A Brief Guide on VA Loan Refinancing

VA loans have several advantages over the conventional loans such as lower interest rate, no down payment hassle and lenient credit score terms. Besides these, VA loans are easier to refinance.

Only a few veterans default on their VA mortgage due to which the Department of Veterans Affairs offers a guarantee of 25 percent of the property's value price to the lender in event of a foreclosure. So, for lenders too, a VA loan has lesser risk involved.

VA Loan Makes Home Refinance Easier

Refinancing is the replacement of existing debt obligation with another debt obligation in different terms. There could be several reasons behind debt refinancing such as:

● To take advantage of better interest rate
● To consolidate other debts into one
● To reduce monthly repayment amount (may be for a longer term)
● To free up cash

Refinancing a loan multiple times can negatively impact the financial benefit of the borrower. Nevertheless, if we talk about home refinance for VA loan, the long-term impact might not be that bad. An individual can borrow more of the value of the home (100 percent in some cases) without VA backing. Whether a borrower wants to take another VA loan to reduce the monthly payment amount, wants some cash back from the refinance or has been delinquent on VA loan, there could be different reasons behind filing for a VA loan refinance.

There's no lower or higher limit for refinance with VA loans. In some cases, one can refinance up to 100 percent of the home's appraised value

VA Refinancing Options

Streamline Loan
For those who want to take advantage of low interest rate, streamline loan is the right option. Veterans with a history of timely payments, who want to refinance the existing VA home loan are eligible for the loan. VA doesn't ask the borrower for any certificate of eligibility, income documents or credit report.

If the area where you live or interested in buying a property has a low real estate value, streamline loan might be the only refinancing option suited for you. The reason being, the borrower doesn't need an appraisal for the property. The purpose of streamline loan is to reduce monthly payments, so borrowers can't ask for cash back or consolidate their other loans in any circumstances.

Cash-out Loan
Borrowers who have equity in home and need cash to pay off debts, improve their home or buy a car can opt for cash-out refinance. But, they should be living in their home and obtain a certificate of eligibility to get the loan. Unlike the streamline loan, it might take more time to get the cash-out loan approved and the borrower should also requalify and have the home appraised for the process.

Refinancing Delinquent Mortgage
The borrowers who are finding it difficult to keep up with the mortgage payments and other bills can ask for reduction of interest rate. They need to submit the application for prior approval, go through credit approval and underwriting for the refinancing of loan payment that has been delayed by 30 days or more. If the borrower doesn't have a financial mismanagement history, he might get the refinance loan approved.

Summarizing It Up!
VA wants to benefit the borrowers with the refinancing option. Lenders have to show the interest rate and monthly payments for the new and old loan as well as how much time it will take a borrower to recoup the closing cost with the lower monthly payment on the new low. This is something that other traditional loans lack in; therefore exploring other options won't be of great help if you are already eligible for a VA refinance.

Empowering Veterans with VA Home Loans

A recent market report states that banks have tightened up the lending standards and that is directly impacting the demand of VA home loans. According to Trulia.com, VA home loan is one of the reasons why 79 percent of veterans are able to own a house. In contrast, if we look at the non-veteran population only 63 percent owns a home.

VA loan offers service members, veterans and their families a chance to have the house of their own and is a testament to the nation's commitment to give a better life to those who served the country. The Department of Veteran Affairs (VA) does not lend money for the loan; it partially guarantees the mortgages made through private lenders such as mortgage companies, banks and credit unions.

What Makes VA Loans Lucrative?

• Interest rate is a little lower than that of a conventional loan
• No down payment is required (in case the purchase price is lesser then the appraised value)
• Can be given to individuals with higher debt-to-income ratios and lower credit scores
• No private mortgage insurance is required on loans that have more than 80 percent of a home's appraised value
• No prepayment penalty is imposed if an individual eliminates the mortgage before the schedule
• Negotiable interest rate
• VA assistance provided to the borrowers who default the payment due to a temporary financial difficulty

Who is Eligible for a VA Loan?

Whether you are looking for VA home loans Texas or in any other state, you need to meet the eligibility criteria to get the loan approved. If you fall into any of the categories mentioned below, you are eligible for VA loan:
• Veterans
• Active-duty personnel
• Reservists/National Guard members
• Surviving spouses

Fees

The cost of getting a VA loan is less than other types of mortgages, still, there's a one-time funding fees that varies according to the amount of the down payment and veteran type. For example, if the borrower is with the armed forces and applying for the VA loan for the first time with zero down payments, he would be required to pay a fee of 2.15 percent of the total loan amount. In a scenario where the borrower makes a down payment of 10 percent, he will have to pay 1.25 percent of the loan amount as the fee. For those applying for the VA home loans for the second time without a down payment, they will have to pay 3.3 percent of the total loan amount.

The regional loan centers of VA are across the U.S. in Cleveland, Atlanta, Denver, Phoenix, Texas, St. Paul, and a few more areas. Individuals seeking for VA home loans can visit the website of VA to find out more details of the center that services the state they live in or seek assistance from a loan service company.

Everything You Need to Know about VA Home Loan Limits for 2015

Buying your “Home Sweet Home” may prove to be a tough job. In addition to finding an ideal home that meets your specific needs, you also need to consider your current financial condition. Over the years, many home loan programs have been introduced to help cash-strapped borrowers. Of these various options, a specific type of loan that has proven to be quite beneficial, specifically for veterans, is the VA loan.

Despite the numerous advantages provided by VA loans, out of the 16.4 million service personnel, only 12% take advantage of VA loans. This is because they are not sure about the rules and regulations associated with these loans. This is where mortgage loan experts can help. Mortgage specialists can provide expert information to make your process easier.

Why VA loans?
Home loans guaranteed by the Department of Veteran Affairs have grown in popularity in the recent years. The main advantage of this loan is that the VA agrees to cover up to 25% of the loan amount for lenders, if the borrower defaults in repaying the loan. This proves beneficial for homeowners as the protection allows lenders to offer competitive interest rates compared to conventional loans. If you are planning to apply for a VA loan in 2015, here are some essential loan limits that have been published by the Veteran Administration:

VA Loan Limits for 2015
The VA loan limit is the maximum that you can borrow without a down payment. Beyond the specified limit, borrowers have to pay a 25% down payment on any amount that is above the limit. The new VA loan limits came into effect on January 1, 2015. Depending on where borrowers live, they can expect variances in interest rates ranging from -42.8 percent to 8.1 percent. Though the standard limit for VA loans for most counties has remained the same ($417,000), the VA has established higher loan limits for high-cost areas.

The term “VA loan limit” can be a bit confusing for borrowers. This is because the VA does not limit you on how much you can borrow. It’s the figure that a VA-approved lender will determine depending on the eligibility, credit history and debt-to-income ratio of the borrower. The VA backs 25 percent of the loan limit for the lender in the county, region or a territory.

Can the Missed Payments in the Past affect your VA Eligibility?

VA loans have gained in popularity in recent years. According to a report by The Huffington Post, the Department of Veteran Affairs backed 630,000 mortgages for veterans and military personnel in 2013. Unique features and unmatched buying power make VA loans a preferred choice among military personnel.

VA approved lenders can help veterans understand the specifications including the eligibility criteria to obtain a mortgage. They can assist borrowers to find the right property, and also negotiate the purchase agreement. However, when veterans apply for a VA loan, lenders will analyze their past credit performance in order to determine whether or not to approve a loan. A borrower who has a history of making timely payments is considered safe. On the contrary, a borrower with a history of slow payments and delinquent accounts may find it difficult to get a loan approval. Here are some of the factors that are considered when you apply for a VA loan:

• Late Payments

When you apply for a VA loan, the underwriter will analyze your past credit behavior. A borrower who has faced some financial difficulties for a specific time period, but has maintained a good payment history, will not be disqualified for a VA loan. If you make regular and timely payments for 12 months after the date of your last defaulted payment, then the lenders consider that your credit has been re-established.

• Credit History

When it comes to VA loans, the absence of established credit history will not disqualify you from getting a mortgage. A satisfactory history of payments is preferred as it helps establish a positive credit history.

• Unpaid Judgment

If a borrower has an unpaid judgment, then his mortgage will not be approved. However, a borrower who is on a repayment plan and has an acceptable payment history may be approved for a loan.

• Foreclosure

A borrower whose previous residence was foreclosed within the last two years from the disposition date is not eligible to get a VA loan. If the foreclosure was on a VA loan, then the applicant may not have full entitlement that is available for the new loan.

According to the rules laid down for a VA loan, a borrower can’t be disqualified for missed payments during a period of financial crisis. However, in such situations, a borrower will have to provide relevant proof to show that the circumstances were beyond their control. The applicant is also required to submit a proof to confirm that the situation has been resolved.

Confused between VA loans and Conventional Loans? Here’s Some Help

Buying a home in Texas may top your list of New Year resolutions. The colorful culture, mouthwatering food, the plethora of employment opportunities and of course attractive homes, makes this state a dream destination to settle down in for many Americans. However, one of the major hurdles that prospective homeowners face is financing the entire investment, especially if you are an active military member or veteran.

This is where VA home mortgage loans play a crucial role. Despite the numerous advantages that VA loans offer, it has been shown that many veterans don’t apply for one. In 2004, VA loans accounted for only 2% of all mortgage loans in the U.S. The scenario improved in 2014, as the number increased to 8%.

One of the key features of VA loans is that it doesn’t require any down payment. Also, the VA loan rates in Texas are quite competitive as compared to conventional home loan programs. For instance, you may get a conventional loan with a low down payment, but the interest rate will be higher due to the higher risks involved.

Why VA Loans?
Here are just a few reasons you might want to choose a VA loan over a conventional loan:

No Downpayment - In recent times, lenders are asking for 10%-20% down payment for a conventional loan. VA loans are backed by the federal government, as a result, banks don’t require a down payment.

No PMI – A VA loan is backed by the government so that lenders don’t need private Mortgage Insurance (PMI) in the loan amount. This is an added expense that is required for conventional loans.

Lenient Qualification Standards - The qualification standards vary for different loans. The government-backed VA loans have less stringent qualification standards as the banks assume less risk.

Assigning an Interest Rate
There are several factors that are evaluated when assigning an interest rate for VA loans. Credit score, loan amount and lender’s fee charged to the veteran and the tenure for which you need the loan are some of the essential factors that are considered. VA loans don’t require a specific credit score but most lenders ensure that it is not lower than 620. A higher credit score ensures a better loan interest rate.

The lock-in period also plays an important role in determining the loan rate. The rates on the loan can vary from day-to-day, and at times even intra-day. This is the reason why it is essential to get the rate quotes on the same day and time.

A Bank Home Loan is Not Your Only Option

Most people, who want to buy a new home in a state like Texas usually consult a mortgage company that can help them find the most suitable property in the competitive housing market. If you too are looking to buy a home in this state, a bank loan is likely to be the first place you think of going. However, it is not your only option. Depending on your financial situation and preferences, you can also consider one of the following options for securing home loans in Texas.

Conventional Loan
These mortgages are offered by private lenders unlike others that are offered by government-sponsored ones. The two major types are –

Fixed rate mortgages -  Interest rates remain non-fluctuating for a determined time
Jumbo mortgages - even for borrowers with low credit scores; however, the down payment for Jumbo mortgages is larger than other mortgages.

Due to stringent lending regulations in the U.S, getting conventional mortgages has become increasingly difficult. Lending institutes are likely to reject loan applications if the borrower's’ monthly income and credit score are low.

FHA Home Mortgage Loan
The United States Federal Housing Administration (FHA) makes provisions for people who have less household income to be able to secure a home loan easily. Only approved mortgage companies can provide such loans. While the interest rate and other terms are favorable for people with lower cash reserves, they need to pay a minimum down payment of 3.5%. However, there is a 1.75% percent premium that is to be paid to the FHA upfront. This amount is usually adjusted in the loan. It means the burden falls on the shoulders of the lender. The overall amount paid by the borrower for an FHA loan is higher than other types of loans.

VA Mortgage Loan
This mortgage is for veterans, which can be sanctioned by approved lenders only. Veterans and their spouses (in the event of their death) can buy homes without a down payment if they can’t secure a private loan. There may be funding fees from zero (0) to 3.15%. The limit for this loan without a down payment can’t go beyond $625,500.

Loan for the First Time Homebuyers
In Texas, there’s the My First Texas Home Loan Program or TMP 79. Another program is known as the Texas Department of Housing & Community Affairs or TMP 77. These programs help people who have low to moderate incomes who have never owned a home (or at least not in the past three years). It helps borrowers get a competitive interest rate with a 30 year repayable mortgage. The amount may cover the down payment and the closing costs as well.

You may not be able to decide which program suits you the best. Keep in mind that the above-mentioned programs are not the only ones that exists. In order to make a smart and informed decision, contact an expert mortgage consultancy firm and learn about your options.

All About VA Loans and How You Can Apply for Them

Do you often hear about VA loans and are you interested in learning what they’re all about? To begin with, a VA loan is a mortgage whose guarantee is given by the United States Department of Veterans Affairs. VA loans are meant to offer long-term financing to veterans who have worked in the American armed services or their spouses whose partners lost their lives in a service-related cause. Those who are eligible for this loan can apply for it. They can go for this loan even when they fail to get private financing. One of the major USP’s of this loan is that a borrower doesn’t have to make a down payment.

Let suppose that you are a resident of Texas. Before you go looking here and there to secure a loan, you must know that VA loans in Texas are made available to eligible and qualified veterans through direct lenders, mortgage brokers and banks. As far as the interest charged on a VA loan, it can be similar to that which is charged in a conventional mortgage.

To secure a VA loan, you need to follow certain steps. First and foremost, you must become pre-qualified to purchase a home or get a loan refinanced. For this, you have to get a pre-approval letter before you make an offer on a home. If you are buying a home and not getting a loan refinanced, you can go for a house whose closing costs don’t exceed 4% of the total amount and can be incorporated in the contract.

For a formal loan application, you will be required to furnish a copy of your purchase contract and there will be other disclosures that will require your signature. In the end, as you show some personal documents, your loan should be approved. Post the approval of your loan, you can go ahead and start closing on your new house. What will happen in the end is that you will again be signing some final loan documents and the purchase transaction as well as the transfer of ownership will be finalized. Then your new home will be all yours.