3%. Why are second-timers asked to pay more? It’s pretty simple, these veterans have already taken advantage of the benefit in the past plus they have also had the time to save money to pay for a down payment.

Another important aspect of the VA Funding Fee that every veteran must know is that it can vary depending on the type of service rendered and whether the loan is a purchase, a streamline refinance or IRRL, or simply a cash-out transaction. The following charts show the details of the VA Funding Fee.

Type of Veteran	Down Payment	First Time Use	Subsequent Use for loans 1/1/04 to 9/30/11
Regular Military	None 5% – 10% 10% or more	2.15% 1.50% 1.25%	3.3%* 1.50% 1.25%
Reserve/National Guard	None 5% – 10% 10% or more	2.4% 1.75% 1.5%	3.3%* 1.75% 1.50%

Cash-Out Refinancing Loans

Type of Veteran	Percentage for First Time Use	Percentage for Subsequent Use
Regular Military	2.15%	3.3%*
Reserve/National Guard	2.4%	3.3%*

* The higher subsequent use fee does not apply to these types of loans if the veteran’s only prior use of entitlement was for a manufactured home loan.

Type of Loan	Percentage for Either Type of Veteran Whether First Time or Subsequent Use
Interest Rate Reduction Refinancing Loans (IRRRL)	0.50%
Manufactured Home Loans	1.00%
Loan Assumptions	0.50%

Although almost all veteran home buyers pay the VA Loan Funding Fee, there are some exceptions to this:

Veterans with service-related disabilities who are receiving VA compensation
Veterans with service-related disabilities who did not receive retirement pay but are entitled to receive compensation
Surviving spouses of veterans who died while rendering service or from any service-related disabilities

VA Streamline Refinance or IRRL

themightyquin — Wed, 10 Jun 2009 17:52:03 +0000

So what happens when interest rates drop, and your once low rate is no longer competitive in today’s market?

Lucky for you, Veterans have a quick and easy solution.

The Streamline Refinance or Interest Rate Reduction Loan (IRRL) program as it is also known, can easily reduce the interest rate on your mortgage and consequently lower your mortgage payment. The savings is immediate, and if done properly, you should see a big drop in your next mortgage payment!

A VA IRRL is easy on the pocket book

One of the best things about this program is that it can be accomplished inexpensively.

Here are some IRRL highlights:

Closing costs can be financed or “rolled-in” and effectively eliminate your actual out of pocket expenses.

The VA funding fee is only .5% (as apposed to 3%) and in some cases can be waived

NO credit Check required

NO appraisal required* (NOTE*: Some banks have changed their funding guidelines and are now requiring appraisals)

NO Employment Verification

You can have up to (1) 30 day late payment over the past 12 months

Can skip up to 2 months mortgage payment. (Mortgage interest accrues in arrears and will be added to your principal balance. This is not free money.)

If you like saving money AND need a quick solution that won’t drain your pocket book, a VA refinance is the perfect choice for ANY veteran.

Serious applicants should locate their certificate of eligibility and DD214.

Don’t delay, follow this link and apply online today!

VA Cash Out Refinance

themightyquin — Wed, 10 Jun 2009 19:52:58 +0000

After having carefully planned and researched, you finally close on a VA home loan thinking that this is the end of all the troubles. As the years pass, so do your family dynamics. Maybe your family has grown in numbers and it’s time to add the extra bedroom, or maybe it’s just a matter of consolidating debt to take advantage of the tax benefits. Statistics show that the average mortgage loan is kept no longer than five years. And, most Americans move within ten years of buying their first home.

Like it or not, you’ll probably be refinancing; and if your considering taking cash out, then this article is for you!

What is a VA cash out mortgage refinance?

In the simplest of words, this is a program that provides you with the option of cashing out the equity that has accrued on your home during your period of stay. You can use the funds as per your requirements and choosing.

Before considering a VA cash out refinance, we recommend speaking to a certified mortgage planner and VA loan specialist. These people can offer you expert advice and also ensure your decision meets both your short and long term objectives. In other words, don’t just refinance your home, develop a plan that betters your financial well being and stick to it.

How much cash can I receive?

Once you get your house appraisal done, you have the option to cash out up to 90% of the total amount of accrued equity in your home.

Don’t confuse a VA cash out refinance with a VA streamline refinance (or VA IRRL)

One of the common mistakes people make is confuse the Cash-Out Refinance program with the streamline refinance program. These two are completely different programs.

Here are the primary differences:

VA Cash Out Refinance:

3% funding fee unless exempt
Appraisal is required
No reported late payments for the past 12 months

VA IRRL or VA Streamline Refinance:

.5% funding fee (can sometimes be waived)
No appraisal required* (*NOTE: with banks changing guidelines daily, some DO require an appraisal.)
Can have 1 late payment reported over the last 12 months.* (*NOTE: As per the banks discretion. In some cases, banks will not accept late payments.)
NO cash can be received at closing

VA Loan Appraisals – Everything you need to know and more

Toni — Mon, 08 Jun 2009 22:42:32 +0000

A VA appraisal is a critical step in funding a VA loan. Let’s examine the appraisal process and highlight the key points every veteran should understand.

Don’t try to order your own VA appraisal!

The VA lender is responsible for ordering the appraisal. This process normally takes place just after the borrower has submitted their entire loan package.

The Department of Veteran’s Affairs will assign a VA loan appraiser. In order to prevent appraisal fraud, the homebuyer will not be able to choose which appraiser performs the work.

The approximate cost of a VA loan appraisal is around $400.00. This fee is state-regulated so it depends on the location of the home sale. The VA loan appraisal fee, in most cases, must be paid before the VA loan is closed.

When dealing with appraisals, the financing can be delayed if the property is not up to par. VA appraisal guidelines can be found on the Veterans Affairs website. These rules discuss the particular instances that could cause a home to appraise for less than the sale price. In order for a VA loan to fund, The appraisal must meet or exceed the purchase price.

If your home does not appraise this could be why

The home is not in livable condition
The home is in poor condition-if there are repairs needed they must be completed before the VA loan is closed.
There are safety issues with the home; lacking a home foundation, no railings on a stairway; etc.

After a VA loan appraisal is conducted you will receive a CRV (Certificate of Reasonable Value) which will be based on the VA loan appraiser’s estimate of the property’s value.

If your appraised value is low, take these actions.

Negotiate the sale price of the house with the seller in order bring the price down to meet the VA loan appraisal amount.
Make a down payment to cover the difference. (I only recommend doing so if you have a home you can’t pass up.)
Request a “Reconsideration of Value” if there were new comps and additional information that would raise the value of the home, which were not available at the time of the original VA loan appraisal.

How to time your VA loan financing.

VA Loan Closing Costs 101

Vikki P. — Mon, 08 Jun 2009 20:12:47 +0000

Whether you are applying for VA loan or any mortgage loan, a borrower has to pay the closing costs. But what exactly are you supposed to and not supposed to pay? If you’ve already began your research, you will notice words such as allowable and non-allowables. Veterans applying for VA mortgages or loans are only supposed to pay the “allowables.” David Reed, columnist for Realty Times and Mortgage Originator magazine, has created this easy to remember mnemonics (ACTORS) about the allowable closing costs for veterans:

Appraisal (aka Notice of Value, NOV) or inspection charges

Credit report fees

Title or title-related charges

Origination fees and points

Recording charges

Survey fees if needed

Now that you have an idea of what the allowables are, let’s take a quick look at the non-allowables. Here is a list of fees that CANNOT be charged to a veteran:

Document preparation, loan closing or settlement, attorney services for anything other than title work, preparing loan papers for conveyance fees, locking in interest rate services, photographs, stationery, mailing or postage charges, telephone calls, amortization schedules, general overhead, membership, escrow charges or fees, document preparation and / or assignment, notary, loan application, processing, loan broker or finders fee other than your mortgage company, trustee’s fees or charges and tax service.

Although a lender is not supposed to charge for non-allowables, there is such a thing as a “One percent Guideline.” This simply means that even though there are non-allowables, “the lender is allowed to charge a flat one percent of the loan amount and apply that fee to the various miscellaneous lender charges the veteran may not otherwise pay for,” according to Reed.

Want more tips about VA loans and mortgages? Always visit our website www.NoBSVALoans.com or subscribe to our RSS feed for more useful and free information right at your fingertips.

4 VA Loan Myths Demystified

Vikki P. — Mon, 08 Jun 2009 15:15:47 +0000

Researching is very crucial if you are currently considering a VA home loan. And while you’re at it, you can’t help but discover some funny information about getting this type of loan.

Here are the truths behind the five of the most common VA loan myths:

Myth No. 1: I have bankruptcy on my credit report and lenders won’t make a mortgage loan so I have to wait for ten years for the bankruptcy to be removed from my report.

The Truth: This is absolutely not true. What’s good about VA loans is that it has a more lenient credit guideline. It allows 2 years to pass before issuing a mortgage after bankruptcy.

Myth No. 2: I can only apply for a VA loan from the US Department of Veterans Affairs.

The Truth: Actually, VA does not make loans. You can apply for a VA loan with any mortgage lender as long as the lender participates in the VA home loan program. A good example would be the VA Loan Store.

Myth No. 3: I have to be on active duty in order to qualify for a VA home loan.

The Truth: Your eligibility is based on your current and past service. According to the VA General Rules for Eligibility, you are most likely eligible for a VA loan if you have served at least 181 days from 1964 to today.

Myth No. 4: VA loan limits are lower than the regular, non-government loans.

The Truth: Loan limits usually change every year especially if there’s a ten percent increase in home prices. Currently, zero downpayment VA loan limits range from $417,000 up to $1.094 million.

Credit Requirements for VA Loan

Toni — Mon, 08 Jun 2009 05:20:10 +0000

Even though the VA loan is more lenient than conventional mortgage programs, there are still credit requirements in order to be approved for a VA loan. Most banks require a minimum 620 credit score and 12 months mortgage history with no lates.

Types of imperfections on a credit report that may affect the VA loan approval process:

Collections
Late payments
Judgments

Payment History Factor

Re-payment history is an important factor in getting approved for a VA loan. Your rental and mortgage payment history signify your ability to pay your housing payment and will better qualify you for a VA loan.

If you lack credit history, provide explanations for any of the following:

If you are a veteran who has been recently discharged and have not been able to establish credit
Use cash instead of credit on a regular basis for bill paying and purchases
Veteran has not used credit since reconciliation of bankruptcy and judgments

Bankruptcy

Bankruptcy does not immediately disqualify a veteran who is applying for a VA loan. If you have had a bankruptcy discharged over 2 years previously to applying for a VA loan it may not be considered. If the bankruptcy discharge was within 1-2 years of applying for a VA loan there are a couple things that are taken into consideration that may still help qualify a veteran:

If you have obtained credit following the bankruptcy and made satisfactory timely payments
If reasons for Bankruptcy were above and beyond the control of the veteran-Loss of job, medical bills, divorce, loss of a business etc.

Foreclosure

Foreclosure is still another issue that will be a deciding factor in qualifying a veteran for a VA loan. The same rules apply as did with bankruptcy, but if the foreclosure is on a VA loan that may change the amount of entitlement available to be used.

Plan ahead and improve credit

When applying for a VA loan, work in advance to reconcile issues on your credit report by paying collection accounts in full or setting up payment plans with judgments against you.

Here are several things you can do:

Get a free copy of your credit report in order to review
Letters from creditors stating balances have been paid in full
Pay credit card bills down to at least half of what open credit in on card
Secured credit cards can help re-build credit

Close excess credit cards that are open only keeping necessary and low interest rate credit cards open—to much open credit can hurt you qualify for a VA loan.

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Characteristics Of Predatory Lenders

Toni — Thu, 28 May 2009 04:25:34 +0000

They say knowing is half the battle.

Here at www. NoBSVALoans.com, we want to keep our readers as well as fellow veterans informed. We believe that veterans need to know what’s out there and how they can protect themselves from abusive lenders. And because we don’t want anyone to become a victim of predatory lending, here are the seven things you need to know about predatory lenders.

Jam-packed hidden fees. Abuse starts when no one’s looking. This type of lender likes to sandwich fees and ask for excessive and upfront prepaid interest.

The never ending prepayment penalties. Understanding your loan agreements are critical. In most cases, pre-payment penalties need to be avoided.

Loan flipping. Wikipedia simply defines it as “frequent refinancings that result in little or no economic benefit to the borrower and are undertaken with the primary or sole objective of generating additional loan fees, prepayment penalties, and fees from the financing of credit-related products.”

Products you don’t need but end up getting. Predatory lenders offer financial products you don’t need. The borrower is then left with even more debts to pay.

Use of mandatory arbitration clauses. Mandatory arbitration is a fancy way of saying “you can’t get a lawyer and go to court to protect yourself.”

Negative amortization. NegAm occurs when the loan payment for any period is less than the interest charged over that period so that the outstanding balance of the loan increases. (Wikipedia)

As an added bonus, we are giving you some useful tips to avoid them.

If it’s too good to be true, then it probably is. Beware of phrases like “No Income Verification” or “Guaranteed approval.” These phrases translate to “We don’t care if you can afford to make the payments or not.” Instead, look for loan experts who can offer you a 100% satisfaction guarantee.

Ask for a list of all the fees involved and raise “what if questions.” Think of a worst case scenario and ask your lender about how you need to handle the situation. Watch out for unexplainable, excessive fees as well as prepayment penalties.