Tag Archives: Guidelines

Veterans Administration Loans for Zero Down Payment borrowers

One of the many benefits available to honorably discharged veterans is the VA Home Loan Benefit.

Basically, it will allow you to buy a home with ZERO DOWN PAYMENT and get a low-interest rate at the same time.  Normally, if you put less money down, you would expect to pay more in rate than someone with a larger down payment but this is not the case with a VA home loan.

Right now, we can get qualified veterans 30 year interest rates in the mid 3 percent range.  This equals $4.49 per thousand borrowed in a monthly payment.  A $100,000 loan would have a payment of $449 per month not including taxes and insurance.  At this rate, buying a home certainly costs less than rent in the Boise area.

How does the Veterans Administration offer this?  First of all, the loan is not from the government but instead its secured by the VA.  The loan is made by lenders to the borrowers according to the VA loan program.

If  XYZ Bank makes a loan to a veteran and later the veteran goes into foreclosure, the bank takes the initial loss.  The VA pays the bank for the defaulted loan, making them whole and takes the house back as collateral for the money lost.

This might seem risky, but the VA loan guidelines are written in such a way as to encourage responsible lending and not letting veterans get over indebted.  Furthermore, Veterans by nature of their service, have demonstrated the ability to follow the rules and generally don’t go into default nearly as much as other home buyers.

How does one qualify for a VA loan?  Its easy, you call your local lender and ask for a VA loan specialist.  If you don’t have one, I can be reached at 861-7579.  They determine quickly if you qualify and can give you an estimate of the payment on the home you are looking at.  You don’t need your original certificate of eligibility, instead, the lender will retrieve it directly from the VA.

 

New Home Loan qualifications and bank overdrafts

New changes to mortgages in 2014 require a lender to judge the borrowers ability to repay.  I like to think that we did prior to this, but when new laws are passed, they always generate new guidelines that supersede the past methods of qualifying borrowers for a home mortgage.

In the past, the presence of overdraft fees in a borrowers bank accounts were left to the discretion on the underwriter.  Now, they are considered a negative factor in judging a borrowers ability to repay the home loan.  Even transfers from a line of credit when done to prevent an overdraft are considered a negative factor in the borrowers ability to repay their home mortgage payment.

Overdraft and Transfer fees can add up to a significant amount of fees in a month.  This in effects becomes a regular monthly debt which can at the least increase your Debt to Income to the point you don’t qualify.  Even if it’s not much, it’s an unnecessary fee that you don’t need to be paying.

What if you have them?  It might be possible to ignore them if  you have a few months of zero overdraft fees or credit line transfer fees.  How to address that if you do have them showing on your bank statements?  It’s sometimes possible to prove to the underwriter that you have changed your ways.  Pre purchasing and budget counseling certificates can prove you have. A letter explaining specific steps you have taken to better manage your money will probably be required as well.

It is definetly more complicated to qualif for a home loan these days, but with proper planning and the willininess to do what it takes, you can get qualified for your next home mortgage.

If you’re in Idaho, and you have questions or want me to look at your situation, call or request a loan pre-qualification at my site.

 

 

So what is it, “eaiser” or “tougher” to get a mortgage in 2014 and beyond?

It seem that everyday you see an article from the MSM that says lenders are relaxing their guidelines for mortgages one day and the next, you’ll see another predicting gloom and doom for anyone who seeks a mortgage in the future.   No wonder people don’t know what to believe.

 

If you want the facts, you should talk to a local mortgage professional you trust.  They are the “boots on the ground” and have to deal with the new rules and guidelines everyday.

As someone who has been in the business a long time and seen the massive changes, I will say it will be tougher in 2014 for some people to qualify.  The “qualified mortgage” rule is only one reason why.  The agencies such as Fannie Mae and the big banks like Chase and Wells will react, tighten guidelines and what they call “overlays”, additional rules for their underwriters, on all mortgages they agree to buy from smaller banks and mortgage brokers.  If you got a mortgage a few years ago and seek one in 2014, you will be surprised at how much more documentation is required and how much work a borrower has to do to get their mortgage funded.

That being said, the mortgage market reacted to the meltdown long before Congress passed Dodd-Frank and created the new super agency, the Consumer Finance Protection Bureau.  The CFPB will now regulate almost everything financial in the country and will certainly use its power to justify its existence.

 

I think we can all agree that not everyone is well suited for home ownership, a long-term commitment that requires financial stability and discipline.  The push to make everyone a home owner that started under President Carter forcing Fannie and Freddie Mac to relax guidelines and accept subprime loans into their portfolio did not work.  Our home owner ship rate has fallen back to where it was in the 70’s.  Being a renter is not a mark of a bad person, it’s just a better housing solution for some people than ownership.

 

Bottom line is if you think you are going to seek a mortgage in 2014, gather all your documents and go see a local mortgage lender.  They should be able to tell you in a few minutes if you could qualify and what, if anything else you need to do before you start looking at homes.

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