Page 2 Article Archive for Clark County, Washington VA Home Loan Team

So Much Documentation Just To Buy A Home! WHY?

November 30th, 2009

Do you find in today’s lending industry that the lenders are asking for way too much documentation? Do you feel they are suspicious of you and that you show up almost being “the bad guy? Do they want our business or what? Unfortunately, this is a direct outcome from the recent nightmare in the lending industry.

The “nightmare” began when large portfolio lenders introduced the “reduced documentation” loan. Borrowers were allowed to use bank statements without verification of deposit and pay stubs instead of verification of employment. This was a revolutionary change that quickly spread into the conforming market. Variations of the reduced documentation loan begain to show up everywhere!. Statistical models demonstrated that a borrower’s credit score was the best predictor of repayment, not their job or banking history. This discovery allowed lenders to tailor documentation requirements to the borrower’s credit score. The higher the score a borrower had, the lower the documentation requirements. That seemed like a great deal for everyone. Lenders could lend, and home buyers could buy!

Well, we all know how the story ends. Here we are. The lending industry is in a real mess. Apparently there is something to validating employment and bank history. Please try to keep this in mind when you apply for a loan and you get put through what might feel like “the ringer”. It’s better for everyone that people get approved for loans they can afford. It’s not as fun as the past, but it’s much better for you!

And this might make you feel a little better. Prior to the reduced documentation loan, maybe in the early 1990s the burden was put on the borrowers to document their loan application and it reached even more excessive levels. Loan originators and underwriters were trained to be suspicious about borrower documentation, and even simple loan packages could exceed 200 pages. We haven’t spun that far back, but it’s good to find the happy medium. Well, we can try to make it a “happy” medium. Find the right mortgage company that will try to make it as painless as possible on you. Of course, I recommend Creekside Mortgage.

Bonnie Miller

Tax Assessment in Clark County

November 24th, 2009

Every homeowner in Clark County should have received their new tax assessment value on their home by now. Many people are in a panic about how much their houses have dropped in assessed value, but this is actually a very good thing. Your home’s taxable assessed value should always be about 5-7% below its true market value. For the first time in three years, assessed values are actually in line with market values. Over the next few months, your taxes will be dropping to support that value, which means a savings for all of us in our monthly housing expenditures.

Kerry N. Greenwald, Sr. VA Loan Specialist

Rates fall back to all-time low!

November 13th, 2009

Rates have now fallen back to an all-time low, right around 5%, in some cases lower on government VA 30 year fix loans.

Once again, it is a great opportunity to buy a house. A lot of people are predicting this is the last run on rates going down, due to the inflationary factors that will be coming in the future due to governement spending at such a high rate. The government will soon have to start raising the cost of borrowing short term money to be able to pay for debt that is currently being incurred.

Kerry Greenwald Sr. VA Loan Specialist

Your Credit Score…..the Highs and Lows

November 12th, 2009

In todays world of Credit there are so many factors that are considered in the bureau’s determining your score. Lets consider two types of credit scores that are not that different…..actually quite similar. Lets compare a 740 and say a 680 score.

The difference points up an important fact: The higher your score, the more points you tend to lose from “bad” actions. That’s because the scoring formula is sensitive to any sign you’re getting in over your head. Maxing out a credit card is considered one of those signs.

You also should know that it typically doesn’t matter to the formula if you carry a balance or pay off that maxed-out card as soon as you get your statement. What’s usually reported to the credit bureaus is the balance on your last statement. Even if you pay the debt in full before the due date, the maxed-out card will hurt your score. So keeping a balance at 35% or less of the available balance is a good rule to follow.

Kevin J. Lawson

Happy Veterans Day !! In Recognition of Our Freedom !!

November 11th, 2009

On this day just a brief reminder first of all that we honor the brave, the true hero’s of this nation. The veterans that have entered the military on their own free will; to provide all of us what is hopefully not taken for granted or overlooked, our gracious freedom. I want to bring up highlights and strong points of aVA Loan.

The VA Loan is an outstanding choice for our veterans, to be able to take advantage of loan opportunities that may not be available elsewhere. For example, closing costs are limited, 100% financing is available, no mortgage insurance, and the VA will help with payments in time of financial hardships. The veteran is not allowed to pay several of the typical mortgage related fee’s in a transaction, including pest and dry rot inspection, so be aware of what is being charged.

Seller concessions cannot exceed 4% of the sales price, however only specific items are covered. Sellers can pay pre-paid items (insurance, taxes), the VA funding fee, which is normally financed into the loan amount, collections and judgments, and charges for temporary buydowns, but not discount points.

Kevin J. Lawson

The benefits of VA vs. FHA loans

November 8th, 2009

Many people are confused about the benefits of getting a home loan through the Veterans Administration vs. the Federal Housing Administration. Both are similar loans due to the fact that they surround first-time home-buyer programs, or are a limited- to no-down-payment-required loan. An FHA loan requires a down payment of 3.5% and the seller can pay all of your closing costs. A VA loan is a true 0% down loan, with no down payment and no closing costs for the borrower, as the seller can pay all closing costs.

FHA loans have a monthly mortgage insurance calculated on the value of the house that lasts up to five years and until you get 75% loan to value on the house. FHA does have an up-front mortgage insurance premium of 1.5% added overall on top of the loan. VA has no such mortgage insurance on a monthly basis.

However, with VA, you do pay a VA funding fee. The first time you use your benefits, there is a 2.15% fee; it is not paid out of pocket, but is financed into the loan. Your second use requires a 3.3% fee. That is also financed on top of the loan; it is not something you have to pay up front, which in the long run is much cheaper than paying that extra premium on a monthly basis.

The bottom line: never, under any circumstances, if you’re a veteran, would you ever go FHA, unless you’ve lost your entitlement, or you want to buy a house with another person you’re not married to who is not a veteran. There are very few circumstances in which FHA would benefit a veteran more than going VA.

Most people try to talk veterans out of their VA rights because it is more difficult for the person doing the loan to complete the transaction. Never give up that benefit!

Another note: If you have any type of disability benefits of 10% or more from the VA, even if you’re putting 10%-20% down, a VA loan is always going to be cheaper for you.

I hope this was helpful. If you have any questions, always feel free to give Creekside Mortgage a call.

Kerry N. Greenwald, Sr. VA Loan Specialist

Fed To Keep Rates The Same

November 4th, 2009

In a recent release by the Federal Reserve, the lending rate’s will remain the same. Rates will remain unchanged for an extended period and specified for the first time that policy will stay unchanged as long as inflation expectations are stable and unemployment fails to decline. The Fed’s also said “Household spending appears to be expanding, but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth and tight credit.” The rate has not changed since last December and Ben Bernanke is trying to determine when the revovery is strong enough to withdraw the 1$ trillion the fed injected to avert a depression. The dollar declined as the Fed’s statement, which followed a report last week showing the economy expanded last quarter for the first time in more than a year, signaled growth alone won’t be enough to warrant tighter policy. The economic forcast by many indicate that we may see the same trends untill mid 2010 to late 2010.

Creekside Mortgage partners with charitable organization for the benefit of children of veterans

October 29th, 2009

Creekside Mortgage is happy to announce that we are partnering with the Special Operations Warrior Foundation to help provide college educations to the children of fallen Special Operations forces. For every closed VA loan originated after July 1, 2009, Creekside Mortgage will donate $100 to the Special Operations Warrior Foundation in the name of the borrowing veteran. The foundation also provides assistance to special operations personnel who have been serverely wounded.

The Special Operations Warrior Foundation was started in 1980 as a scholarship fund named in honor of the legendary Army Green Beret Bull Simons. This fund provided college educations for surviving children of the men killed or incapacitated at Desert One.

Children awarded scholarship funds are survivors of Special Operations Forces of the Army, Navy, Air Force, and Marine Corps. Currently, the foundation is providing scholarships for 760 children of over 600 Special Operations Forces who have passed away in service to the country.

At Creekside, we are veterans who want to support our fellow service members and their families in every way that we can–not just by providing expertise in using VA home loan benefits, but by supporting organizations who have common cause to support families of service members. When you choose Creekside for your lending needs, you are partnering with us to help children of deceased service members and to make a difference in the lives of others. Please visit http://www.specialops.org for more information on this organization.

Kerry Greenwald Sr. VA Loan Specialist

Why put 5% down on a VA home?

October 25th, 2009

The VA loan allows a Veteran to utilize his/her VA loan multiple times with various combinations depending on military history, service connected disability, down payment, and prior VA loan history. I must preface my topic: “Why put 5% down on a VA home loan?” with a basic answer to another question: What is a VA funding fee? The VA funding fee is added as a dollar amount calculated by a percentage to the purchase price of the home you are buying. The VA funding fee guarantees to the lender that if a Veteran fails to repay the loan the lender is protected from $36,000 up to$144,000, and an additional amount equal to 25% of the allowed county loan limit for a single family home may be available. This is not to be confused with the veterans entitlement amount to purchase with $0 down, which is $417,000 in most counties, and higher in a few.

When a veteran with active duty service (which includes nearly everyone, including reserves, due to active duty service in multiple theatres of war) the VA funding fee is set at 2.15% for first time use of the VA benefit and subsequent use (another new home purchase or refinance) is set by the VA at 3.3%. The Veterans who are in reserves with no overseas service in Iraq or Afghanistan for example (on active duty) will have slightly higher fees, and for the purpose of this discussion I will focus on active duty and active duty reserves.

If you put down 5% on a VA home loan, your funding fee drops to 1.5%, no matter how many times you have used your benefit. This is a huge savings! If you look at an average home of $250,000, the funding fee for a second use on your home would be 3.3%, or $8,250. However, if you put down 5% the loan amount is now $237,000 and the funding fee would drop to $3562.50–a savings of $4,687! With a first time home purchase (funding fee of 2.15%), you still save a significant amount of about $1,813 on our hypothetical $250,000 home. The lower loan amount translates into lower monthly payments.

There is no other loan on the planet that even comes close to your VA home loan benefit…all other loans require some type of mortgage insurance paid monthly when you are in less than a 20% equity position. Additionally, on a VA home loan the seller can pay up to 4% of the purchase price of the home toward your closing costs, pre-paid fees, and VA non-allowables (fees the veteran by law cannot pay). Using the hypothetical $250,000 home again, the seller could pay up to $6,500 in closing costs, pre-paids, and VA non-allowables. This frees up a person’s savings to go toward a down payment rather than paying closing costs.

If you put 10% down, your VA funding fee will drop to 1.25% , which is a limited return for the additional funds required compared to the benefit gained by the 5%. Feel free to contact us for more information on your VA home loan benefits.

Michael Frakes, U.S. Navy Retired, Sr. VA Loan Specialist

*The guaranty means the lender is protected against loss if you fail to repay the loan. The guaranty replaces the protection the lender normally receives by requiring a down payment allowing you to obtain favorable financing terms.

*For loans in excess of $144,000 on purchases or new constructions, additional entitlement up to an amount equal to 25% of the VA county loan limit for a single family home may be available.

Michael Frakes U.S. Navvy Retired Sr. VA Loan Specialist

Federal homebuyer’s tax credit comes to an end Nov. 30

October 6th, 2009

The Federal homebuyer’s tax credit is coming to an end Nov. 30. Will it be continued, or not? That is the big question. Most economists predict that the government will give a four to six month extension, but it is hard to predict whether the dollar amount will go up or not, due to the added debt load to the federal deficit. The incentive has worked, though, creating a larger amount of people who were first-time homebuyers this year.

From my point of view, it would benefit the industry if the government extended the tax credit, but it makes me ask the question, does it benefit all of us in the end? Is it creating another false bottom on the real estate market? If I had to make a personal call, I think the government will probably continue it. This will help out Clark County real estate by continuing to dry up the overwhelming supply of houses and slow down the growth of newly built homes.

We should have a better idea of whether it will be extended as we get closer to the date. Most things I have read have predicted we will get that notice about a week before the tax credit ends. If there are updates, I will post them here!

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