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Posts Tagged: VA Loans

The VA Loan is Thriving

The US Department of Veterans Affairs’ home loan program has the most arduous task of any government loan program: Give those who make the American dream possible the best chance to live that same dream. It’s a big task, and the VA has answered the call.

2015 saw the VA back a record 631,151 loans. That is a forty percent increase from 2014, and nearly a 400 percent increase since 2007. While these numbers are due to historically low interest rates, the bottom line is that regardless of numbers, the VA is offering veterans relief from today’s stringent lending laws, while protecting them from the foreclosures that scarred the housing market in 2008.

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The building of the VA loan has been a decades long process that has yet to be perfected, but is always making progress. When servicemen returned home after WWI, the government gave them about $60 and a train ticket home. It wasn’t until 1944 that Congress passed the GI Bill of Rights, and the VA loan entered its infancy. Since then, it has helped over 20 million veterans become homeowners.

Like most things that are 71 years old, the VA loan of 1945 is hardly recognizable from what we have today. In 1945, the loan was only eligible to WWII veterans, the government only backed 50 percent of the loan, and the loan cap was $4,000 at a time when average home prices were $8,300. With today’s inflation that is like capping a loan at $53,000 when average home prices are $110,000.

Today, VA loans are capped at $417,000 (in most counties) while the average home price is $330,000. The VA also backs 100 percent of all loans, which makes it less risky to lenders, who therefore offer rates which on average are 0.31% lower than conventional loans. In addition, VA loans don’t charge Private Mortgage Insurance, and the VA picks up fees ranging from termite inspections to postage. In summary, it is a pretty good deal.

But it is important to remember that nothing is permanent. VA rules did not change one bit from 2014 to 2015, yet activity rose 40 percent. When rates no longer make the VA loan such an obvious choice, it is important to understand the gripes people have with the VA, or what head of VA Loan Program Mike Frueh calls, the “myth of my father’s VA.”

Can I use a VA loan after a foreclosure?

For homeowners who have defaulted on a mortgage, rebuilding credit and financial security is important. Luckily for military veterans, they have a mortgage tool that can allow them to more quickly rejoin the ranks of homeownership, even after default—a VA-backed loan.

A Veterans Affairs (VA) loan is available to servicemembers, veterans, and eligible surviving spouses and differs from FHA loan or conventional mortgages by offering more flexible qualification requirements. For many lenders, a 620 FICO score is an acceptable minimum score—a useful requirement since defaulting on a mortgage can result in the loss of up to as 120 points from your score. Also the mandated delay between a default and reapplying is shorter than most loans: even an FHA loan requires three years after a short sale, versus the two years typically required for the VA, allowing the borrower sufficient time to monitor and rebuild their credit profile. Some lenders may have even shorter waiting periods, or none at all following a short sale. 

4 tips for surviving a summer move

Most people who work in real estate would advise against moving during the summer, since it's the single busiest time of year for movers. Not only are parents with school-age children and college kids moving at this time, but the U.S. military does personnel relocations during the summer as well. 

"When I drove a moving truck, over 60 percent of our moves were military and were in the summertime, the same time that a lot of civilians want to make a move," mover Erik Christensen told Moveline.com.

However, if a summer move is inevitable for you, you can still do some things to help it go more smoothly:

VA Loan More Affordable For Qualified Service Members In 2013

Going into the new year, members of the U.S. armed forces are going to be enjoying a larger Basic Allowance for Housing (BAH) from the Department of Veteran Affairs (VA) that will make homeownership more affordable than in 2012.

The BAH, which is a monthly, non-taxable stipend paid to many active duty military members, is updated annually as part of the VA Loan Program. This loan is a government-secured mortgage initiative that allows qualified service members to purchase new homes without having to put significant money down upon signing.

VA Expands Benefits For 2013

The VA Home Loan program recently became a more attractive option for veterans as the Department of Defense announced it will expand the Basic Allowance for Housing (BAH) by 4 percent for 2013.

Usually the VA increases the BAH by roughly 3.88 percent, though not always on an annual basis. The boost in the BAH by an increased margin for 2013 is attributed to overall improvements in the housing market, which have resulted in steadily increasing home prices in most regions.

Refinance Application Continues Weekly Increase

Mortgage refinance continues to lead the way in helping the housing markets inch toward a strong recovery as the number of applications rose to 83 percent of all mortgage filings for the week ending December 6.

The Mortgage Bankers Association (MBA) reported that refinances increased by 4.5 percent from the week before. The number of homeowners who restructured their loans to achieve lower monthly payments the previous week had seen an uptick of 6 percent, a sign that momentum is building for initiatives that take advantage of record low interest rates.

New Programs Helping Retired, Self-Employed Homeowners Attain Better Rates

Before adjustments were made across the board to government backed mortgage programs, acquiring a new home loan and refinancing existing ones was an extremely difficult task for the elderly and the self employed.

In the past, if you didn't have a clear source of steady income or extensive paperwork documenting monthly or yearly earnings, lenders may have viewed certain loan applications as incomplete, increasing the difficulty of refinancing a loan.

Banner Year For VA Loan Program Through 2012

The Department of Veteran Affairs (VA), which insures mortgages through its home loan program, financed its 20 millionth residence as of October 31. This marks a milestone for the program, which has been helping members of the armed forces get affordable housing since the VA enacted it back in 1941.

The VA home loan became a lifeline for veterans after World War II when returning soldiers were seeking a return to normalcy and start new families. By insuring mortgages against default for eligible servicemen, the VA was able to work with banks in getting new loans for these veterans at reasonable rates and with no down payment.

Refinance Easier Than Ever For Qualified Veterans

Currently, the market for mortgage refinance is favorable for any homeowner looking to achieve a lower monthly payment. However, for borrowers who have mortgages financed through the VA Loan program, restructuring their mortgage has proven easier than for nearly any other demographic.

The VA offers the Interest Rate Reduction Refinancing Loan (IRRRL) to veterans as a sort of thank you for their service. This process reduces the volume of paperwork that homeowners would have to go through to restructure their mortgage by nearly half compared to traditional methods of refinancing.

Applications For VA Loans Reach 18 Year-High

According to figures from the Department of Veterans Affairs (VA), the popularity of its home loan program has seen an unprecedented surge in recent months. In the fiscal year ended September 30, mortgage applications to the VA jumped 50 percent compared to the same period last year.

The department has guaranteed 540,000 loans in fiscal year alone, which is the highest volume of applications seen since 1994. Compared to five years ago, output for successful new home loans has surged more than 300 percent.