How to buy a home using a VA loan

California attracts million of potential homeowners for dozens of reasons. With an abundance of big cities close to military bases, it’s easy for military homeowners to overlook Sacramento. At the same time, buying a home in California gives active-duty service members and veterans the chance to use their VA Home Loan benefits.

After World War II, Congress enacted the VA loan program which has helped more than 18 million service members become homeowners. The program is available to qualified veterans and service members, and includes several financial benefits to borrowers.

Arguably the most touted advantage of the program is paying no money down. Qualified borrowers can finance their home without paying a penny down. In Sacramento County in California, borrowers can finance a home worth up to $418,750. The standard limit is $417,000, but more expensive markets have higher limits.

Borrowers don’t just save in the absence of paying money down. With a VA loan, sellers pay up to 6 percent of closing and concession costs. Also, the miniscule VA funding fee can be packaged into monthly payments so borrowers need not pay it up front.

Monthly payments for VA loans are markedly lower than those of conventional mortgages. VA loan borrowers do not pay private mortgage insurance, which can be a hefty cost every month in traditional mortgages. Additionally, interest rates for VA loans do not soar because of the VA’s guaranty. The VA does not issue VA loans, but it insures up to one-quarter of each loan’s value. As a result, lenders assume less risk and feel comfortable offering lower interest rates.
Homebuyers must be current or former members of the military to meet the VA home loan requirements, but homebuyers don’t have to have perfect credit. Lenders who issue VA loans don’t expect perfect credit, but look for scores of about 620. VA loan applicants with a history of bankruptcy or foreclosure are not immediately disqualified.
To qualify for a VA loan, borrowers usually fall into one of the following categories:

-While on active duty, served 90 days during war time or 181 days during peace time.

-For at least six years, served in the Reserves or National Guard. -Still on active duty and meets one of the criteria above.
-Spouse of a service member who died in the line of duty or as a result of a service-related injury and has yet to remarry.
The first step in a getting a VA loan is completing a Certificate of Eligibility (COE) from the VA or a VA-approved lender. A COE affirms that you meet the initial requirements for the VA home loan program. For more information on VA loans, contact a VA-certified lender.

MORTGAGE INTEREST RATES ARE SUPER LOW

I can't believe the interest rates this week. They are at 40 year lows. A person can get a 30 year mortgage at 4.0% fixed. You can also get a 15 year fixed mortgage at 3.75%. I have been originating loans since 1991 and I have never seen them this low. If a person were to take out a $150,000.0 mortgage their principal and interest payments would only by 716.0 per month. If you were to take out a 15 mortgage ,you payment would be 1090.0 per month. Just think if you could afford a fixed 15 mortgage payment. It wouldnt matter if home values went up or down. You would own a home free and clear in 15 years. No payments. That is my dream. What is your dream?

Mortgage interest rates have come down

The mortgage interest rates have come down a half of percent in the last 30 days. The 30 year fixed rate is now around the 4.5% range. Interest rates change daily so that is why I say they are in the 4.5% range. What does that mean for someone getting a 200k loan? It means that now their payment will be 60 dollars less per month for 30 years. That can also mean that they can qualify for 10k more of a home loan to buy their dream home. Mortgage rates follow the 10 year note rate. The ten year note rate at the end of April was 3.94%. It is now at 3.16%. It could be a good time to see how much of a home loan that you qualify for now that Mortgage interest rates have dropped by a half percent.

Figure out how much of a loan amount equals your desired payment

I would say the first step in seeing how much of a house that you want to
buy is to determine how much of a payment that you want and then play with
a mortgage calculator to see how much of a loan that equals. I have a mortgage caculator at the bottom of this blog. For example you can put in $100,000.0 at 5% and see that the payment is $537.0 per month. You will need to add in a monthly amount for taxes and homeowners insurance. That will vary by the amount of the purchase price. I used 5% because that is
the average 30 yr fixed rate now. You can always get an average of the current market interest rates at websites like www.bankrate.com to use in the financial calcualtor. I will also be updating my blog with the current market rates. So go ahead and put in different loan amounts and even put in different lenghs of loans like 20 years and 15 years. You would be surprised that there isnt much of a difference by lowering the term of the loan down to just 20 years.

Qualifying for a home loan

I just wanted to go over what an Mortgage underwriter looks for when qualifying someone for a home loan. They first look at a person's income compared to their debt and proposed housing payment. They want a person's housing payment to by 31% or less of their gross income. They want the housing payment plus debt payments to be 41% of the gross income or less. If a person grosses 3000.0 per month, they would want the maximum housing payment to be $930.0 per month or less.The $930.0 per month includes the monthly real estate taxes and homeowners insurance. They would want the housing payment plus other monthly debt to be $1230.0 per month or less. That means they want either car loans and or credit card payments to be $300.0 per month or less. You can use the mortgage calculator at the bottom of the page to see how much of a loan amount would equal the mortgage payment. In this example the loan amount that has a total payment of $930.0 per month is $120,000.0. In most areas that can buy you a nice starter home which is less than renting the same house. A mortgage underwriter would also look at your credit report to make sure that you are paying your bills on time the last year. They now want a credit score of 620 or above. They also like to see at least three accounts or more on your credit report. If you dont have that many accounts on your credit report, you should add another credit account. You could also ask your utility company to report your account to the credit agencys. If your credit score is not high enough, I will be giving tips on how to remove bad credit items. They do look at the property that the loan will be attached to ,but basically I have just described what mortgage lenders look for when qualifying a person for a home loan.

More than one way to become a homeowner

Most people think that the only way to become a homeowner is to go to the local mortgage lender and get a loan to buy your dream homes. There are other ways to becoming a homeowner. You can buy a home with seller financing. This is available when a person owns a home free and clear and wants the income from the payments of the seller financed home. You can also get seller financing even if the current homeowner has a loan on the home. It is called a wrap around mortgage or subject to financing. The current person keeps the current loan in place and he sells the house by putting writing a new mortgage with the prospective buyer. This is usually done for a short term like three to five years. After that time period ,it is up to the new homeowner to refinance and pay off the old mortgage loan. You can also become a rent to own buyer and have some of the rent payment be applied to the down payment. You then dont have to save for the down payment and just have to get a loan when you finalize the purchase of the house. I will be giving tips in the future on how to qualify for home loans and how to find seller financed properties