Tag Archives: financing

Overcoming Misconceptions About VA Loans: How Veterans Can Land The Home Of Their Dreams

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It may come as a surprise to many that veterans can and do experience difficulties when they begin the process of purchasing a home. With VA loan options allowing for a seemingly easy “in” to the home-owning experience, what is it that the general public is failing to understand veterans’ options? Below, we’ve covered why some veterans experience trouble when it comes time to purchase a home and the common fears that plague buyers and sellers alike.

Why Veterans Experience Difficulties Purchasing Homes

Post 9/11, the way that funds have been allocated to veterans looking to purchase homes looks a little different than it once did. Veterans receiving support in the housing market now tend to be resting on the margins of homelessness and homeownership. This has led to an ever-unstable “middle” section of veterans who manage to get by, but fail to leverage VA loans successfully.

Veterans are part of a demographic that’s slowly shifting towards a much younger age range. Young people don’t purchase homes– they rent. Toss in the diversity of the current pool of veterans, and you’re looking at a group of young men and women who are likely to be saddled with the consequences of intergenerational poverty. Veterans coming home from war today are paying for the 2008 housing crash and aren’t receiving targeted assistance.

Common Fears for Sellers and Buyers Regarding VA Loans

For sellers

Offers by veterans are frequently rejected due to the copious amounts of red tape that accompany VA loans. There are often appraisal delays, which drag out the amount of time sellers have to wait to close on properties, and sellers are responsible for bearing fees that would traditionally fall to buyers.

All too often, sellers are advised by agents to become almost discriminatory towards those with VA financing. These sellers are pushed to take cash and conventional offers in order to avoid the perceived “hassle” of dealing with VA loans.

For buyers

Understandably, many buyers today feel apprehensive entering the market with a VA loan. It’s no secret that sellers and agents are beginning to shy away from offers from veterans who are relying on VA loans to purchase homes; why would veterans feel confident?

Most veterans are hesitant to give up the benefits of a VA loan in favor of pursuing more conventional funding options. While they may have a better shot at landing a home with traditional financing, the financial advantages of VA loans are tough to overlook. This leaves many buyers feeling trapped between what’s best for them and what sellers will accept.

Three Misconceptions About VA Loans

Knowledge can empower both veterans and sellers

Concerns about red tape

As mentioned previously, numerous sellers fear the red tape that’s long been associated with VA loans. They don’t want to spend extra time or money trying to close a sale– but the fact of the matter is that most VA loans close within thirty to forty-five days. The program used to involve copious amounts of snail mail, but the process has become quicker and more efficient.

Borrower qualifications are too lax

Some sellers are apprehensive that veterans approved for VA loans may not actually be up to snuff. If they can qualify for the loan so easily, who’s to say they’re actually capable of paying for their home? But the VA’s no-down-payment benefit isn’t handed out like candy. Borrowers are still required to meet the certain debt, credit, and income requirements in order to receive financing.

Sellers are saddled with fees

It’s true that in some cases, sellers will need to pony up a little bit of cash to cover fees during a sale to a VA borrower, but this isn’t always true. The only fees that need to be paid by sellers are 1% origination fees, which don’t have to be charged anyway. Veterans are not permitted to pay these fees, but lenders, title companies, and sellers can all pay them.

 

Determining Which Mortgage Term Length to Choose

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When you apply for a mortgage loan, one of the first questions your lender will ask is how long of a term you are interested in. The most popular term length chosen is 30 years, but there are also 15 and 20-year options. Some lenders offer other loan programs with different term lengths as well. When you are making your decision about which term length to apply for, there are a few points that you should consider.

The Mortgage Payment

As a rule of thumb, the longer your term length, the smaller your mortgage payment will be. This is because the principal repayment for the loan is extended over a longer period of time with a longer-term length. Most borrowers prefer a lower monthly payment, but if you can afford a higher payment, you may consider the other benefits associated with choosing a shorter term length.

The Interest Charges

The interest charges for a longer-term length can be considerably higher than with a shorter-term length, and this means that the shorter term length loans are more affordable over the life of the loan. It also means that equity will accrue more quickly in shorter-term loans. By using an online loan calculator with an amortization schedule, you can see how the interest charges accrue for shorter and longer-term lengths.

Your Future Plans

A final point to consider when trying to decide which term length to choose for your mortgage is your future plans. A shorter-term length may be ideal if you are nearing retirement and want to pay off your loan before you reach retirement age. It may also be preferred if you want to build up as much equity as possible before you sell the home in a few years. Longer-term loans are often the preferred option if you have a tight budget and want to have extra cash on hand for other things, such as to pay off credit cards or simply to have wiggle room in your budget.

Choosing a term length for your mortgage is not something to rush into, and it is something that you should spend time researching and reflecting on. By doing so, you can make a more informed decision about which mortgage to apply for.

Using Debt Consolidation Loans to Deal with Debt

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Most Americans have $10,000 or more in debt, with most of it owed to credit card companies. With several different payments and high monthly interest rates, getting out from under all that debt can seem impossible. However, debt consolidation loans can make the seemingly impossible possible. Debt consolidation loans can put all of that debt under a single, low-interest monthly payment. They can get all debt levels, small and large, under control. Read on to learn how to use a debt consolidation loan to get yourself back in the black.

Types of Debt Consolidation Loan

There are two kinds of debt consolidation loans: secured and unsecured. Secured loans use some form of collateral, such as home equity, to get the loan. They usually have better terms and interest rates than unsecured loans. No collateral is needed for unsecured debt consolidation loans, and it is usually easier to get approval for them than for secured loans. It should be possible to get an unsecured debt consolidation loan with a debt-to-income ratio of as much as 50% and a credit score of 585 or more.

Applying for a Debt Consolidation Loan

Applying for either kind of debt consolidation loan is usually a relatively simple process. It can usually be done online, and involves filling out just a few forms. The debt consolidation company will then contact various banks on your behalf, sending you the list of consolidation loan offers that it receives.

The Benefits of Debt Consolidation Loans

A debt consolidation loan allows you to make one payment a month instead of several. Additionally, your interest rate should be lower, and you can probably even get an extended repayment term if you want. This would make your monthly payments lower, although it would increase the amount of total interest that you pay. By making the monthly payments easier to make, a debt consolidation loan can even help you raise your credit score. Furthermore, it can also keep you from defaulting on your current debts, which would be very bad for your credit score.

The Drawbacks of Debt Consolidation Loans

If you extend the term of the loan by too much, you can end up paying a lot more in the long run. Also, if you don’t shop around for different loan offers, you might not get very beneficial terms. Additionally, if you opt for a secured loan using your house as collateral and it becomes devalued, you might end up paying more than your home is worth.

Choosing a Good Debt Consolidation Loan Company

A good, trustworthy debt consolidation loan company should have no application fee and no hidden charges, like Directions Home Loan. The loan fees should be close to the national average, and the application should be both short and simple. Contact Directions Home Loan and speak to a loan officer.

The Takeaway

If you are thinking about getting a debt consolidation loan, take your time and do the research before signing anything. Know what you should be able to expect, and compare as many different offers as you can. Choose the offers that best balances your short and long term needs. If you carefully consider your various options, a debt consolidation loan can help you manage even seemingly unmanageable debt.

How to buy a home this year

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How to Buy a Home This Year

If you are tired of renting and ready to make your move, now is the perfect time to buy a home. Housing prices are still affordable, interest rates on mortgages remain low and there is plenty of inventory to choose from.

Owning the roof over your head can be a dream come true, but it is important to make a plan before you make your move. You can buy a home this year, but the planning and preparation you put into the purchase will make a big difference.

Check the Direction of Interest Rates

The general direction of interest rates will have a direct impact on the interest rates mortgage lenders charge, so having that information can be a big help when buying a home. If interest rates are on the rise, locking in a low rate now and getting pre-approved for a mortgage could work to your benefit. If interest rates are expected to decline, waiting to buy could actually be a good move.

You can find information on interest rates and mortgage interest policies in the financial press, from traditional newspapers to modern websites. The more you know about interest rates, the easier it will be to time your home buying decision.

Research Local Neighborhoods

There is an old saying in real estate that you should buy the worst home in the best neighborhood, and there is a lot of truth to that strategy. Buying into an up-and-coming neighborhood, even if the home itself needs some work, could allow you to benefit from a future appreciation and ultimately make a profit should you choose to sell.

Make a list of Must Have’s and Nice to Have’s

Whether you are shopping for your first home or looking for something nicer than what you have, it is important to think about what you must have and what you would like to have. Separating your wants from your needs can make shopping for a home a lot easier, saving you a lot of time and potentially a lot of money as well.

You might like to have granite countertops, but if the price is right, butcher block may work just as well. You may crave hardwood floors, but if the home is perfect in every other way, a little carpet should not stop you from making an offer.

Set Your Budget and Factor in Interest Rates

If you want to buy a home this year, you will first need to determine how much you can afford to spend. It is important to set a realistic homebuying budget, one that includes not only the monthly mortgage payment but the cost of repairs and upkeep as well.

You can download and use The Directions Home Loan App (https://myhomeloan.directionshomeloan.com/borrower/signup/easton@directionshomeloan.com) to estimate your monthly payment, but you will need three critical pieces of information to make it work. You will need to know whether you prefer a 15-year or 30-year mortgage, the price of the home, the amount of down payment you will be putting down, and an idea of what you.

You can do your homework and get the first three, but you will need your lender’s help to determine the interest rate you will likely have to pay. The interest rate on your mortgage depends on a number of factors, from the overall level of interest rates to your own credit score. Finding this information now can make your home buying easier, so be sure to check with your chosen lender.

Buying a home takes planning and preparation, and the sooner you get started the better off you will be. If you plan to buy a home this year or next, you will need to think ahead, and now is the perfect time to get started by contacting Direction Home Loan at www.directionshomeloan.com.

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When to Refinance a Home Mortgage

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Is it always a good idea to refinance your home mortgage when interest rates are low?  This article discusses the pros and cons of refinancing according to individual homeowner’s financial circumstances.  In-depth financial considerations are discussed.

Historically low-interest rates are creating a surge in mortgage applications, and home refinancing is currently accounting for a large percentage of the application total (Mortgage Bankers Association). Many homeowners are taking advantage of low-interest rates and finding themselves with more money in their pockets. “When a borrower refinances, it’s a mini-stimulus, because they have more money to spend,” says Carolyn Kemp, spokeswoman for Mortgage Bankers Association.

Is refinancing a mortgage at extremely low rates always a good deal? Check the pros and cons of refinancing a home mortgage and consider individual financial opportunities and situations.

Refinancing May Be a Good Choice

  • Homeowners wish to save money with lower monthly payments. Monthly payments are reduced with a lower interest rate or if the length of the loan is increased.
  • Homeowners want to eliminate debt faster by paying off their mortgages quickly. Monthly payments increase, but homeowners save in the long run on overall interest payments on the debt.
  • Extra cash is needed to pay off credit card debt or other loans. Mortgage interest is tax-deductible, while credit card and other loan debts are not.
  • Homeowners would like to consolidate two loans into one. If there is enough equity in the home, homeowners can combine loans into one loan. This situation is usually a better debt solution than combining payments on a first and second mortgage.
  • Conversion of an adjustable-rate mortgage (ARM) into a fixed-rate mortgage (FRM). Staying in an ARM, subjects a mortgage to variable interest rates, while obtaining an FRM allows homeowners to lock in at a lower rate for the life of the mortgage.
  • Homeowners want to eliminate private mortgage insurance (PMI). Homeowners no longer have to pay PMI payments if the current loan balance is below 80% of the new appraisal for the home.

Refinancing May Not Be the Best Choice

  • The majority of the mortgage is already paid. Closing costs will offset gains in lower interest rates.
  • Home value has gone down. A new loan might not pay off the existing loan if a homeowner refinances up to 80% of the reappraised value and the original mortgage is higher than this amount.
  • Homeowners have been diligently paying their first loan for an extended period of time. Refinancing may increase the overall payment if a homeowner has been paying an existing loan for an extended time period.
  • Homeowners have used up a substantial amount of home equity. If homeowners have used up 90% or more of the home’s value they won’t be able to procure the best market rates for a refinance. Lenders will charge higher rates because they believe that borrowers have less to lose if there isn’t significant equity in a home.

Now is the time to act on low-interest rates if a homeowner’s financial situation warrants a refinance of their home mortgage. Learning the pros and cons of refinancing a home mortgage empowers homeowners to act in their best financial interest by taking advantage of the best deal for their situation.

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