Veteran Home Loan PMI Change Effective 10/11

December 15, 2011 by Leave a Comment

Veteran Home LoansCongress is trying to “beef up” military benefits, and they started by lowering the Veteran Home Loan fee for getting a VA Mortgage Loan.  The Fee, called a funding fee, is VA’s version of PMI.  It’s important to remember that the Veteran’s Administration doesn’t actually MAKE mortgage loans for Veteran’s, they only insure them.  The Guarantee Fee covers the default charges the Veteran’s Administration might face if the homeowner goes into foreclosure.

Congress passed H.R. 1383, the Restoring GI Bill Fairness Act of 2011, and with that, the Guarantee Fee on mortgage loans for Veterans will be a little cheaper. The VA Funding Fees was reduced effective October 1st.  This was important, because in some parts of the country, Veteran’s who are relocating are not seeing much equity that they can take with them to their new post.

The Funding Fee is charged at loan closing, and is generally added to the loan amount.  If you are purchasing a $100,000 home and you have not used your entitlement before, you loan amount will be $101,400.   You don’t have to finance in the Guarantee Fee, though.  It can be paid through seller contributions, lender credits, or added back to the Veterans loan amount.

Since most Veteran home loans are funded with no money invested for a downpayment, the Funding Fee on those loans will be lowered from 2.15% to 1.4%. This reduction is for those Veteran’s that are first-time users of their entitlement and who are on active duty or honorably discharged.

Funding Fees for subsequent use of entitlement will drop from 3.3% to 2.8% in October, with further reductions to 2.15% in 2012 and 1.25% in 2013. Those Veterans who do make 5% or 10% down payments will see their funding fees drop to as low as a half of a percent. In addition, the National Guard members and Reservists will also see decreases in their VA PMI rates.

Loans for Veterans are one of the last true remaining “no money down” mortgage loan programs in the marketplace. FHA and USDA are now charging monthly fees in addition the the money collected upfront – so this reduction in the funding fee for Veterans should provide a significant money saving benefit to returning service members.

Congress is also hoping that since mortgage rates are so very low, this move will motivate some Veterans who have been waiting to purchase a home!  If you have questions about your VA Eligibility Benefits – please call Steve and Eleanor Thorne, Mortgage Banker in Cary – we offer the lowest mortgage rates for homes in NC!  919-649-5058

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Already Used Veteran’s Eligibility to Purchase A Home?

November 28, 2011 by Leave a Comment

talking things over Ft BraggPeople moving to Ft. Bragg, in Fayetteville NC might be moving here with little or no equity.  Did you know that even if you’ve used your VA eligibility before, you can use it more than once… under certain circumstances.

You need to either:

  • Pay off your prior VA loan (for instance, sell the property)
  • The VA allows a one-time only basis, you may have your eligibility restored if your prior VA loan has been paid in full but you still own the property.

In either case, to obtain restoration of eligibility, the veteran must send a completed VA Form 26-1880 to the local VA Center.  (In NC the Eligibility Center is in Winston Salem.)  We suggest that Veterans include evidence that the previous loan is paid in full with a notice from the bank, and a copy of your HUD-1 Settlement Statement.  Including this information will speed up the process, and you will avoid days of delays!

If you allowed the folks who purchased your home to assume your VA loan, you can still get the Eligibility Reinstated.  In the case of an assumption, your Eligibility will be restored if the person who assumed the loan is also an eligible veteran, and they are willing to substitute his or her available eligibility for yours.  This means the person purchasing your home with an assumption, has to qualify for a VA mortgage for you to be eligible for a NEW VA Mortgage Loan.

If you allowed someone to assume the VA Home Loan, and they defaulted, or the Federal government lost money AT ALL, you will not have your VA Eligibility restored. Even if it’s not your fault, and the VA does not hold you responsible.

The same thing is true if  you short sold your home, or did a deed in lieu.  If the VA lost money, they will not reinstate your Eligibility. Although you might be released from liability on the loan and/or the debt was waived, our experience is that the VA will not restore the Eligibility.

We’ve been told pretty sternly that  “The law does not permit the used portion of the veteran’s eligibility to be restored until the loss has been repaid in full.”

If you are considering a home purchase in NC, and have questions about your Veteran’s Eligibility – please call Steve Thorne 919-649-5057, NC’s Veteran Home Loan Expert!  If you want to know VA Home Loan Qualifying basics, click here.

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FHA Guidelines to Qualify “Rent to Own” in NC

May 5, 2011 by 1 Comment

Rent-to-own agreements and or sales that take place between a tenant and landlord have special FHA Guidelines. Often times, when someone moves to our area with a short sale, or previous forced foreclosure in their past – they will rent a home here until their “waiting period” is over.

If you are in this situation, and plan on buying a home under a rent to own scenario, there are different rules for different types of loans. All Government loans are popular, because of their low downpayment requirements.  VA has no “formal” guidelines for this scenario, and neither does USDA- however, most Underwriters follow the FHA Guidelines for all Government loans in a lease to own scenario.

The appraiser will determine the fair market rent for the property.  Any money paid ABOVE the fair market rent will be used as a credit towards a future downpayment. So, if the appraiser says the fair value rent for the home is $1000, and you pay $1500 a month – $500 for each month you paid that could be paid by the Seller as Downpayment for you at closing!

The rent to own agreement must be approved by the lender. There also is a loan to value restriction (85% LTV) if the parties are related and they haven’t rented for a long enough period of time-usually at least 6 months.  For NON related sales agreements, you can currently go up to 96.5% and not have to have a minimum rental period. Rules and underwriting are OF COURSE always subject to change at any time and any additional lender overlay.

If you are purchasing a home in NC, and want more information about FHA Guidelines and Rent to Own contracts – please call Steve and Eleanor Thorne, 919-649-5058 we are the NC FHA Experts!  We also have the LOWEST mortgage interest rates! :-)

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Bankruptcy and VA Home Loans

April 29, 2011 by Leave a Comment

We are talking to folks every week who lost a job in the last several years, lost medical insurance – or had some other tragedy that made it necessary for them to take steps they never thought they would have to.  The reality is that in today’s economic conditions, unfortunately, bankruptcy has been the only way a family could get a fresh start. As a Veteran, considering a home purchase in North Carolina, you need to know a few things about how Bankruptcy can effect your ability to buy a home.

So, can you get a VA Guaranteed Home Loan if you have a bankruptcy?  The short answer is YES!

The good news is that as of today, the VA underwriting guidelines are far more relaxed than the guidelines for other mortgage loan types (USDA, for instance, makes you wait 3 full years before you are eligible for a mortgage).  The rules for applying for a VA Mortgage Loan after Bankruptcy are different based upon what type of Bankruptcy you took and weather you were able to KEEP your home, or if it was included in the bankruptcy.

Chapter 7 Bankruptcy

Chapter 7 bankruptcies are essentially when the borrower is freed of all liability from creditors. VA loan guidelines typically call for a 2 year waiting period after a Chapter 7 bankruptcy before you can receive VA financing again.

There are rare circumstances in which the 2 year waiting period will be reduced to 1 instead. You would have to be able to show that circumstances beyond your control were the driving force behind your financial hardship.   For instance, we’ve seen this done when a spouse died… we also had a situation where a couple had a children that were less than 12 months apart in age, and the wife could not afford childcare and had to quit her job.  If you can prove the extreme circumstance – then we might be able to make it work after the 12 month waiting period.

As mentioned earlier, USDA Home Loan guidelines call for a 3 year waiting period, and conventional loans require a 4 year waiting period.  IF you had a home that was included in the Chapter 7 Bankruptcy, and it was foreclosed upon – then VA Underwriters also require a three year waiting period.

Chapter 13 Bankruptcy

Chapter 13 bankruptcies involve the establishment of a repayment plan instead of being cleared of liability immediately.

Veterans and military personnel can qualify for a VA mortgage loan, based upon current guidelines,  even when they are still in Chapter 13 bankruptcy. However, you will have to show that you have made a minimum of 12 payments on-time and be approved by the court trustee for the new mortgage loan.  This is VERY, VERY RARE… but again, we saw this happen with a couple who had a restaurant, field Chapter 13, they closed their restaurant and went to manage a National Chain Restaurant.  That was approved… it just takes the right circumstances.

Once you complete a Chapter 13 Bankrutpcy, VA Mortgage Loan Guidelines allow you to immediately apply for a mortgage! Yippee! Conventional Loan guidelines, for instance require a 2 year waiting period!

Don’ Forget About Your Credit Score

All of this talk about being able to qualify for a VA mortgage Loan after (or while) you have a Bankruptcy, assumes that you have a credit score that’s recovered from this event, and is high enough for the Underwriters to approve.  The Veteran’s Administration does not make these mortgage loans – they only insure them.  The VA does not have a minimum credit score that they will insure… however, Underwriters have a minimum Credit Score that they will APPROVE… and these days, that number is a MINIMUM of 620… and some underwriters will only allow loans for those Veterans with scores of at least 640.  So, even after you have finished the bankruptcy process, there are still actions you need to take to get your credit scores up and increase your likelihood of qualifying for a VA loan after bankruptcy.

For example:

  • Re-establish your credit as soon as possible if you do not have any creditors after the bankruptcy process. Remember, approving a potential borrower with no credit is almost impossible!  We NEED a credit history that’s Clean For At Least 12 Months, with 3 Tradelines! You can re-establish credit using secured credit cards, apply for credit with FingerHut, or you might be able to be added to a credit card with a family member.
  • Once you re-establish credit, be sure to always make payments on time... and be sure that the folks who are extending credit to you are reporting those payments to all three credit repositories!  If you are paying for a car over time, and making payments to the dealer – he’s probably not reporting those on time payments to the credit bureaus!  Credit Unions often will not report to all three repositories either, because each submission costs them money!
  • Get in the habit of checking your credit at a minimum of once a year. This will give you an idea of where you stand, especially when you begin shopping for a VA mortgage loan.
  • Upon the discharge of your bankruptcy, send a copy of all your discharge paperwork (including all applicable schedules) to the three credit bureaus: Equifax, Experian, and TransUnion. This is important… it’s also important to KEEP the paperwork for at least 7 years.

We do TONS of VA Mortgage Loans in NC.  We have bases at Fort Bragg, Pope Airforce Base and Camp Lejuene… plus, there are TONS of Veterans who live in Johnston County, Wake, Harnett and Pinehurst!  If you qualify for a VA mortgage loan in NC call Steve Thorne, 919-649-5058.  We have BEST Mortgage Loan Rates Available!

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Tips For Relocating to Fort Bragg

April 4, 2011 by Leave a Comment

There are almost 1700 soldiers and their families that will be moving to Fort Bragg (Fayetteville) North Carolina in the next several months. As they are relocating and looking for homes – I thought that this information on Soldier Support would be helpful.  Frankly, I was impressed with all of the resources available to Veteran’s and their families.

If you are looking for a new home in NC, and you have questions about your Veteran Mortgage Loan Benefits, please call Steve Thorne, 919.649.5058 Professional Mortgage Planner with THE lowest rates!

Phone: (910) 396-8682
Location: Soldier Support Center – 3rd Fl.
Normandy Drive, Fort Bragg (map)
Hours: M-F 8am-5pm, closed on all Federal holidays

After 5 p.m. customers can obtain ACS information by contacting the FRG Center at 910-432-FRGC. The FRG Center is open M-F until 7 p.m. and is located in the basement of the Soldier Support Center.

RRP provides assistance to military personnel (active duty, retired, National Guard, Reserve), DoD civilians, and family members moving to or from Fort Bragg. RRP provides information on Fort Bragg as well as Army, Air Force, Navy and Marine installations worldwide. Information regarding housing, transportation, legal claims, EFMP, financial management and sponsorship is provided. The program also sponsors monthly pre-move briefings.  View Relocation Readiness Tri-fold [.pdf]

Newcomer’s Orientation is every 1st & 2nd Tuesday from 0900-1130 on the 3rd floor of the Soldier Support Center.  Information available on schools, housing, employment, medical care, recreation, welcome packet and many other services. For more info and registration, call 910-907-3499. For more events please see the ACS Calendar.

Request a Fort Bragg Welcome Packet

ACS Events Calendar
ACS quarterly newsletter

Looking for more information about qualifying for a VA Mortgage Loan?  We have tons of information to share about VA Benefits and Improving your Credit Score to qualify for a VA Mortgage Loan!  Welcome to NC!  We think you’ll like it here!  Call Steve Thorne, 919-649-5058 if you need help with obtaining your Certificate of Eligibility, or have questions about purchasing with a Spouse!

 

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Used Eligibility Once VA Mortgage Loan

March 28, 2011 by Leave a Comment

People moving to Ft. Bragg, in Fayetteville NC might be moving here with little or no equity.  Did you know that even if you’ve used your VA eligibility before, you can use it more than once… under certain circumstances.

You need to either:

  • pay off your prior VA loan
  • and disposed of the property, you can have your used eligibility restored for additional use. Also, on a one-time only basis, you may have your eligibility restored if your prior VA loan has been paid in full but you still own the property. In either case, to obtain restoration of eligibility, the veteran must send a completed VA Form 26-1880 to the local VA Center.  In NC the Eligibility Center is in Winston Salem.  We suggest that Veterans include evidence that the previous loan is paid in full with a notice from the bank, and a copy of your HUD-1 Settlement Statement.  Including this information will speed up the process, and you will avoid delays.

If you allowed the folks who purchased your home to assume your VA loan, you can still get the Eligibility Reinstated, if the person who assumed the loan is also an eligible veteran who is willing to substitute his or her available eligibility for yours.  Otherwise,  the Veteran cannot have eligibility restored until the assumer has paid off the VA loan.

If you allowed someone to assume the VA Home Loan, and they defaulted, or the Federal government lost money AT ALL, you will not have your VA Eligibility restored. Even if it’s not your fault, and the VA does not hold you responsible.  Additionally, if you short sold your home, or did a deed in lieu, the VA will not reinstate your Eligibility. Although you might be released from liability on the loan and/or the debt was waived, the VA will not restore the Eligibility.

The law does not permit the used portion of the veteran’s eligibility to be restored until the loss has been repaid in full.

If you are considering a home purchase in NC, and have questions about your Eligibility – please call Steve Thorne 919-649-5057, NC’s VA Mortgage Expert! Remember, Veteran’s who have been deployed still qualify for the $8000 Tax Credit!  If you want to know VA Home Loan Qualifying basics, click here.

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USDA Home Loans and Deferred Student Payments

March 13, 2011 by Leave a Comment

People are moving to Raleigh, and staying in the Triangle because we have jobs. Folks who are considering putting down roots here, and getting a North Carolina Home Loan need to learn more about how their Student Loans will be viewed by Underwriting Guidelines.

Whether it is a USDA Home Loan, an FHA Loan, or a VA Mortgage Loan – if you have have existing student loans, first off they need to be current. If you are past due – call TODAY and see what can be done to create a payment plan.   Once you’ve made 6 to 7 payments on the new plan – you will be closer to being able to buy a home in NC.

The USDA Loan Program is very popular among recent graduates, and a couple reasons are because there’s not a down payment requirement and it is the simplest home loan to get with credit scores of 620 being used to qualify.

Because you don’t need to fork out a ton of cash to get into the USDA Home Loan Program it has gotten VERY popular over the last few years… and it’s our understanding that Johnston County, NC is one of the HIGHEST Counties in the Country when it comes to people who buy a house using the USDA Rural Development Loan!

Student loans come in two classes: deferred and not deferred.  And one thing to keep in mind when looking at the USDA Loan Program is that it does treat student loans differently than the other loan programs available.  At first glance you would intuitively think that a deferred student loan would not be considered in qualifying for your new home loan.

The rule changed slightly with the publication of Administrative Notice 4543.  Now, any student loan whether it is in repayment or deferred must be included in the qualifying calculations.

So, Even though the payment may be deferred, USDA Home Loan Underwriters in NC will still consider this to be a long term debt. This means that if you have 6 payments or more left on a student loan – we will calculate that payment in qualifying you for a mortgage loan.

The maximum total debt payment ratio for USDA is 41%.  This means that your credit card payments, student loans, car payments (etc) plus your mortgage, taxes and insurance on the house should not represent more than 41% of your GROSS (before taxes) monthly income.  We have seen a few cases where this was bent by an underwriter… but not often.

If you do have student loans that are in deferred status and plan on getting a USDA Loan, be sure you know exactly how much the monthly payment will be once the loan is back in repayment status.  If you do not have that information, the USDA Underwriters will use 1% of the loan balance as the monthly payment.

See what part of your county qualifies for USDA Mortgage Loans!

To find out if you qualify for a USDA Home Loan in NC call Steve Thorne (919) 649-5058.  We work with hundreds of families using this program each year here in NC!

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Profile of 2009 – 2010 First Time Home Buyer

November 9, 2010 by Leave a Comment

The National Association of Realtors released information about First Time Home Buyers last week that showed some interesting trends!

  • 93 percent of those surveyed in 2009 – 2010 reported that they purchased using one of the first-time buyer tax credits. (Who’s surprised??? Nope, we’re not surprised either!)
  • Ninety-five percent chose a fixed-rate mortgage.
  • The median age of first-time buyers was 30 and the median income was $59,900. (This part was a little surprising!) The typical first-time buyer purchased a 1,540 square foot home costing $152,000 (bet they were keeping their total payments under the $1000 mark)
  • First-time buyers who made a downpayment used a variety of sources: 74 percent used savings, 38 percent received a gift (or a loan) from a friend or relative, (READ:  their parents) Eight percent tapped into a 401(k) fund, and 6 percent sold stocks or bonds.
  • Women accounted for 1 in 5 purchases, and single Males made the largest leap in the survey ever – which was attributed to the tax [Read more...]

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FHA and VA Mortgage Loan Guidelines Waiting Periods

October 25, 2010 by 2 Comments

If you’re like millions of American’s the last couple of years have been tough.  People who have lost their jobs, or their houses, or their business didn’t just wake up one morning and say, “Oh, instead of making my payments, I think I’ll take a trip to Belize!” They never imagined they would be one of “those people” with bill collectors and “dings” on their credit.

Well, the good news is that your credit score is really just a snap shot of the last 24 months. Yes, missed payments will stay on your credit file for 7 years – but their IMPACT on your credit is greatly diminished after 24 months. (If one person on the loan has good credit, and one person has “poor” credit click here).

So if the bad credit, foreclosure, bankruptcy is behind you… how long do FHA and VA make you wait before you can purchase a home again? Below you will find a chart with the Waiting Period and/or guideline for each Program.  Note that there’s another column that says “With Extenuating Circumstances.” That could mean, you were in Florida, lost your job, had to Short Sale, and move to North Carolina to get a new job… you would need to PROVE that the reason you did a Short Sale in Florida was due to the job loss, and you would need to prove that the company that had the Short Sale is not going to come back after you for the deficiency balance (some banks do – some banks do not).

If the chart says “UW Discretion” that means that the UnderWriter needs to make the call… these days, it is our experience that UnderWriting is TOUGH. We MUST make a strong “case” to get any exceptions, we must DOCUMENT the file, and we MUST know what our UnderWriter is looking for.  

n these situations – you need a GREAT loan officer who will WORK FOR YOU!

DerogatoryEvent FHA VA
Waiting Period and/or Guideline Waiting Period and/or Guidelinew/extenuating circumstances Waiting Period and/or Guideline Waiting Period and/or Guidelinew/extenuating circumstances
Bankruptcy Ch 7 or 11 2 years 1 year 2 years 1 year
Bankruptcy Ch 13 1 year with 12 months satisfactory payments to trustee.  Must have court permission (not trustee) to incur new debt.   If not fully discharged for 2 years loan must be manual UW. Same 1 year with 12 months satisfactory payments to trustee and trustee permission to incur new debt. Same
Foreclosure Deed-in-Lieu 3 years UW discretion 2 years 1-year w/current satisfactory credit.
Short Sale Borrower current attime of short sale:

No wait if all mtg and installment debts pd on time for 12 months preceding short sale.

Borrower delinquent

at time of short sale:

3 years from date of sale.

If previous mortgage was FHA, 3 years from date CAIVRS claim was paid.

 Same No guidance.Typically treated as foreclosure but is at UW discretion. Same

If you have questions about FHA mortgages or VA mortgage loans, and how your particular situation will be viewed in North Carolina with our Underwriting Guidelines (because the State of North Carolina has it’s own set of Mortgage Underwriting Guidelines ON TOP of what FHA and VA set out) please call Steve and Eleanor Thorne, 919-649-5058.

We are truly FHA Home Loan and VA mortgage Loan Experts, and we will give you solid advice!  We offer the best interest rates and fees available.

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