Category Archives: Va Interest Rate Refinance Loans

What is a VA Mortgage?

In many instances, younger people who return home from serving their country would like a home to call their own. Not having built up a vast credit rating in the community, it is quite possible that this would be denied to them. One thing that they can do is to avail themselves of a Veterans Administration home loan, part of the perks attached to being a veteran.

 

A Veterans Administration home loan helps veterans, surviving wives or husbands, or service men and women to become home owners when they may otherwise not be able to do so. The mission of the Veterans Administration and the home loans is to bring home ownership into the hands of those who have served our country. In Idaho a VA mortgage can assist you in gaining access to a home more rapidly.

The VA can help you to buy a home, to repair a home, to retain your home, to adapt a home if necessary in order to make it ready for your personal use. In some cases, as veterans who have been injured come back to the United States they require some adaptation of their homes in order to be able to use them well. The VA mortgage can help with that too.  VA home loans are  home loans which are provided by private lenders but which are guaranteed by the United States government so that the monies are more easily attained by the veteran and the lender can offer terms for your Idaho VA loan which are much more favorable to you.

 

Just finished up my busiest month since May of 2006!

Interest rates moved up around memorial day but my clients who listened to my advice to lock their loans got deals that probably wont come around again.

Right now, if someone was looking for a no cost VA refinance or an FHA streamlined refinance would pay about 1.25% higher than what was available before memorial day.

That doesn’t mean that rates are bad, in fact they are still great, just higher than they were a short time ago.

I keep track of my clients situations and needs and when I see a chance to improve it, I will contact them and let them know what is available. It was those past clients that listened to my advice and had me lock their rates that were successful in getting a no cost refinance in the low 3’s. The clients who didn’t want to lock all thought the rates would drop a little more and missed the opportunity when rates moved up 4 weeks in a row.

While I wish everyone had listened to my advice, most did and that made for a lot of work and long hours getting their loans set up, processed and closed. I did have to skip a few trips to the gym or lunch invites, but it was worth it to take care of my clients.

The lowest rate is usually not the best loan!

This might make some of you say “what has he been smoking?” but there is an important reason for this.  I see many people get sucked in to a “my rate is the lowest so I must have gotten the best deal” mentality.

You can’t go online without being bombarded with get a mortgage with a 2.25% rate(APR 2.78%) or other such message.  This is one of the most outrageous offers I have seen.  I can’t think of anyone who would be served by this offer. FYI, it was 3 yr. adjustable rate VA Loan with 1% discount and 1% origination plus all the other third party fees.

I know why online lenders offer it, to make the phones ring.  They later pull a bait and switch and get the borrower into a more realistic loan that their local bank or broker could have gotten them.  For most people, that would have been a 30 yr. fixed rate in the 3’s with either a no points/no origination fee structure.

Lenders offer a wide range of rates and terms for clients so they can select the best mortgage for their situation.  For some, they are never going to move and it might make sense to pay a discount point, origination fees, and closing costs.  On a 30 yr. fixed rate mortgage, it takes about 7 years to recoup the cost of a 1% discount point.  If you are sure you will live there for longer than 7  years, then you would come out ahead.  If you think  you might move in a few years, then don’t pay closing costs or even a 1% origination fee.  The no points/no origination fee option is a much better mortgage for your situation.

There is even an option called the No Cost Refinance that is very popular.  For the record, I call it Lender Paid Closing Cost Refinance as that is more accurate but the slang term is No Cost Refinance.

Here is how it works:  Say a lender offers 3.25% on a VA streamline refinance with no points, just third party  plus your escrow account set up.  That can be about 1.5-2% in most areas.  At 3.75%, that same lender may offer a lender credit of 2% that gets credited to the borrower to offset your closing costs and new escrow account set up.  This means you are not rolling any costs into the loan.  Yes, the rate is higher, but you didn’t pay anything upfront to get it.  The difference in payment might only be 25 dollars more and that would take 10-11 years to recoup if you rolled the closing costs into the new loan.

What I like to do with all my clients is to find out what their reasons are for getting the loan, their goals for the home, and sometimes even their retirement planning goals so that I can help them select the right loan for their situation.  This is why my past clients call me to help them finance their next home or to send a family member to me for help.

Don’t fall for that “too good to be true” interest rate offer!

I have the advantage of being in the industry and can see a misleading offer a mile a way.

Recently, I was shown an offer for a VA refinance at 2.25% (3.94%Apr) and had to dig into it.  Sure enough this national, Internet only, lender was offering a 3 year adjustable rate VA Loan.  Furthermore, it had a 1% origination fee plus at least 1% in discount points.  On a $150,000 loan that would be over $3000 in additional costs borrower would have to pay just to save about $75 a month instead of taking a 30 yr fixed rate in the low 3’s.  In today environment, it just doesn’t pencil out when you run the savings vs the cost and the projections for long term interest rates.

Now to be fair, I do have adjustable rate mortgages available to my Idaho Mortgage seekers, I just don’t think they are the best choice for most borrowers.  If someone just has to have the lowest rate and will tolerate the risk of an adjustable rate mortgage, then I guess I would write the loan for them after much disclosure of how much they are going to pay if the loan adjusts to its maximum over the life of the loan.

Many times online only lender use these advertisements to simply make the phone ring and then switch the borrower to a normal fixed rate loan once they find out that too good to be true rate is for an adjustable rate mortgage.  This is a classic case of “bait and switch.”

 

 

 

How does a VA refinance work?

If you have a Veteran’s Administration Loan, you may qualify for one of the best loan programs in existence today, the VA Interest Rate Reduction Refinance Loan.  This loan is also sometime referred to as a “VA Streamline” or IRRRL  (pronounced Earl.)

The VA IRRRL allows a Veteran or in some cases, the widow of a Veteran to refinance their loan into a lower rate or from an adjustable rate to a fixed rate without getting a new appraisal or providing a lot of new documentation.  The Veteran’s Administration doesn’t care about the present value of your loan, instead they are more concerned that you have been making your payments on time.  Most people in my area, Boise, Idaho have experience a loss of value in the housing crisis that hit us in 2007.  I have been successful in helping my clients get lower rates and payments even though their current market value is probably less than when they originally took out their VA Loan.

One thing to note about the VA IRRRL, it doesn’t let you obtain any extra cash out of your loan nor does it allow you to payoff a 2nd mortgage or Home Equity Line of Credit (HELOC.)  A Veteran home owner could take their extra mortgage payment savings and apply that to any second mortgage and accelerate the payoff.

It also requires a process called a subordination of the second mortgage where the second mortgage lender agrees to allow the new first mortgage.  Many times there is a fee from the second mortgage holder to do the agreement and it takes a week or two to get it done.  It is something we do as part of our service.  I advise my clients when seeking to refinance their Idaho VA Mortgage if they have a second mortgage that needs subordinating.

Currently in my market, Boise Idaho, we are refinancing VA Mortgages into new, lower rate loans in the 3’s.  We also have a No Cost VA Loan where for a slight increase in the mortgage rate, we obtain a large mortgage credit for our clients to offset their closings costs.  those No Cost Va Loans in Idaho are also in the 3’s for 30 yr fixed rate loans.

It is common for many of my past clients to call me up and have me run their numbers and see if another No Cost VA IRRRL is available.  If someone saves even $50 per month and they are not increasing their loan balance, it is like getting a free $50 or more per month.

There is not enough space here to go into all the details of getting a VA refinance in the Boise, Idaho.  should you have any questions or want me to look at your situation, call me at 208-861-7579 or simply shoot me an email and I can get your custom mortgage quote for you.

 

4 loan programs for “upside down” home owners

In my area, Boise Idaho, the home values jumped from 2004-2007 and as a result, many homeowners bought at the peak prices.  In 2012 interest rartes are much lower but most of those homeowners owe more than their home is worth.

The “upside down” homeowner may think that they cannot refinance and lower their mortgage payments, but there are options available right now.

1. VA Interest Rate Reduction Refinance Loan, or IRRRL:  If you ahve a VA loan,and have been current on your payment the last 12 months, then you may refinance your mortgage without having to get a new appraisal.

2.  FHA streamline refinance:  The same as the VA IRRRL, you may refinace into a lower rate without having to get a new appraisal.

3.  USDA  Rural Developement refinance:  This is a new program that was recently rolled out in a few test states.  It doesn’t require a new appraisal to get a lower interest rate.

4.  Home Affordale Refinace Program, or HARP:  If you ahve a Fannie Mae or Freddie Mac owned loan prior to 5/31/2009, you may refinance regardless of how far upside down your are.

Now with all of these programs, there are different requirements and features that are too numberous for one posting.  Some lenders hsve “overlays” on the programs that may add additional requirements to the basic loan progra.  for example, many lenders require some sort of appraisal on a VA IRRRL.  I have several, that follow the program’s guidelines of no new appraisal needed.

If you are talking to a mortgage lender and they dont have the no appraisal requirement, then call around until you find one who follows the intent of the program.  If you are in Idaho and need help with a FHA Streamline Refinance, VA IRRRL, or a Home Affordable Refinance Program loan, you can call me and I can help you lower your mortgage payment.

Need to get your loan done quickly, I just closed one in 20 days. Start to funding!

This was a VA refinance, so it takes 4 days from signing to funding due to the right to recind period of 3 days. 

It helped that the client was prepared and got anything I needed right away.  The Title Company, Pioneer Title of Ada County, worked the signing into the clients work schedule.  It was the smoothest loan I have had in a while.

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