If you are out shopping for a new VA loan, or any other mortgage for that matter how do you know if you are getting a good deal or not? You know how you get a good deal with a mortgage by comparing apples to apples or comparing good faith estimates to good faith estimates.

The good faith estimate spells out consumer paid fees versus lender paid fees, origination fees, discount points, any third party fees, and the prepaids or escrows. Along with your good faith estimate you will want to ask for a truth in lending statement or ask about the APR or annual percentage rate.

Once you get all of these in hand you want to compare them from three different loan officers that you call to talk to about getting a loan. In order to know what you’re looking at you should have a basic understanding of some of the mortgage terms you will come across.

Let’s first talk about the APR. In mortgages, the APR is a bit tricky to understand just know that it will be higher than the interest rate that you were quoted. In the event that you’re doing a VA loan and you are looking at super low VA rates, you will also see a corresponding low APR that will be slightly higher than interest rate you were quoted.

Origination fees – origination fees are fees paid by you or the lender to your mortgage company. This is how your loan officer makes money they get paid origination fees. There are two types of origination fees consumer paid or lender paid. Your loan officer can only get paid from one of these two sources.

Discount points – discount points are fees paid to your loan officer from the lender for the interest rate that they sell you. Loan officers are given wholesale rates from their lender’s and they can either sell you wholesale rates and charge you up of the to keep the rate down or they can sell your higher rate to keep your fees down. It’s rather simple. You just need to understand that that is what is happening.

Prepaids and escrows – prepaids and escrows are the same no matter which mortgage company you use. Real estate taxes, title insurance, attorney fees, prep fees all of these fees are basically the same between any lender. Sometime these fees are negotiable depending on who you go through and sometimes are not you’ll just have to ask.

This covers some of the basic information you’ll need to shop for new VA loan or any mortgage for that matter. Just keep in mind if you have questions make sure you ask them. Your loan officer cannot answer you unless you asked the question.

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VA loans offer a wonderful mortgage feature called the VA Streamline Refinance. The VA Streamline is actually like it sounds – it is a streamline program that allows a Vet who has a VA mortgage to take advantage of low VA streamline rates with minimal paperwork to refinance.

Now, let’s get into the three key features and benefits of the VA Streamline Mortgage

First of all, the VA streamline mortgage requires that you have not missed mortgage payments over the past 12 months. If you have missed a payment and have a good reason why – you may be able to get an exception. Most likely you’ll have to had something happen that caused you to miss the payment that you can explain and that you have taken corrective action to fix such that it won’t happen again. Make sure you speak to your loan officer about your payment history if you have any questions.

Next, under perfect conditions, and per VA loan guidelines, you won’t need to get an appraisal on your property like you did when you purchased your home. While this can be good given the case where your home won’t appraise high enough to cover a loan amount large enough to payoff your mortgage – the VA would still do your loan. However, and this is where it gets a little stick in today’s weak housing market, many VA lenders are requiring an appraisal because of their investor requirements. There is no telling exactly which lenders are requiring an appraisal so you will have to pick up the phone to make some calls to different VA mortgage lenders. It is worth the effort.

The last feature we’re going to cover in this post is that you can get some payment relief with the VA streamline because it is possible to defer up to 2 payments before you have to make your first payment. You will also be in line to receive a refund on your current escrow account from the mortgage that is being paid off which could be up to nearly a full year’s worth of real estate taxes. Make sure you talk to your VA loan specialist about this feature if you want to use it. They won’t just set up the deferment unless you ask for it.

The bonus feature of this program is that as long as you have been making your mortgage payments on time, it is possible that you will not be asked to provide any income or credit report information. Again, the VA doesn’t specifically require this information for the streamline refinance, but the individual VA lenders may and some do. With this in mind, you will need to make some calls to different lenders if you have a concern about this to find out your best options.

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There is an interesting program helping people get into homes called the Neighborhood Stabilization Program and it is supported by many Arizona banks. It is possible to get a $15,000 zero interest, no monthly payment loan to use toward closing costs and down payment to help you purchase a home in established neighborhoods within the Phoenix city area through one of the following programs:

• Move-in Ready – Homes have been purchased and improved by the city of Phoenix to meet HUD Housing Quality Standards.
• Home Improvement - Purchase your own unoccupied, foreclosed home that need a little TLC and receive up to $40,000 in addition tot he $15,000 loan to use toward eligible repairs to the home.
• Homeownership Assistance Program – Buyers purchase any foreclosed home within the city of Phoenix; receive credit counselingand homebuyer education plus $15,000 in closing cost and down payment assistance.

Phoenix Neighborhood Stabilization Program Requirements

Homebuyers annual household income can’t exceed the amounts below based on household size (anyone living in the house). In determining income, all wages and salaries of all household members age 18 and older are considered, as well as other sources of income for the total household. Program income requirements are different than Lender income requirements.

Other eligibility criteria for thehomebuyer includes:

• Contribute 50% of the required down payment or a minimum of $1,000 (whichever is greater) from personal funds
• Cannot be on the title of any residential property
• Must be a legal U.S. resident
• First mortgage terms can be a 15 or 30 year term
• Purchase price can’t exceed 95% of the FHA mortgage limit for one unit
• Funds will be secured by a promissory note and recorded subordinate deed of trust
• Funds will be paid directly to the title company and excess funds will be applied to the balance of the first mortgage

Neighborhood Stabilization Program Home Improvement Program Requirements

The Home Improvement program is designed for homes that are in need of a little TLC and are as follows:

• The mortgage must be an FHA 203k loan
• Home must fail a Housing Quality Standards (HQS) inspection by the city and require at least $5,000 in rehabilitiation but not exceed a maximum of $40,000. We recommend using $35,000 as a maximum to allow for a cushion on unforeseen costs.
• Purchase price cannot exceed 99 percent of the “as is” appraised value of the property as determined by an appraisal conducted within 60 days prior to closing.

The Neighborhood Stabilization Program is popular with people who are interested in buying a home – and with the different programs available within the NSP program, many houses are put in reach of people who may otherwise be left out.

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Choosing the right mortgage for you, as either a Veteran or someone with a VA certificate of eligibility, takes some investigation. Of the different types of Veteran’s mortgages, there are sites for VA Fixed Rate, Adjustable Rate and VA Hybrid reviews. A look into all these types of mortgages can help you pick the right one for you. You should also check out what your loan possibilities are concerning FHA financing as well as using Fannie Mae and Freddie Mac for a conventional mortgage.

The VA home loan program is possibly one of the best mortgage deals on the real estate market right now. Despite that, there are some other steps you should take before buying a new home.

When getting a VA loan for any home, remember that part of the process is getting a VA appraisal. The VA appraisal has fairly rigid guidelines for the appraiser to follow and only determines whether the property meets VA standards for a mortgage and the market value of the house you wish to buy.

With respect to looking at safety issues etc. that aren’t covered by the VA appraisal, you should also think about getting an inspection of your prospective home. It is always in your interest to know the condition of the home, and what potential problems owning it might present. You could also get a roof inspection, a termite inspection, and an HVAC (heating and cooling system) inspection, as well as others. In some cases you may even have to get a potable water test if you are purchasing a home that has a well. Make sure that you speak to your real estate agent for some guidance for what types of inspections are recommended.

Most sellers will let you get your own inspector and arrange for all these types of inspections. Finding repairs that need to be performed can help you negotiate the cost of repairs into the final home price. Make sure that you have some contingencies built into your sale contract in the event that you find some problems and you can’t get them resolved with the seller.

With all home loans, not just VA loans, you as the buyer have the responsibility to get a home inspection to insure that you avoid problems in the future with your new home. Remember the saying – buyer beware.

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Popular among VA mortgage lenders is the VA Streamline Refinance. The VA streamline refinance program in its purest sense is a great program for those who already have a VA loan because it doesn’t require an appraisal or a credit underwriting package. However, with the current state of declining home values across most of the US in 2011, many of the approved VA lenders are requiring appraisals and credit information.

Now let’s look at some other aspects of this loan program to see if it is right for you.

In just about every case, you can only use the VA streamline loan if you are lowering your current mortgage interest rate. Only in the case that you are going from a VA adjustable rate mortgage to a fixed rate will the VA allow you to increase your interest rate.

Unlike the case when you got your first VA loan, you do not have to live in the property to get a VA streamline refinance.

Your new loan amount may not exceed your existing Va loan balance, except for allowable fees and closing costs, the funding fee, and up to 2 points. You may also add to your new balance up to $6,000 for qualified and approved energy efficiency upgrades to your home.

You cannot use the streamline refinance for a cash back or cash out loan. You may only use it to refinance your current first mortgage balance. This means that if you have a second mortgage you cannot use the VA streamline refinance program to pay it off.

Any VA lender who offers VA loans may offer you a VA streamline refinance. This also means that you do not have to do your refinance with your current lender. Rather you will have to do your VA streamline refinance with another approved VA lender.

Hopefully some of these tips and suggestions shed some light on this very important loan program for those homeowners who have VA loans and want to refinance.

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Getting a mortgage in 2011 is still quite a challenge for many people – even the most qualified. In this post we cover some of the most common challenges you may face if you are trying to get a mortgage – even if it is a va hybrid loan. The three most common problems in 2011 for getting a mortgage are: home values (appraisals), income sources, and employment stability.

Let’s analyze each of these common problem areas.

Home Values – this topic is a major deal killer for sure in 2011, and it is one that can leave many people with an extremely sour taste in their mouth when it comes to their potential mortgage lender. Appraisals for many homes are still showing depressed values from the height of the market that occurred back in 2006. With sagging home values many homeowners around the US are finding it nearly impossible to refinance as their mortgage balance far exceeds their home’s value. With this as the case underwater homeowners are left with no option to refinance and only the option of staying put, or short selling their home, or letting their home go back to the bank in a foreclosure process.For purchase deals, the flip side of the coin is that the property valuation required by the mortgage company can often come in less than the negotiated sales price which could mean the seller declines to sell the home leaving the buyer looking for a new place.

Income – What you make as income and how you prove are one of the most carefully analyzed item on your mortgage application as you qualify for a mortgage.The key in proving income is to be able to show your last 30 days worth of pay stubs and a year to date total as well as the last 2 years of income. You also don’t want to show any gaps of unemployment – of if you do – you will want to be able to thoroughly explain why you weren’t working.

Income Sources – This is a problem for many people in today’s economy. How different income streams trip people up is that they must be established for a minimum of 2 years.What this means is that being a strong credit candidate with money in the bank for downpayment may not be enough if you are self-employed and have only been self-employed for less than 2 years. You may also have problems if you are just starting to get overtime, or you are just starting to get commission income with your new job.

To summarize, you want to make sure you have no unexplained employment gaps, and you need two years of solid employment or self-employment history, while saving as much as you can.

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Many people who are shopping for Arizona homes have found that many of the properties available for sale are either bank owned properties (lots of Phoenix banks have lots of inventory) or short sales. One person I spoke with recently was shopping for Tempe homes for sale that needed a little work. When buying a bank owned property or a short sale, chances are that the home is going to be in need of at least a few repairs — and many times, the most popular loan option for this scenario is the FHA 203k loan.

FHA 203k Program Highlights

The FHA 203k streamline loan has become in demand with the slowdown in the housing market. When a property is owned by the bank, chances are that the property may be in need of a little work and the FHA 203k streamline program is a great option. Some of the frequently asked questions we see about the FHA 203k loan include:

What is the FHA 203k mortgage?

The FHA 203k mortgage loan is a rehabilitation loan that works much like a development loan. The one who is buying the home is able to buy a home that is in need of repairs and is able to mortgage the repair work in the mortgage to fix items in the house. The FHA 203k loan consists of the purchase price of the home plus the construction costs for the work to be performed after close.

An FHA 203k Example Situation:
$100,000 purchase price of home
$20,000 Repairs Needed (see a list of the most common FHA 203k repairs)
$120,000 Total Loan Amount

The offer is the purchase price of the house only. You don’t need to include the cost of repairs anywhere in the sales contract or offer. In the above example, the purchase price on the sales agreement or offer would be $100,000.

Is the FHA 203k loan harder to qualify for than a traditional FHA loan?

Getting an FHA 203k loan is roughly the same as getting a regular FHA loan. What does it take to qualify for an FHA loan? Generally speaking, a credit score above 620, a good job and a down payment of 3.5%. Of course there are more details to being able to qualify, but those are the general highlights.

How do I find a contractor to do the repairs?

It is suggested that you work with a general contractor that can perform all needed repair work. Your loan officer can easily help recommend one they will need to know at least one good contractor. It is also vital that the contractor be practiced in FHA guidelines so that they can include any FHA required items in their contract.

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If you are considering getting out of the renter market and into the housing market as a homeowner here a few tips that can help. All but two of the following 6 tips will help you no matter whether you decide to buy a home or not so I’ll get the first two out of the way as they have to do with buying a home and then get to the good stuff about your consumer credit health.

Consider Low Down Payment Loans – This tip brings forth buying a home using an FHA loan, VA loan, or a USDA mortgage. Each of these loan programs carry some sort of social stigma such as they are only for lower income home buyers or poorer credit home buyers. I suggest you forget the stigma because who cares about your mortgage if you own your home. Believe me there are a lot less people standing around the water cooler at work talking about their mortgage or home’s value these days as many many more people have financial skeletons in their closets and avoid the social bragging rights that seem to exist several years back. Loan down payment loans can keep money in your pocket that you can either save for later, or use to purchase furniture etc. once you close on your new home.

Consider A No Closing Cost Mortgage – No closing cost mortgages are not really mortgages without costs. Rather, they are mortgages where the third party fees that are associated with getting a mortgage are paid by the lender because the lender charges you a higher interest rate. This loan option is a great way to keep money in your pocket, but you need to weigh the long term benefit of keeping a higher payment mortgage over time versus the short term savings. If you go too long without reifnancing you could be paying more with the no closing cost loan option.

Credit Score – Yep, you have heard it before – or maybe you haven’t…but the higher your score the better your loan terms will be meaning possibly lower fees and lower interest rates. Not only do mortgages have credit score requirements, so do car loans and all other kinds of consumer credit. The better your scores the better credit terms you can get. Because credit is so closely tied to your credit score it is imperative to keep your scores as high as possible. You never know when you need to have your scores pulled – like getting a job or applying for a new aparment lease.

Preserve and Protect Your Credit – This is a wide open tip that has many boundaries from fixing your credit report to preventing identity theft to keeping your credit balances low compared to your credit account limits. You should get yourself up to speed on how to preserve and keep your credit protected.

Shop Around – No one ever always has the lowest rates or the best deal. It seems like there is always someone out there who is willing to offer better terms. In terms of mortgage interest rates, you need to check rates everyday as one day a lender will the lowest priced and the next day they won’t. It is not exactly clear to those of us who aren’t behind the closed doors as to how prices are set, but let’s just say that some subjectivity goes into it which means there is some human consideration that makes room to someone else somewhere having a better rate. The question is how willing are you to go seek it if you like what you have and the pricing works for you?

Know your borrowing limit – Last but not least this tip should be considered by all of us. How much can I afford, how much do I want to spend etc.? Do you know your budget? Perhaps this should be the first thing to consider. Most people qualify for a different figure than what they ultimately want spend for a home or a car. So knowing your personal intuitive limits versus your “book” limits is very important when it comes to making major financial buying decisions.

There you have it, my version of Tips to buying a home in 2011. If you have any questions please feel free to contact me.

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For many people here in Arizona, they are in a situation where they owe more on their home than it is currently worth. For those people who are in an FHA loan, the FHA streamline refinance program may be a good option for refinancing their loan because there may not be an appraisal required.

Arizona FHA Streamline Refinance Highlights

• No appraisal required
• No employment verification (verbal only, no income required)
• Existing loan has to be an FHA loan
• Payment history for the last 12 months must be clean
• Mid credit score must be 640 (with this lender)
• No cost FHA streamline options available

Academy Mortgage is Arizona’s leading FHA lender with more FHA loans done than any other mortgage bank in 2010 due largely to great service and excellent rates. Call now to speak with an FHA streamline expert!

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Every now and then, someone will ask me “is it okay if I ______________ to pay for my closing costs?” So I thought I would outline what most lenders will accept as an acceptable source of funds for closing costs and/or down payment when getting an FHA loan.

Remember: no matter what funds you plan on using, they are going to have to be documented as to the source of the funds.

Acceptable Sources of Funds For FHA Loans

• Checking/Savings Accounts/CDs
• Lease to Own/Rent Credit with Option to Purchase
• Interested Party Contributions (subject to limitations)
• Loan Repayment Proceeds (with appropriate and acceptable paper trail)
• Corporate Relocation Buyout
• Relocation Benefits
• Use of Business Funds (as per policy and if allowed by underwriter)
• Disaster Relief Grant or Loan
• Non-Traditional Savings Plan/IDA Accounts
• Employer Assistance
• Gifts
• Gifts-Pooled Funds
• Gifts of Equity
• Gifts/Grants from Non-Profit
• Gifts – Wedding
• Retirement Accounts
• Proceeds from Sale of Home
• Sale of Assets
• Government Bonds
• Stocks/Securities
• Inheritance
• Trade Equity
• Land Equity
• Trust Account
• Life Insurance Net Cash Value
• Bridge/Swing Loans
• Income Tax Refunds
• Saving Funds to Close
• Gambling or Lottery Winnings (this is my favorite one)
• Lawsuits or Insurance Settlements
• Borrowed Funds Secured by an Asset
• Financing Concessions
• Cash-on-Hand

Whew. Sure, there might be more places that you could possibly come up with for a down payment / closing costs – but there are probably about 99% of all of the ones I have seen. Have questions about where your down payment can come from when getting an FHA loan? Be sure to ask your loan officer.

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