Home loans, whether it be a mortgage for a new home, or a line of credit or second mortgage for home renovations or another financial need; are one of the best loan options available anywhere. Typically when getting a home loan, you will either: already own a home and be borrowing against your equity; or be in the process of attempting to purchase a home. This article will explore some of the financing options that are available in either situation.
Lets start by assuming that you do not own a home and you are applying for your mortgage. Mortgages are one aspect of the home buying process that should be researched in every aspect. The kind of mortgage that you get will play a huge part in your financial future, so be sure to get the best package you can find. Don't be afraid to be choosy with mortgages as there are some that don't favor the homeowner, they favor the lender. This should never be the case. A mortgage should be designed to help the borrower fulfill the loan, not to fill the lender's pockets. Be careful of no down payment programs as some of them can require a huge lump sum payment down the road. There are a number of "suspicious" loans and lenders out there so be sure to do your homework on both the loan and the lender before you agree to anything.
Now, taking out a home owner's line of credit or a second mortgage is quite different. With both of these loan options the amount of the loan is secured by the home's equity. This results in great low interest rates on the loan. These loans are perfect for the home owner who wants to do some renovations to their home. The line of credit works in the same fashion as a credit card, but without the plastic. This kind of loan is great for reno's as there is a lot of room in the loan for the extra costs that always seem to spring up during renovations. The 2nd mortgage is also a great option for home upgrades but it is not as flexible as the line of credit as it is a loan for a certain amount, unlike the line of credit with is a loan up to a certain amount. The bottom line to home loans is simply to know what you are getting into, and who you are getting into it with. Do your homework and investigate your options beforehand so that there are no surprises down the road.
VA guaranteed loans are made by private lenders to eligible veterans for the purchase of a home which must be for their own personal residence. The guaranty means the lender is protected against loss if you or a later holder fail to reimburse the mortgage. The guaranty replaces the protection the lender routinely receives by requiring a down payment allowing you to find favorable financing terms.
You do still have to qualify to achieve a VA mortgage. VA uses two methods for income qualification purposes. The primary means of evaluating a veteran's wages is the residual income method. Under this method, the underwriter determines that a veteran has sufficient revenue to cover day-to-day living expenses after paying housing expenses, taxes, and other debts such as car payments and credit card payments. VA also uses a debt-to-income ratio method like many programs. However, VA uses only one ratio (41%) which is the ratio of total debt (both housing and other debt) to income. Your credit background will be equally considered. At least a 620 FICO credit mark is very valuable to find a VA approval.
VA mortgages involve no down payment up to $417,000, which is the conforming mortgage limit for 2008 is ($625,500 for Hawaii, Alaska, Guam and U.S. Virgin Islands). This means that eligible veterans could get a no down payment purchase mortgage for those amounts. Highest Loan Amount: The maximum mortgage amount permitted for a VA mortgage varies from county to county. The highest maximum VA mortgage right now is $1,094,625. The lowest maximum VA mortgage amount available in any county is $417,000.
If you already own a home, so you're at least fairly familiar with the mortgage process. If you've never refinanced through VA you might think that it's more complicated because you're involved with a government agency. Well, you'll be pleasantly astounded to learn that a VA Refinance mortgage is really no different than than the method of refinancing with any other mortgage. Of course, you have many more protections and it will be easier to get eligible with VA.
One of the most important advantages of an VA mortgage is the ability for the mortgage to be assumed. This gives the buyer a significant advantage in a high interest rate market. VA loans are eligible for streamlined refinance, a plan that allows the borrower to easily refinance the mortgage to reduce their interest rate and drop their monthly payment.
Did you know that you can refinance your existing mortgage to a VA home mortgage to lower your monthly payments, get cash out of your home, consolidate debt and achieve a fixed-rate mortgage? Compare your VA refinance mortgage options today ? it's painless!
Both Gary Ashton & Robert D. Thomson are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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