Is it Time to Adjust Your Second Mortgage?

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Hourglass with home inside.

With the recent announcement of a fed rate hike, if you have a home equity line of credit (HELOC) you’ll soon see a rise in your monthly mortgage payment. HELOCs had rock bottom rates for the past eight years and provided an alternative and affordable method to access equity. But as rates trend upward in the months and years ahead, a payment spike of 2% or more may be enough to consider additional options. Here’s why:

Rates Are Going Up

While rates are still low by historical standards, they are set to rise over the course of 2017 and beyond. HELOC rates are tied to the Prime Rate, a constantly moving index, plus a base rate called a margin. Over the past 20 years, this rate peaked at 9.5% and averaged 5.39%. This is almost 2% higher than today’s Prime Rate of 3.75%.

Prime Rate 20 Year Graph

If you have a 2% margin on your HELOC, add this to today’s Prime Rate of 3.75% and your rate would go up to 5.75%. Add it to a 20-year average Prime Rate and your HELOC rate is 7.39%.

For now, it is likely that your HELOC only requires you to pay interest each month. But at the 10-year mark, you must pay a principal plus interest payment amortized over 20 years and your rate will still adjust with Prime monthly.

If the uncertainty of a rising Prime Rate leaves you anxious about your monthly payment, there are two solutions to all this anxiety and extra cost.

Refinance & Pay Off Your HELOC:

Even with first mortgage rates spiking .5% since November, there are still about 4 million homeowners who will benefit mathematically from a refinance of their first mortgage. Depending on how much equity you have, you can combine your first and second mortgage into one loan and pay off your HELOC. This would offer you the benefit of one single mortgage payment at the option of a fixed-rate that would not adjust.

Switch to A Fixed-Rate Second Mortgage:

If you want or need to keep your second mortgage, but don’t want to risk rising interest rates, RPM’s fixed-rate second mortgages provide a stable payment over the course of the entire loan term. This second mortgage can be obtained on its own while your first mortgage’s rate and payment remains untouched. Today, the rate on a 20-year fixed-second is about 1% lower than where your HELOC is headed. This means interest cost on a fixed rate second mortgage is $83 per month less than a HELOC, and your payment is fixed.

Rates on new first mortgages and fixed second mortgages won’t remain this low for long, so let’s replace your rising-cost HELOC before it’s too late. Contact a trusted loan advisor today to discuss your options.

By Jessica Velazquez

 

What Rising Rates Mean For Home Buyers and Owners As 2017 Approaches

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As 2016 draws to a close, it’s a good time to reflect and look ahead to what 2017 may bring. The Trump Administration’s plans to cut taxes and prioritize spending on infrastructure have already started to impact the housing market and mortgage marketplace. Many of the trends we’re already seeing at the end of this year are expected to continue to affect home financing in 2017. Let’s take a look:

Mortgage Rates – Up, Up, and Still Low by Historical Standards

Freddie Mac RatesAmid post-election uncertainty investors pulled their money out of U.S. Treasury bonds (a benchmark for mortgage rates), causing rates to increase. Rates on 30-year fixed mortgages rose about .5% between the election and the December Fed meeting. This means monthly payments are about $85 more per month on a $300,000 loan and about $172 more per month on a $600,000 loan.

Most investors feel that the Trump administration’s policies will promote growth and encourage inflation. Threats of inflation often drive investors to sell bonds, bond prices drop in a sell-off, and rates increase as a result. Although rates could continue higher to start 2017, rates are unlikely rise as quickly as they did post-election, and the long-term rate chart above shows that rates are still extremely low by historical standards. Many homeowners may still benefit from a refinance.

Fed Rate Hike: What’s the Impact?
The federal funds rate also has an impact on longer-term home loan rates. On December 14, 2016, the Federal Reserve announced a rate increase of .25%, following their first meeting since the election.

Homeowners with a Home Equity Line of Credit (HELOC) will see their rate rise by .25% on their next payment as a result of this Fed decision, which impacts the Prime Rate. HELOCs are tied to a margin plus the Prime Rate, which is now at 3.75%. So, if a borrower’s HELOC margin is 2%, that means the HELOC rate will be 5.75% on their next payment.

If Trump delivers on his promise to accelerate economic growth and lower unemployment, analysts expect the Fed could step up the pace of rate hikes to counter expected increases in inflation. Fed officials are widely expected to raise rates two or three times in the coming year, depending on the health of the economy. Switching from a HELOC to a fixed-rate second mortgage now may be an option for some borrowers to protect themselves from later increases.

New Loan Limits
On a positive note for home buyers, the new year will kick off with an increase to maximum loan limits for Fannie Mae and Freddie Mac mortgages, also known as conforming loans. The limits are going up for the first time since 2006. An increase in conforming loan limits will also have a potential impact on FHA borrowers since FHA sets its minimum national loan limit at 65 percent of the conforming loan limit. This change has the potential to increase credit capacity and home buying power for those who have been unable to enter the real estate market in the recent past. According to NAR President, William Brown, “Today’s conforming loan limit increase is a much-needed recognition of rising home prices in high-cost markets, and a help to first time and lower-income borrowers looking to utilize an FHA mortgage.” Click here to see updated loan limits by county.

It’s Time For A Mortgage Review
The economy is improving, which will continue to help the housing market improve. For more insight into the market and the possible impacts to your home financing opportunities, contact a loan advisor to discuss your options.

By Amy Malloy

How to Read a Loan Estimate

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Couple comparing two documents.

Before deciding on a lender, it is important to research your options and find the loan that best fits your financial needs. When you start your research, you can request a Loan Estimate from as many lenders as you wish. Each lender will supply you with a Loan Estimate in the same, straightforward format, making it easy to compare your loan offers. To make your research as smooth as possible, below is an explanation of each section of a Loan Estimate:

Loan Estimate Summary

The first page of a Loan Estimate is a summary of the loan broken down into the following four parts:

General Information

Included here are the date issued, applicants, property address and the sale price. It will also state the proposed loan term, whether the loan was for a purchase or refinance, if a certain loan product was used, the loan type, loan ID number and the rate lock. It is important that all this information accurately reflects the information you and your loan advisor discussed. If anything looks different than what you expected, ask the loan advisor for clarification.

Loan Terms

This section identifies the loan amount, interest rate, monthly principal and interest. Remember if the estimate is for an adjustable rate mortgage, these amounts can increase after closing. This section will also indicate whether or not your loan has a prepayment penalty or balloon payment.

Projected Payments

Here, you will see the payment calculation for your estimated total monthly payment. This calculation includes your monthly principal and interest, mortgage insurance and your estimated escrow. Your estimated escrow will include any charges related to homeownership, including any property taxes or homeowner’s insurance.

Costs at Closing

This shows a summary of the estimated closing costs and the estimated cash to close. The estimated cash to close includes your down payment and other costs or fees to be paid at closing.

Closing Cost Details

On the second page of the Loan Estimate you will find a breakdown of the closing costs associated with your loan. The Closing Cost Details are broken down into your ‘Loan Costs’ and ‘Other Costs.’

  • ‘Loan Costs’ is comprised of one-time costs broken into three sections: Section A (Origination Charges), Section B (Services You Cannot Shop For) and Section C (Services You Can Shop For).
  • ‘Other Costs’ is comprised of a combination of prepaid and one-time costs, including taxes and other government fees, prepaids, initial escrow payment at closing, and any other costs.

For a more detailed breakdown of Closing Costs, please click here.

Additional Information about Your Loan

Additional Information

At the top of page 3, you will find the lender or mortgage broker’s information. This will include their NMLS # and license ID, their name, email address and phone number. Make sure the information that is listed for your loan advisor is correct.

For more information about finding the right mortgage professional for you, click here.

Comparisons

This section offers several calculations to help you compare the cost of this loan with other offers from different lenders. Loan costs can vary across lenders and different types of loans. To ensure that you are getting the loan that fits your financial needs, request Loan Estimates for the same type of loan from different lenders.

Other Considerations

‘Other Considerations’ will share other important information regarding your loan. This section will say whether your loan requires an appraisal of the property and who is responsible for paying that fee. It will state whether or not your loan can be assumed by another person, if you were to sell or transfer the property to someone else. It will also define the requirements for homeowner’s insurance, late payment fees and potential for a future refinance. This section will also state your lenders intention to service your loan or transfer the servicing to another lender.

Confirm Receipt

By signing the receipt, you are acknowledging that you have received this Loan Estimate. It does not mean that you are required to accept this loan.

To look at a sample Loan Estimate, click here.

Contact an RPM loan advisor if you would like assistance understanding your Loan Estimate and financing options.

By Kendall Taylor

What You Need To Know About Locking A Rate

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The financial markets reacted to the initial uncertainty surrounding the Trump Administration with a post-election uptick in mortgage rates. Despite the recent increase, interest rates are still lingering near historic lows. But, how long will the low rates last? According to a recent Zillow article, “This dramatic rate spike might level off near-term, but don’t count on a reversal back to record lows.” If the economy continues to gather momentum and inflation picks up, chances are good that the Fed will increase rates at the final policy meeting of the year in mid-December. There’s still time to act on low rates before another increase and a rate lock can help ensure that you don’t miss an opportunity! Here’s what you need to know:

reviewing rates on computer

What Does it Mean to Lock in a Rate?
While recent mortgage rate increases may not be cause for panic, you may want to lock in a rate to protect yourself from additional rate increases while you complete the loan process. A rate lock is a guarantee from your lender that you can obtain a loan at a certain interest rate, at a certain price, within a specific time period.

Getting Started
The first step is to research rates, which you can do by contacting a mortgage professional or submitting an inquiry online. As you shop around keep in mind that both the interest rate and the Annual Percentage Rate (APR) will be quoted. It’s important to understand the differences in the rates in order to accurately compare quotes.

The interest rate is the cost of borrowing the principal loan amount and is used to calculate your monthly payment. The APR reflects not only the interest rate but also the points, fees, and other charges associated with the loan. For that reason the APR is usually higher than the interest rate.

Discount Points and Fees
The cost to obtain a lower rate for a mortgage loan is expressed in points. Each point charged is equal to 1% of the loan amount. For example, on a $400,000 loan amount, the cost of a discount point would be $4,000. Discount points are essentially prepaid interest on the loan, so the more points you pay, the lower your interest rate. Whether or not you should pay points depends on how much money you have to put down at closing and how long you plan to stay in your home. You want to consider if the cost for a slightly lower rate and monthly payment are worth the amount of upfront cost. Ask your lender to review the options with you.

When to Lock
On a purchase loan it usually makes sense to lock in a rate as soon as you go into contract for a property. In the case of a refinance, you should lock your rate at the time you start the application process, which will start the clock ticking. A rate lock is typically good for 30, 45, or 60 days. Ask your lender to explain the costs and rates for different duration periods and make sure the duration of your lock period gives the lender enough time to process the loan.

Peace of Mind
A rate lock can reduce some anxiety over rate fluctuation while you complete your transaction. Contact an experienced loan advisor who can help you consider the costs and benefits of each home financing option and then move quickly when the time is right to lock in a rate and a loan that works for you.

By Amy Malloy

Holiday Décor Safety Precautions

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Santa Hat and Christmas Tree in the background.

It’s the most wonderful time of the year! Part of the joy of the holiday season is gathering with friends and family to celebrate and honor traditions. For most, that includes decorating their home. To ensure that your holiday celebration is filled with laughter and not a disaster, take a look at these holiday décor safety tips!

The Tree

The tree is often the center of a home’s holiday decorations. To make sure it will last till December 25th, be sure to purchase a fresh tree. A fresh tree’s needles will be hard to pull from the branches and will not break when bent between your fingers. Once you select a fresh tree, it is important that you water the tree daily to prevent it from becoming dry and more susceptible to fire.

Little girl hanging candy can on a tree.If your family prefers an artificial tree, purchase one that has the “Fire Resistant” label. Although this doesn’t guarantee it won’t catch on fire, it shows that it was manufactured to resist burning and should extinguish quickly.

When it comes time to choose a location for your tree, refrain from placing the tree next to any fireplaces, heating ducts or radiators. Be thoughtful of placing your tree away from high traffic areas, such as doors and walkways. You don’t want someone to brush against the tree and accidentally break one of Aunt Edna’s antique ornaments!

Holiday CandlesHoliday Candle

Candles give a warm glow to a room and are often a part of a home’s décor, especially during the holidays. Although candles are beautiful decorations, they increase the risk of a fire. Never leave candles unattended and remember to blow them out before going to sleep. When placing your candles, keep them away from curtains and trees, and out of the reach of children and pets. Consider using battery-operated LED candles as a safe alternative, especially if you are expecting lots of children in your home for the holidays.

The Lights

When purchasing lights, buy lights that have been approved for safe use by a nationally recognized testing laboratory, such as the Underwriters Lab. If you already Holiday lights outside a house.have lights, check to see if they are damaged or worn out. Cracked light sockets, frayed wires and loose connections can be a fire hazard.

Before hanging up your lights, figure out how many outlets are available. Keep in mind that you shouldn’t use more than three standard-size sets of lights per single extension cord. If you overload the outlet, it can overheat and cause a fire.

Inflatable DecorationsInflatable snowman decoration

You don’t want to be the family that let the abominable snowman loose in the neighborhood. Follow the manufacturer’s instructions to accurately secure it to the ground. If the weather gets windy, turn off any blow-up decorations. These decorations should also be turned off overnight or when you are not at home.

 

Post-Holiday Cleanup

Crumpled wrapping paper underneath a tree.Once the celebration has wrapped up, the real fun begins: the cleanup. Although it may seem like a good idea to throw crumpled wrapping paper into the fire for easy disposal, don’t! This can cause a flash fire. When it comes time to remove the tree, make sure to give the surrounding area a thorough sweep. Clear away any broken glass, metal hooks or pine needles that may have been left during the tree removal.

By Kendall Taylor

 

 

Credit Do’s and Don’ts During the Lending Process

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Credit Card over a Laptop

Did you know that your credit report is pulled twice during the lending process? Once in the beginning during the pre-approval stage and again right before your closing. During this time period it is imperative that you don’t do anything that could impact your credit score or your loan. Here’s what to do and not do to protect your credit while you are in the process of purchasing or refinancing a home.

Don’t Apply For New Credit

Refrain from taking out any new credit cards within the three to four months before you apply for a mortgage or while in the process of securing a loan. When you apply for a new line of credit with a company or retailer they will run your credit report to make sure you qualify for their card. This can decrease your credit score, which can push you into a lesser credit score category. If you were already in the process of obtaining a new home loan, this change in credit will show up once your lender pulls another credit report before closing – which could cause delays during the process.

Don’t Close Any Credit Card Accounts

Seems like a good idea to close those old credit cards, right? Don’t! Well, at least don’t when you’re in the process of securing a loan. Closing credit cards can hurt your debt-to-credit utilization ratio, which is the debt you have incurred on your credit cards divided by the credit limit on all your accounts. This ratio makes up 30% of your credit score. Closing credit card accounts will not only lower your available credit, but will also reduce the average length of your credit history. These both factor into what mortgages and interest rates you qualify for.

Do Continue to Use Your Credit Cards

Continue to use your credit cards and make your monthly payments as you normally would. If you stop using your credit cards for an extended period of time, your card issuer may cancel your card. This affects the average length of your credit history, resulting in a lower credit score. Lenders like to see a healthy credit history of using and paying your credit card bills on time.

Don’t Make Big Purchases Using Credit

When purchasing a new home, you may be eager to buy new items to furnish your home. Wait until after your closing to make these big purchases! This new debt can change your qualifications for certain mortgages and interest rates. Lenders recommend that your credit card balances be 30% below their limit during the loan process.

Don’t Co-Sign On a Loan

Think twice before co-signing on a loan for any relative or friend. Co-signing on a loan is an added risk to your credit score. Although you are not the primary borrower, by co-signing you are responsible if the primary borrower defaults on the loan. This added risk will alter your debt-to-income ratio, which will also affect your credit score.

Do Call Your Loan Advisor

Your loan advisor is there to guide you throughout the lending process. If you have any questions regarding your credit or loan, ask your loan advisor  for advice.

By Kendall Taylor

How to Choose the Right Mortgage Professional

It is often said that buying a home is the most significant purchase you will make in your lifetime. It’s a major financial commitment and an important milestone, so you want to get it right. This means doing some homework and seeking professional guidance. A real estate agent can assist with your home search, but what about securing a loan? How do you find a mortgage professional you can trust to consider your best interests, help you select the right product, and guide you through each step of the home financing process? The following tips will help you conduct a thorough and efficient search for a lender you can rely on to help make your dreams of homeownership a reality!

consult Realtor

Consult your Realtor
Tap into your Realtor’s professional network. Real estate professionals work closely with mortgage lenders on a regular basis, and will have a good sense of products and services available from different providers. Based on past work experience, familiarity with your financial background and goals, your Realtor is uniquely suited to recommend a mortgage professional who is qualified to serve your needs and preferences.

Check Licensing
NMLS stands for the Nationwide Mortgage Licensing System and Registry. It is a web-based legal system of record for non-depository financial services licensing or registration. All mortgage loan advisors and brokers must be registered and have an NMLS#, as required by the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act). Once you obtain a mortgage professionals NMLS#, you can utilize the NMLS Consumer Access Website to verify some basic information. You can confirm if their registration and licensing are current and verify contact information, office location and the name of the company they are authorized to represent.

Online reputation
Go beyond your network and check the online reputation of the professionals on your short list. Check customer review sites, like Yelp, Google+ and Facebook, to hear what other clients have to say about their experience. Honest feedback from real customers can give you an insider’s perspective on working with that loan advisor, and help guide your decision in choosing the professional that best fits your needs.

Reach Out
You don’t have to actually submit a complete loan application to just ask questions. Reach out to a mortgage professional you are interested in working with. Attempt to contact them in the manner in which you prefer to communicate, whether it’s phone, email or even text. If the loan advisor is hard to reach, you have a pretty clear indication of what your service experience could be like.

What to Ask
Think about what you really need from a loan advisor, both in terms of product and services, and ask questions based on those hot buttons. What type of special expertise matters to you? Are you a first time homebuyer or a more sophisticated real estate investor? Are you self-employed with a complicated income stream? Are you looking for low down payment options? Do you qualify for a government-backed loan, such as VA, FHA, or USDA? Do you need a jumbo loan that exceeds conforming loan limits?

Ask what you can expect from the process. What tools and resources are available to help you along the way? How will you communicate with each other? If you like to meet in person, make sure that option is available. If you prefer the convenience of online, digital paperwork submission, ask about access to technology throughout the process. Essentially, you should ask about any detail that is important to you.

Search for a loan advisor near you and ask how we can help make that dream house…your home!

By Amy Malloy

4 Tips to Organize Your Kitchen… Just in Time for the Holidays!

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family gathering

The kitchen is often referred to as the heart of the home. It is where food is prepared, and meals are shared. The holidays are just around the corner, and with so much holiday tradition centered around festive gatherings and special foods, you’ll likely be spending extra time in the kitchen. Whether you will be planning an elaborate meal, hosting a simple occasion or baking holiday treats, now is the time to organize your kitchen for ultimate efficiency during the busy holiday season! Here are some simple tips to help you get started:

The Pantry

With hungry kids grabbing afterschool snacks or lunch items on their way out the door in the morning, the pantry can easily become a disaster zone. Organized food pantryTo add order to the chaos, group like items together, such as paper products, canned goods, spices and baking supplies. As you sort the items, check for expired items that need to be tossed. Add shelf organizers and label the shelves. This makes it easy for anyone in the family to find certain items and know where to return them. An organized pantry will help you avoid buying duplicates of items already on hand. This will also prove extra efficient and save you from ransacking your pantry looking for that little jar of pumpkin spice when it comes time to prepare Thanksgiving dinner!

The Pots and Pans

hanging potsTo free up space in your cabinets, try hanging your pots on either your walls or an overhead rack. This will make finding that specific pan you need that much easier. Or, take the time to stack your pots and pans neatly, strategically placing your most used pans in easily accessible spots in your cabinets. Consider adding extra plastic shelving to create more space if needed. For those lids that always seem to be wreaking havoc in your cabinets, try using a dish rack to neatly hold your lids.

The Cleanup

To ensure a speedy cleanup, it’s time to conquer the madness underneathCleaning supplies your sink. This area always presents a challenge due to all the plumbing pipes and the bottom of the sink. Make the most of the available space by fitting stackable shelving around the bottom of the sink. This will allow you to add small bins where you can store your cleaning supplies. You can also add hooks on the inside of the cabinet door to hold dish rags.

The Containers

Once the food coma hits, the last thing you want to do is rummage through all your Tupperware to store your leftovers. Avoid this time drain by dividing your glass and/or plastic containers into stacks and gathering the matching lids. While sorting through Leftovers in plastic containers.your container stash, take the time to discard any containers or lids that are missing their other half. Let’s face it– at this point they are just taking up space. Next, place lids into a small bin that will fit in your cabinet. Stack the containers inside one another. Place these stacked containers so that your most often used containers are easily reachable. Take stock of what you have and invest in some new sets of reusable containers based on what you may need over the holidays. Even the inexpensive sets sold at grocery stores will do the trick and many are designed for efficient, stackable storage. If you plan to send guests away with leftovers or if you will give baked goods as gifts, consider the type of container you will need and purchase accordingly.

By Kendall Taylor

 

Bank vs Broker: What’s the Difference in Mortgage Services?

“Should I work with a bank or a broker?” This is a question often asked by home buyers as they evaluate options for a mortgage service provider who will best suit their needs. Recent news has only done more to shine a bright light on how the lines between mortgage services, traditional banking (such as checking and savings accounts), and higher level investments are blurred. Consumers today have choices that come with greater complexity and consequence than in years past.

Let’s look at how each of the service models are different.

researching a mortgage proWorking With A Bank
When one traditionally thinks of using a bank to obtain a home loan, there is often an assumption of convenience associated with it. In other words, some believe that if they already have their checking, savings and investments with an institution, it will offer them the best terms on a mortgage. Additionally, since a customer relationship is already established and it’s implied that the bank has all of the client’s information, the process itself should be easier. Right? Actually, neither of these assumptions are a given.

What if your bank does not offer the type of loan you seek? Or, what if your real estate market makes a pre-approval letter from this institution appear weaker to a seller than the letter of a local lender or broker? What if your bank requires you to structure your accounts and balances in such a way that makes you feel they control more of your finances than you’d prefer?  These are all important questions to evaluate as you consider the various service options.

Working With a Broker
The broker model has been plagued by the middleman myth – since the broker uses another lender to fund the loan, it’s assumed that they must inherently charge more fees to the client. Even when a broker might be able to offer more options, better rates and a wider range of lending sources, some borrowers are turned off by the idea of providing his or her financial information to someone other than their primary bank.

Bridging the Gap
If neither of the above seem to be exactly what you need, there is another mortgage service model that addresses the concerns of both banks and brokers, but also reinforces their strengths. A mortgage lender like RPM is able to bridge the gap by focusing specifically on delivering the best home loan experience to our clients. We have a singular focus and aren’t distracted by cross-selling other financial services and products. This allows us more time to learn about the unique needs and dynamics of lending in the communities we serve. As a mortgage lender, we aggregate many channels of funding for the home loans we make, whether they are conforming, FHA, VA or jumbo in nature. We realize that not every borrower fits in today’s narrow credit box and we are driven to find the solutions that meet our client’s needs in a financially responsible manner. While the diversity of our products is similar to a broker’s, our reputation and volume allow us to offer consistently competitive rates and costs.

Avoid Assumptions – Ask Questions
In many ways, there are more choices and more ways to research home loan options today than ever before, so it’s important to avoid assumptions before beginning your journey. Whether it’s a bank, broker, or a lender who bridges the gap between both, there is a viable fit out there for your needs. Contact a loan advisor today to see how we can be of service and help you consider your options.

By Rob Spinosa

Qualifying for a VA Loan May Be Easier Than You Think

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A recent survey by the National Association of Realtors (NAR) revealed that homeownership rates are higher among veterans and active military than those who have never served, especially within younger age groups. So, why are military personnel outpacing their non-military peers when it comes to owning a home? There are many possible explanations, but the impact of VA Loan benefits is certainly a factor. Of those surveyed by NAR, 54 percent of veterans and 74 percent of active military said they used VA Loans to finance their home purchase.

military momVA Loans provide a means for active service members and eligible veterans to buy a home at a competitive, fixed interest rate—often without a down payment. So, what does it take to qualify? It may be easier than you think! Let’s take a closer look at the basics of VA Loan eligibility:

What are the service requirements?
You may be surprised to learn that it doesn’t necessarily take years of service to become eligible for VA Loan benefits! If you are active duty military, you must have actively served for 90 continuous days to be eligible for a VA Loan. As a veteran, you must have been discharged under conditions other than dishonorable discharge and you must meet service requirements depending upon when and where you served. See a complete list of service requirements here.

Even if you don’t meet the minimum service requirements, you may still be eligible if you were discharged due to hardship, the convenience of the government, reduction-in-force, certain medical conditions, or a service-connected disability.

What types of properties are eligible?
To use VA financing, the property must be your primary residence. VA Loan benefits do not extend to vacation homes or investment properties. In addition to buying or building a home, you can also use VA Loan funds to refinance or improve your home, including energy efficient upgrades.

How high does my credit score need to be?
Although the VA doesn’t require a certain credit score, the private lenders, who ultimately grant the loans, require a minimum FICO score. But, don’t worry – there’s some breathing room here. The required score may be as low as 600, which falls more in the range of “Fair” credit, rather than “Good” or “Excellent.” Check with your lender to verify the required score.

What are the income requirements?
Unlike many government-guaranteed mortgage programs, the VA does not set a maximum income limit for qualifying VA Loan borrowers. However, there is a minimum amount of residual income required. Residual income is the amount of money left over each month after all major expenses are paid. As an active military member, you may be able to include some of your military allowances and special pay in this total, which will help keep your debt-to-income ratio lower.

Do I need a Certificate of Eligibility (COE) & how do I get it?
The COE is the official document that verifies to your lender that you have met the eligibility requirements for a VA-backed loan. You can apply for a COE through a lender who participates in the VA Home Loan program. The lender will advise you on what documentation must be included with the application. You also have the option to apply for a COE online through the eBenefits portal or you can complete Form 26-1880 and mail it to the VA Loan Eligibility Center.

What’s the easiest way to get started?
The VA Loan application process may seem complex but it doesn’t have to be difficult. Consult a loan advisor who participates in the VA Home Loan program and understands the requirements, the documents, and the process. We are here to help and we are honored to serve those who work hard to protect our freedom. Contact a loan advisor near you to get started today!

By Amy Malloy