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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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 Veterans who are interested in getting a VA loan have heard about the VA funding fee – but aren’t quite sure exactly how much it is or maybe even exactly what it is.

What is the VA funding fee and how much is it?

The VA funding fee is a fee that may only be paid in cash or financed as part of the VA loan.

However, the funding fee may be split only when the total loan amount with the funding fee will exceed the current maximum mortgage amount. On loan amounts exceeding $417,000, if the combined loan amount plus the funding fee exceeds the county limit, the portion of the total funding fee that exceeds the county limit may not be financed into the loan amount.

Amount of funding fee charged is based on the loan-to-value, veteran status, transaction type, and prior use and here are a few graphics that show the percentages for the require VA funding fees for closing.

VA Funding Fee For VA Purchase Loans

VA Funding Fee For VA Refinance Loans

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When it comes to VA loans, there are certain closing costs that Veterans can pay – and certain closing costs that the Veteran is not allowed to pay according to the VA.

VA Appraisal

When it comes to getting an appraisal done, it is allowable for the Veteran to pay the cost of an appraisal. It is also allowed for the veteran to also pay for a second appraisal if he or she is requesting reconsideration of value.

The veteran cannot pay for an appraisal requested by the lender or seller for reconsideration of value. It is also not allowed for the Veteran to pay for appraisals requested by parties other than the veteran or lender.

Discount Points on VA Loans

It is allowable for a Veteran to pay discount points on purchase, cash-out and no cash-out refinances, as long as they are considered to be reasonable.

The Interest Rate Reduction Refinance Loans (IRRRL) may include only up to 2 points in new loan. Additional discount points must be paid in cash.

Origination Point

An origination point of 1% of loan amount is allowed to be paid by the Veteran. If the 1% origination point is paid by the Veteran, then there are certain other fees that cannot be paid when the 1% origination fee is paid. These fees that cannot be paid include:

• Amortization Schedule
• Application Fee
• Attorney Services (other than for title work)
• Photos
• Postage and other mailing charges, stationery, telephone calls, and other overhead.
• Processing Fee
• Closing Fee or Settlement Fee
• Commitment Fee or Marketing Fees
• Conveyance Fees or Preparing Loan Papers
• Sales Commission
• Protection Warranties (Homeshield, Ticor, etc)
• Document Preparation Fee
• Escrow Fees or Charges
• Interest rate lock-in Fees
• Trustee’s Fees or Charges
• Lender’s Appraisals
• Truth In Lending Disclosure Statement preparation Fee
• Tax Service Fee Transfer Fee
• Notary Fee

With VA loans, there are many fees that have different rules based on what the VA allows. If you have questions about whether or not a particular fee is allowed on a VA loan, be sure to contact your loan officer to learn the right answer.

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When interest rates are low, many Veterans who have VA loans in Arizona are interested in possibly doing a VA IRRRL streamline refinance.

But when is the VA IRRRL allowed?

The VA IRRRL Streamline Refinance program allows a Veteran to refinance their existing VA loan to a new VA loan to a lower interest rate with a reduced amount of documentation.

VA Streamline IRRRLs are allowed under the following circumstances:

• Pay off veteran‘s existing VA loan with current entitlement being transferred to the new loan. No additional entitlement will be used. Regardless of the amount of entitlement being transferred to the new refinance loan, the guaranty coverage will be 25%.
• New interest rate must be lower than the existing interest rate (unless refinancing from an ARM to a fixed rate).
• Veteran must sign statement acknowledging the interest rate and the payments of the new loan versus the old loan and how long it will take to recoup all closing costs paid (both those closing costs included in the loan and those paid outside of closing.
• May include existing VA loan balance, allowable closing costs, prepaids, energy efficient improvements up to $6,000 completed within 90 days immediately preceding loan closing and up to a maximum of 2% discount points.
• Pay off of second liens is not allowed. Second liens are to be subordinated with no consideration to the CLTV.
• Total loan amount may not exceed the appraised value or original loan amount, which may include the funding fee.
• Cash-out is not allowed. However, a maximum of $500 may be allowed due to computational error, changes in the final payoff, up-front paid outside of closing (POC) items being reimbursed or refund of an escrow account on the old loan if different lender other than the current holder originates loan. Loan amount calculated when submitting to underwriting should reflect no funds going back to the borrower. Any cash-out (other than POC items) on loans in Texas is not allowed.
• High balance VA Streamline IRRRLs are not allowed.

If you are a Veteran who currently has a VA loan, it may make sense to speak with a loan officer about whether or not the VA IRRRL streamline refinance will help you lower your monthly mortgage payment – and now you have a good idea about when the VA IRRRL program is allowed.

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Many people who are Veterans are eligible to buy a house with a Arizona VA loan – and they may not be aware that there is a program available that they can “buy down” their interest rate for the first two years.

VA Loan 2/1 Buydown: How It Works

A temporary buydown is an arrangement wherein the property seller, borrower, lender, builder, developer, or real estate agent deposits money to an account so that it can be released each month to reduce the borrower‘s monthly payment during the early years of the mortgage. During the specified period, the borrower‘s effective interest is ―bought down.  This will reduce the monthly payment in the early stages of the loan, and may allow the borrower to more easily qualify for the loan.

Borrower must qualify at Note rate unless there is evidence that income to support the application will increase to cover the increases in loan payments. Routine Cost of Living Adjustments (COLA) raises cannot be used for this purpose.

The buydown arrangement can be considered a compensating factor. If the residual income and/or debt-to-income ratio is marginal, the buydown plan (used to offset a short-term debts), along with other compensating factors, may support approval of the loan.

Escrowed funds set up for the buydown may not revert to the party that established the escrow. If the property is sold subject to, or on an assumption of the loan, the escrow must continue to pay out on behalf of the new owner.

VA Loan Buydown Restrictions

• Allowed on purchase transactions only.
• Maximum 1% increase in one year.
• Adjustments may only be one time per year.
• Maximum 2% below note rate

If you are buying a house with a VA loan and think that you may want to participate in the VA 2/1 buydown program be sure to as your lender about it.

It will save you money each month on your monthly mortgage payment.

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Refinancing in 2010 is tough in many parts of the country. Why? It is tough because of the severe “correction” we have had in home values over the past few years. Home values have come down which is causing problems for many folks who want to refinance but cannot meet program guidelines centered around your home’s value relative to the home’s mortgage balance. In general, for a mortgage to get approved the home’s value must exceed the mortgage balance.

If you are fortunate enough to have a VA mortgage you may be able to refinance your current VA mortgage using the VA’s streamline refinance program without having to meet the home value and mortgage balance requirement that I just mentioned. The VA streamline program does not require an appraisal (according to the VA – see below for specific mortgage lender specifics) so if you are in a situation where you home’s value is less than your mortgage balance you may still be able to qualify to refinance your home using this program.

However, if you are not upside down on your mortgage balance and your home’s value and if are looking for some cash out on your home to do some debt consolidation, or minor home repairs, you may want to consider the VA cash out refinance loan program.

The VA cash out mortgage program is good if you already have a VA loan and want to refinance, or if you don’t have a VA loan, but want one and are eligible for one. Some other reasons to consider the VA cash out refinance loan program include:

• competitive mortgage rates,
• no PMI (this is a big cash savings when compared to other loan programs like Fannie Mae, Freddie Mac and FHA),
• you can defer a few mortgage payments,and
• you can be set up to refinance using the VA streamline refinance program if rates drop in the future.

Unlike the VA streamline refinance, the VA cash out refinance will require you to get an appraisal and qualify for the mortgage with your income, assets, and credit. If you decide to go for this program, the VA will let borrow up to 100% of your home’s value with your new loan. (Lender Caveat) However, many lenders in 2010 are capping the new loan amount to not exceed 90% of the home’s appraised value. Also, some mortgage VA lenders are requiring an appraisal and income/employment documentation even for the VA streamline refinance.

You will need to talk to a VA loan officer who specializes in VA loans to see what options you have for your situation.

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