VA loans are $0 down payment mortgage options available to veterans, service members and select military spouses. VA loans are issued by private lenders and guaranteed by the U.S. Department of Veterans Affairs (VA).
Since its inception in 1944, more than 22 million VA loans have helped veterans, active duty military personnel and their families purchase homes or refinance mortgages.
How does a VA loan compare to a traditional/conventional home mortgage? Read on.
What is the down payment?
- VA loans: 0% down.
- Conventional loans: Up to 20% down.
Do I have to pay mortgage insurance?
- VA loans: VA loans do have a form of mortgage insurance, the VA Funding Fee. It is usually 3.3% and financed into the loan up front. If the borrower separated from the military with a qualifying disability, the funding fee is waived to 0%.
- Conventional loans: If buyers do put down less than a 20% down payment, they must pay for private mortgage insurance.
Are the interest rates for VA loans competitive?
- VA loans: The VA backing gives lenders a greater degree of safety, which means the interest rates can be more competitive than non-VA loans.
- Conventional loans: Without government backing, banks take on more risk with conventional loans, which can result in less-competitive interest rates.
How easy is it to qualify for a VA loan?
- VA loans: Because the loan is backed by the government, banks assume less risk and have less stringent qualification standards for VA loans, making them easier to obtain.
- Conventional loans: Conventional loans require stricter qualification procedures that can put homeownership out of reach for some homebuyers.
Can I do a cash out refinance?
- VA loans: Borrowers can do a cash out refinance up to 100% of their home’s value.
- Conventional loans: Borrowers with conventional loans must leave some equity in their home when doing a cash out refinance.
What else should I know about VA loans?
- VA eligibility is re-usable. A lot of people think they are only eligible for a VA loan one time, but they are able to get VA loans more than one time.
- You can have more than one VA loan at a time. It’s a myth that you can only have one at a time.
- VA loans are assumable.
You or someone you know may be the perfect fit for a VA loan. Contact a loan officer today to learn more about VA loans and other types of home loans that may be a good fit for you.
Do you want more information about VA loans or grants? Find it here or call us today.
Spring marks the beginning of the selling season and is often considered the busiest and best time to purchase a home. As more people look to purchase a home in the coming months, it’s important to understand the buying process. Here are some tips from DORA (Department of Regulatory Agencies) and the Division of Real Estate.
Talk to your lender early in the process. Meet with your lender before contacting a real estate agent to simplify the home buying process. Getting prequalified for a mortgage gives you a solid price range for homes to consider.
Determine your working relationship with your broker. Many homebuyers don’t know that Colorado has two options when it comes to your relationship with your broker – a Single Agency broker (an agent for the buyer OR seller) or a Transaction Broker (for the buyer or seller OR both). A single agency broker will advocate for and work solely on a single client’s behalf. A transaction broker facilitates the sale by fully informing the parties, presenting all offers and assisting the parties with any contracts, including the closing of the transaction without being an agent or advocate for any of the parties.
Understand the real estate contract. An offer for the purchase of real estate must be in writing to be valid. The Colorado Real Estate Commission requires every real estate broker licensee use a contract form approved by the Real Estate Commission, unless the contract is drawn by either the seller or buyer or the attorney for the buyer or seller.
Recognize contingencies in the contract. The contract approved by the Real Estate Commission allows for the buyer and their licensed broker to make the contract contingent on certain items. Contingencies can be items such as the property appraising for the purchase price, approval of financing, a satisfactory home inspection, or the sale of their current residence. It is critical for a buyer to include those contingency items in the contract to eliminate misunderstandings about what circumstances will allow for a successful execution of the transaction.
Meet all deadlines and put down your earnest money. Once your offer has been accepted by the seller, you will put down a good faith deposit, often called earnest money. Both the buyer and seller will need to meet specific deadlines before you close on your home. As a buyer, if you miss a deadline, you might not be able to cancel or withdraw your offer unless you are willing to forfeit your earnest money. Your offer allows you to make decisions regarding when to close on your new property, when you can take possession of that property, and what remedies are available if the contract dates are not met.
This is a lot of information. If you’re ready to get started on the homebuying process, contact us to start with step one and get you pre-qualified today.
The Division of Real Estate recently issued this consumer advisory – “Take 5 to get wise and learn how to protect your real estate nest egg.”
Colorado residents owning a home for 20 years or more are being targeted for the equity in their property. An offer may include a cash transaction, a quick sale, no inspection, and the freedom to leave your problems behind.
In Colorado’s hot real estate market, a lot of homeowners might not know the market value of their property, which is what unscrupulous investors want. They are trying to drive down your property value with misleading and confusing information. Their goal is to make a profit by turning around and selling your property at true market value.
This can happen to anyone because people who perpetrate fraud are good at what they do – separating you from your money.
Protect your nest egg when considering an offer on your property:
- Go to www.dora.colorado.gov/dre to research licensed professionals.
- Go to your local county government website and look up property values for you and your neighbors.
Other tips to protect your nest egg when considering an offer include:
- Be wary if you weren’t thinking about selling.
- Always keep someone you trust in the loop.
- Do research on real estate brokers working in your neighborhood.
- Always seek legal advice.
- Know the value of your property and understand the motivations of why an investor wants to buy your property.
By taking a few steps you can protect your home, your finances and your future. If you have questions, please contact us.
You may have considered moving to a new home but have not found the perfect one for you and your family. Home renovations may make your current home feel like new. Or perhaps you want to pay off credit card debt and better position yourself financially.
Those are two reasons that a cash-out refinance may be a smart financial move for you.
If you have equity in your home, a cash out refinance may be an option for you. This type of refinance would allow you to replace your existing mortgage with a higher loan amount, allowing you to get cash back. You would receive cash for the remaining amount after paying off your existing loan amount.
Here’s how a cash-out refinance works:
- It pays your current mortgage and allows you to apply for a higher loan amount.
- A cash out refinance has a limit to the amount of equity that can be received in cash. This is normally between 70% to 80% depending on the loan program.
The pros of a cash-out refinance:
- A mortgage refinance typically offers a lower interest rate than a home equity line of credit or home equity loan.
- You can make home renovations with a cash-out refinance, potentially adding value to your home.
- You can save money in interest and increase your credit score by paying off your debt in full.
A note about private mortgage insurance:
If you have a lot of equity in your home, there’s a good chance you are no longer paying for private mortgage insurance, or PMI. If you borrow more than 80% of your home’s value, you’ll have to pay private mortgage insurance.
A cash-out refinance can make sense. Using the money to fund a home renovation or consolidate debt can rebuild the equity you’re taking out or help you get on a sounder financial footing. As with any mortgage loan questions, we would be happy to discuss this with you further.
The mortgage lending world is full of terms that may not be familiar to you but are important to understand if you are considering buying a home or refinancing. One of those terms is mortgage rate lock.
A mortgage rate lock is an arrangement between a lender and a borrower in which a mortgage’s interest rate is locked for a certain period of time. Typically, the locked-in rate will be the current market interest rate.
Some lenders choose to charge borrowers a lock fee if they choose to lock in the interest rate. Also, it’s common for lenders to start at a higher rate in case the homebuyers do not exercise their options to lock in a rate.
When a borrower and lender agree to a mortgage rate lock, it is important that both parties are bound by the agreement. This agreement would mean, for example, that the borrower could not unlock the rate because the market interest rate had lowered. Interest rates will usually be locked from the moment that the mortgage is offered until it is closed.
Unless a change occurs to the loan application, the interest rate will stay the same and will not be affected by market changes. Changes to the mortgage application, such as an increased loan amount or an updated credit score for the borrower, can result in the interest rate changing. Interest rates can also change if the home is appraised at a higher or lower amount than expected, or the borrower changes the type of mortgage for which they are applying.
Mortgage rate locks have some drawbacks from the borrower’s standpoint. For example, if the market rate falls during the term of the mortgage, a borrower would not be able to take advantage of these lower rates. The same would be true for lenders if the market rate rises.
A lock deposit can be a good way to make sure that both the borrower and the lender hold to the terms of the mortgage lock agreement. This deposit shows that both parties are committed to upholding the agreement. A loan estimate and a rate lock can be issued at the same time, and the period of the mortgage rate lock can be between 10 and 60 days. A longer rate lock period typically means that the borrower and lender have agreed to a higher interest rate.
Questions about mortgage rate locks or anything related to home mortgages? Please contact us today.