If you bought your house years ago or even more recently, it is very possible that you are paying more than you have to every month because your interest rate is not as low as what is being offered currently.  Even if you are comfortable with your current payment, it does not hurt to at least check the current interest rates and try our payment calculator to see how much you could be saving.  The next step would be to contact one of our qualified VA mortgage specialists to find out if we have a program that could save you money.  If you have had your current loan for a while now and don’t want to go all the way back to the beginning, we have options that may be able to help you pay off your mortgage even faster, but at a lower interest rate.

Another option is the VA Energy Efficient Mortgage program.  This program allows the borrower to add the cost of home improvements that promote energy efficiency into the loan amount.  These improvements can include solar heating and air conditioning systems, insulation, and many other types of energy efficiency improvements.  If you do qualify, you can take out up to 90% of your home’s value!

At VA Mortgage.com, we realize that every financial situation is unique so we will spend time getting to the bottom of yours and understand your needs and goals.  Then we will find the best VA mortgage product that best suits all of your needs.

VAMortgage.com

VA home loans are not an option for everyone, and many of those who are eligible do not even realize that they are eligible.  The VA home loan program was created in 1944 as one of the benefits offered to veterans in order to help them buy a home.  Since its inception, the VA home loan program has helped more than 18 million veterans and active duty service members achieve home ownership.  More than 67 years later, the VA home loan program remains one of the most progressive lending programs in the market.

Many people think that VA Mortgages come directly from the VA, but this is actually not the case.  A VA mortgage must come from a mortgage lender, usually a bank.  The VA does, however, insure up to 25% of each VA home loan and dictates the guidelines of the program to make certain that veteran borrowers are treated fairly.  Because of this guarantee from the VA, lenders like us have the confidence to provide eligible military members with low interest rates and flexible loan terms.

Probably the most attractive benefit of the VA home loan program is that there is no down payment required.  100% of the home’s appraised value can be financed with a VA loan.   A second benefit is that while a conventional or FHA home loan would require mortgage insurance if a 20% down payment is not made, a VA mortgage requires no mortgage insurance of any kind.  And a third benefit of a VA home loan is that all closing costs are regulated by the VA to ensure that all VA-eligible borrowers are treated equally and fairly.

The requirements to obtain a VA home loan are also much more flexible than those of a conventional loan.  Approved VA lenders like VA Mortgage.com don’t need to see perfect credit, which enables us to help many veterans who may not have otherwise been able to secure financing.  VA loans also have lower income requirements than conventional loans and allow high debt-to-income ratios as well.   In fact, about 80% of VA loan borrowers could not have qualified for a conventional loan.  The VA home loan program is one of our nation’s ways of saying “Thank You” to the millions of men and women who have served us so faithfully over so many years.

Source: Flickr_Nikcname

People often ask me if they should refinance their mortgage and my answer is almost always the same, “it depends on what your goal is.”  When you break it down there are only a few reasons to refinance your home.  You may want to save money, shorten the mortgage term, or tap into the equity in your home and take cash out.  Right now I will to look at saving money.

Many  of the refinances that I do are for what is called a Rate and Term refinance, where you only refinance the mortgage balance and the closing costs to save money (if you have a VA Mortgage this is called an Interest Rate Reduction Refinancing Loan or IRRRL).  The next question that is asked is how much of an interest rate reduction should you look at before considering a refinance (for some reason many people think that it should be at least 1% lower than they are currently paying).  In reality there is no set amount of interest rate reduction to look for.  In order to answer that question you have to look at the big picture, how much will it cost to refinance your home and how much will you save.  Since each situation is different, you can’t look for a specific rate, but rather look for the actual savings related to the cost (we will get back to this shortly).  Some people may be able to refinance without any fees and others may have to pay a few thousand dollars to refinance their homes.  These costs are generally rolled into the loan and if there are any upfront fees they are limited to the cost of the appraisal and credit report (about $425 total).  Most VA IRRRL’s do not have any out of pocket expenses.

In order to determine what I can do for a client, I need to get some basic information first, most of which is on their current mortgage statement.  These items include:

• Current interest rate
• Current loan balance
• Principle and interest payment
• Tax and insurance escrow payment
• Home value
• Credit score

With this information I can find out what rates are available and which loan program would be best for a borrower.  When looking at what it costs to refinance a home and how much it will save, I look at how long it will take to recover the costs (costs of the refinance/the savings).  If it costs $2,500 to refinance and it saves $250 per month, the recovery time is ten months.  If the savings were only $50 then it would take 50 months or just over four years.  Generally I look for a 2-3 year recovery time; however some circumstances may call for a longer recovery time (the VA will allow up to a seven year recovery time with an IRRRL).

Another thing to look at is the actual savings.  For some people a $75 savings is worth the effort of refinancing, others may not think so.  I like to think about what the extra cash will be used for.  If your income has dropped in recent years, or your expenses have increased, you may need the money to pay bills and sometimes the $75 is very important.  Others may need to start putting more money into their retirement accounts and the $75 is equally important to them.

Let’s say that you are comfortable with your current mortgage rate and payment, why should you consider refinancing?  There may still be reasons for you to consider refinancing at this time.  Suppose your income were reduced (either switching jobs or company reducing your pay), it is easier to refinance your home now while you have a steady job and may not be as easy if you were to lose your job.  Maybe you are planning on retiring, having children, having to pay/save for college, buying a new car/boat/motor home, increasing your insurance coverage, or getting long term healthcare.  These things will cost you money.  With a refinance you may be able to have these things without touching any of your savings, retirement accounts, or increasing you current monthly cash flow.

Remember, it is always easier to refinance when you do not feel the need to.

Euro-zone Pizza by El Gran Dee

Have you ever been over at someone’s house watching the game with five or seven other people and decide to order a couple of pizzas? How often does everyone just say, “Sure, pepperoni is fine?” Never. In my experience, an argument always breaks out and we end up getting a topping on half or someone just doesn’t get their way. Try this with 17 people and one really big pizza and you have the Euro-zone.

As most of you probably know, the Euro is the currency used throughout the Euro-zone, which includes 17 of the 27 members of the European Union. A currency union has great advantages, especially in a place like Europe. It did away with exchange rate risk and made intra-Euro commerce much simpler and cheaper overall. The Euro-zone covers a very diverse geographic area with varied natural resources, outputs, and core competencies, allowing all members to benefit from each other. Mature, robust economies have the advantage of consistent supplies of materials, goods, and labor they need at a consistent price, while developing economies benefit from the stability of a widely used currency, simple intra-Euro investment, and the monetary discipline of a central bank. The monetary policy of the entire currency is controlled by the European Central Bank, similar to the American Federal Reserve. This is who controls the supply of money in circulation and interest rates, among other tools, to try to control inflation and stabilize prices. Each member nation, however, has their own National Central Bank controlling fiscal and regulatory policy which includes government spending and taxation. Basically they manage their own budget, much like the different states in the U.S., but with significantly more autonomy. And here in lies the problem.

While the Euro-zone encompasses a wide spectrum of nations, let’s take the polar examples of Greece and Germany. Greece’s economy is based on tourism, shipping, and some industrial manufacturing, and its government is characterized by high social spending and currently has high debt, much of which was made available by their inclusion in the Euro-zone. Germany however, is known for fiscal discipline. Their economy is very service-based and their emergence from the global recession was ahead of the pack. Loose monetary policy puts their strong economic recovery at risk and threatens their interests. Tightening of monetary policy, which is good for Germany, puts Greece at a higher risk of default (some would call it a certainty) and worsening of their economy. What’s worse, some of the ECB money going to Greece in the form of bailouts (which are loans) was collected from Germans. So if Greece defaults, all of the Euro-zone, including Germany, will lose a good portion of the Euros owed to them, and possibly set off a chain reaction of default in the other at-risk countries. If additional loans are approved, Germans will continue to foot part of the bill until who-knows-when.

This is a very brief summary of just one of the many complex relationships that make up the Euro-zone. As in my currency manipulation article, there are many theories by members of different interest groups spanning from the right wing to the left, all pointing fingers at each other. These differences are always exacerbated in times of recession. When the team is winning, everyone is fine with cheese, but when they aren’t, there is always one person that doesn’t like pepperoni, and always one that only likes anchovies. So my unanswerable question is: Throughout the rise and fall of economic tides, is it more beneficial to form a currency union or would they have been better off just ordering their own sandwiches?

Mortgage Cross-Sells to Banking, Insurance and Financial Services Products

Have you ever walked into your favorite bank to perform a transaction at the ATM or maybe to inquire with a teller or someone at the front desk about a particular service they offer or a product you may wish to talk about? And before you are finished the transaction are you being made aware of other banking services? Well, this is what’s known as “Cross-Selling.” Financial institutions offer many different products and are very cognizant of the fact that it is important to maintain as much continuity with the client as possible. There is no better way than to make the customer aware of something that will help influence them to keep coming back and increase your company business. A bank not only handles checking and savings accounts but, also offers things such as investment accounts, mortgages, home equity lines, insurance products, and so on. Advertisements are everywhere, in your bank statements, on the ATM screens, at the teller windows, and throughout the offices. There are many ads and promotional pieces on products available to you that you may not be aware of. When you greet your teller at their window many times they will ask, “Have you heard about our great mortgage rates?” or “Are you aware of our investment opportunities?” “Do you need a home equity loan?” “How about a quote on home insurance?” These are all a form of cross-selling the product that didn’t relate to the purpose of your visit.

Financial institutions like to do as much business with their customers as possible, so as a result the personnel who you are meeting with to handle your transactions may talk to you about other products. Such as the mortgage loan officer who when taking your loan application offers you the opportunity to speak with their financial advisor to talk about investment strategies, or makes available the chance to obtain a home insurance quote from an affiliated company. Good business habits are necessary when dealing with the public, as it is very important to make sure your customer is given every opportunity to know your product menu no matter what their current relationship is with the institution. More and more people like to know they can do “one-stop shopping” at their bank to handle all their financial needs, just like if they go to the grocery store. In so doing they are dependent on the employees of the financial institution to make them aware of other items offered by the bank. The best way to keep the customer coming back is to provide them with new ideas to help them structure their everyday life. A happy customer is a returning customer and this makes good business sense for all involved.

VA Mortgage - Wounded Warrior Golf Tournament 2011

On Monday May 23rd, three of my co-workers (Brian Chisholm, Joe Scopel and Jeff Weber) and I played in the Second Annual Wounded Warrior Project golf outing at Chartwell Golf and Country Club in Severna Park, MD. VAMortgage.com was one of the event’s sponsors. The tournament format was a net best two ball setup. Retired Major General Donald C. Hilbert kicked off the tournament by presenting/announcing a full incoming and outgoing Marine Honor Guard. These Marines were from the same group that works on the White House grounds. Despite some threatening weather reports from that morning the event went off without a hitch and the skies were clear all day.

The Wounded Warrior Project is a non-profit organization which was formed in 2002 to “honor and empower wounded warriors” of our nation’s military. Their website goes on to say that they “work to raise awareness and enlist the public’s aid for the needs of severely injured service men and women, to help severely injured service members aid and assist each other, and to provide unique, direct programs and services to meet their needs.”

The event was very well organized by Steve Lombardo; breakfast, lunch, a cocktail/appetizer hour and dinner were all served. Steve became involved with the WWP after seeing it on the Bill O’Reilly show in 2004 and becoming very impressed with their mission. He also got involved with the WWP’s “White House to Light House” soldier ride which serves to heighten public awareness about challenges Veterans face while recovering from traumatic injuries.

Among the players was current 49er and former NFL All-Pro running back Brian Westbrook. In all, 140 golfers took part in the event with two-thirds being members of Chartwell and many being veterans themselves. Several veteran golfers who participated are single- or double-amputees with prosthetic arms or legs. Double-amputee Ryan Kules also participated in the event; he’s the director of alumni affairs for the WWP. Last year the inaugural event raised $48,000 dollars; this year the event raised approximately $60,000 dollars. We were thrilled to see such strong support for the disabled veterans of our armed forces. It was an incredible experience for the four of us representing VAMortgage.com and I’m sure everyone else in attendance would have to agree. We felt honored to be a part of such an event and cannot wait until the next WWP outing.

We at VAMortgage.com strongly support the Wounded Warrior Project and other organizations that aim to serve veterans who have made great sacrifices to serve their country and us. To donate or obtain more information on the WWP, please visit www.woundedwarriorproject.org.

Chinese Currency via jimmie-homeschoolmom

We hear a lot these days about currency exchange rates, especially with regard to the Chinese Yuan coming in and bullying around our stable greenback. But the truth is, it’s a much more complicated story than that. I’m sure everyone has heard from the news that China has been undervaluing their currency, despite many politicians’ polite requests to let it appreciate. But why would they want it to stay low? Simple, it makes their products more competitive in the export market. If a factory is paying its bills in Yuan but getting paid in dollars, it can charge a lot less for its products and still make money. This also makes imported products from countries with strong currencies extremely expensive and therefore less competitive in the Chinese market. Selling more and buying less, sounds like a plan. This may be a faux pax, and not great for citizens’ purchasing power, but if you aren’t concerned with geopolitical manners or the population’s standard of living, it’s not a bad strategy. Not a new strategy either, and one that the U.S. Federal Reserve Chairman, Ben Bernanke, has not overlooked. The efforts to stimulate the U.S. economy, namely sustaining very low interest rates and Quantitative Easing (essentially printing money), have caused the dollar to inflate somewhat. While inflation is a scary word, this has been done strategically for two main reasons, though there are others. First is to stimulate U.S. industry by allowing our products to be more competitive internationally, giving China a taste of its own medicine. This is doubly attractive with the Euro zone tightening economic policy. Secondly, our mountain of government debt, much of which is held by China, is denominated in dollars. So the less the dollar is worth, the lower the value of what we owe to our debtors. Pretty good plan as well right?

Right…except if you have any savings or investments denominated in dollars or if you don’t want to pay more for the imported goods we have all grown to need. But if you’re in a stable position it is, however, a great time to purchase a home. Home prices, as well as mortgage rates, are incredibly low, making now the perfect time to lock into a fixed rate mortgage. In economics there is never a correct solution. There are only solutions that are good for some groups for some reasons based on someone’s speculative theory. So what is going to happen next? I don’t know which strategy is best or whether loosening or tightening is more likely to benefit more people. I would bet, however, that in the next year it’s going to depend on who is in charge, who they aim to please, and what the competition is doing. So despite all of the criticism, is Mr. Bernanke barking up the right tree? Your guess is as good as mine and I don’t think he’s sharing his playbook with us.

We’d love to hear what you think.

Many individuals of all ages are challenged by the everyday routine of providing for their families to make ends meet. With that comes the opportunity to explore what is currently available to help our financial picture. For those who are 62 years of age or older and own your own home there is what’s called a Home Equity Conversion Mortgage or otherwise known as a Reverse Mortgage. This is a government-insured loan by FHA and can help those who are “cash short but house rich” make their ends meet.

It is surprising but, the oxymoron statement of the time is “Oh, I’m retired with a part time job.” I don’t know about you but, I always thought retired is just that, retired. In today’s world this is the dilemma, our funds don’t seem to be as plentiful as we thought.

So now what? A Reverse Mortgage allows the homeowner to borrow funds against the equity in their home based on the current market conditions. The factors that determine how much someone is eligible for is based on their age, interest rates and home value. Whatever funds are available can be used to pay off their existing mortgage, pay medical expenses, help to subsidize their income, pay off other debt obligation or any other use which they choose. The available funds can be received as monthly payments for life or a specified term, as a lump sum, a line of credit or any combination of these. The very best thing is you are not required to pay back the loan until the last surviving borrower vacates the home as their primary residence and you maintain the ownership to your home as the deed stays in your name, not the lender. The lender does not take title to your home. You are required to continue to pay your taxes, homeowners insurance, association/condominium fees, and ground rent, if any. There are costs associated with this loan which the lender you choose will be required to discuss with you as well as other requirements as set forth by HUD (Housing and Urban Development) in order to participate in the program.

For more information on how this program may benefit you please feel free to visit the VAMortgage.com website or send us an email.

1. For an employee that receives a W-2 - Many clients do not realize that as part of the loan process, lenders are ordering a copy of the client’s tax transcripts from the IRS.  The tax transcripts are a condensed version of the client’s tax return and any monies that were earned or deducted for a particular year will show up on the transcripts.  If a client has a loss from un-reimbursed employee business expenses, rental properties, or a side business, that loss will be taken from the monthly income used to qualify for the loan.  Be careful what you deduct on your taxes because what you are telling a lender is that you make less than your W-2 states.
2. For a person who is self-employed – A self-employed borrower will have to provide the lender with a copy of his or her tax returns with all schedules for the past two years.  If the borrower only has a loss and doesn’t show any positive income, the borrower will not have any income to qualify.  If the borrower is only showing a small amount of income, the borrower will have a difficult time qualifying for the loan. Many self-employed borrowers deduct a large part of their wages which makes it difficult to qualify for a loan.
3. For someone who receives alimony and/or child support – If a client has alimony or child support garnished from his or her wages, that money will directly affect the amount of money that can be used to qualify for the loan.

Before applying for a loan, make sure you are aware of your income.  Not necessarily the amount of money that you take home each week but the amount of money that you report to the government.  It is certainly nice to have a loss to write against your wages at tax time but just remember, that loss could be the difference between getting a loan and not getting a loan. Always be sure to consult your tax advisor for information specific to your circumstances.