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Posted on: February 2, 2022

Choosing the right VA lender is incredibly important. Not only does it impact your VA home loan experience but it also influences your costs.

Are you trying to decide between VA home loan lenders? Here’s how to choose the best one.

Get matched with a mortgage lender. Start here (Apr 29th, 2023)

How to find the best VA mortgage lender 

Who is the best VA home loan lender? There’s no clear-cut answer to that one. All lenders offer different rates, fees, and levels of service, and their qualifying standards can vary, too. To find the best one for your unique scenario, you’ll need to:

#1. Prepare for your mortgage application

Before you can begin applying for VA loans, you need to set the stage first. This means saving up for your down payment (if any), getting your credit and budget in order, and avoiding big financial changes in the months before applying for a mortgage (jobs, income, new credit cards, etc.).

You should also begin gathering up all the documentation you’ll need for your loan. This includes your Certificate of Eligibility (COE), your bank statements, and your tax returns.

#2. Set your budget

Your next step is to prep your budget. Before you can begin the loan process, you need to have a good idea of what you can spend each month on your mortgage payment. Keep in mind your mortgage will also include things like homeowners insurance, property taxes, and HOA dues, if necessary. 

You can use our VA loan calculator to get a good idea of what you might be able to comfortably spend on a house.

#3. Familiarize yourself with your mortgage options

You already know you want a VA loan, but there are actually several types of VA mortgages to choose from. It’s helpful to know what type of mortgage you want before you start shopping.

For example, if you’re a Native American veteran and are buying on certain federal lands, you’d use the VA’s NADL program. If you’re refinancing, you could opt for a VA cash-out refinance or VA Streamline Refinance (also sometimes known as an Interest Rate Reduction Refinance Loan (IRRRL)). 

The VA has a full breakdown of these loan options on its website.

Determining which VA mortgage program you want to use will help narrow down your choice of VA lenders since not all companies offer the full suite of VA loans. 

#4. Compare rates and terms from at least 3-5 lenders

Next, it’s time to get quotes from at least three VA home mortgage lenders. This requires providing a little basic information — your income, credit score, and other details — but they usually take only a day or two to receive. 

Once you have estimates from each lender, compare them line by line. How do the closing costs and fees measure up? What about the interest rate? You should also factor in the level of service and responsiveness you’ve received thus far.

#5. Get pre-approved

When you’ve chosen the best VA home loan lender for you, it’s time to get pre-approved for your loan. This essentially means the lender has evaluated your financial details and thinks you’re a good candidate for a loan.

To get your pre-approval, you’ll fill out a short application with the lender. Once they’ve gone over it, you’ll get a pre-approval letter stating how much you can borrow and at what interest rate. You’ll include this in any offers you make to show you’re serious about the home.

#6. Read the fine print

Finally, make sure you understand your loan’s fine print. You should have a good grasp on all your loan’s terms before you sign, including:

  • What is your closing date?
  • Does your rate lock extend through the expected closing date?
  • How much money do you need to bring to closing?
  • What will your monthly payment be and how will you pay it?

If you have any questions or are unsure about something, ask your loan officer before heading to the closing table.

Get a personalized mortgage quote. Start here (Apr 29th, 2023)

Why you should shop around for a mortgage lender

Shopping around for your veteran mortgage lender is incredibly important, especially if you want to minimize your costs as a buyer. According to Freddie Mac, getting quotes from just five lenders can save you as much as $3,000 over the life of the loan.

Some of these savings come from fees and other closing costs. Much of it comes from interest rate discrepancies.

Here’s an example: Say you were quoted a 3% rate on a 30-year, $200,000 loan with Lender A and a 3.25% rate on that same loan with Lender B. It doesn’t seem like much, but Lender A would actually save you $27 per month and a whopping $10,000 in interest over the next three decades.

How to compare mortgage loan offers 

To compare your loan offers, you’ll want to look at the loan estimate — a three-page document given to you by the lender. These forms break down all the costs, fees and other financial details of your loan. These loan estimates are standardized, so comparing them line by line is quite simple.

You’ll want to pay particular attention to the loan amount, the interest rate, the estimated monthly payment, and your estimated closing costs. The “Comparisons” section on page 3 can be helpful, too. It shows what your balance will be in five years and can be a good way to compare loan option costs.

Questions to ask your mortgage lender

Before you decide which VA loan lender to go with, make sure you ask them some questions. 

You’ll want to know things like:

  • How long do you expect the process to take? Some lenders take longer to process loans than others, so be sure and get an estimate before moving forward. You’ll need to know an estimated closing date when making offers and negotiating with sellers. (It will likely play a role in which offer they choose, too). 
  • Who will be my main point of contact throughout the process? You’re going to have a lot of questions along the way, and you need a go-to person. You’ll also want to ask how you can get in touch with this person. Are they available via phone, email, or text? And during what hours?
  • Which parts of the process will be online and which will be in-person? Most lenders will let you do everything remotely and online these days, but it still helps to ask. How will the logistics of your loan work? Where will you sign the closing papers? Get all the details.

You might also ask how often the lender does VA loans. These mortgages can be more complicated than other types of loans, so you want one who’s experienced and well-versed in the process.

Start comparing mortgage lenders today (Apr 29th, 2023)

Benefits of a VA loan

VA loans come with countless benefits, but the biggest perk is that they require no down payment.

Because these mortgages are guaranteed by the U.S. Department of Veterans Affairs, lenders can afford to pass substantial benefits along to VA borrowers.

Unlike other mortgage programs, which ask for anywhere from 3% to 20% down, VA loans require no down payment at all. This can offer significant savings right off the bat. (A low-cost FHA loan requires at least $7,000 down on a $200,000 house, for example, while a VA loan requires $0 down).

Some of the VA loan benefits include:

  • Competitively low interest rates
  • No credit score requirements
  • Limits on closing costs
  • Loans are assumable, meaning future buyers can take over the loan (and the favorable rate and terms it comes with)
  • No private mortgage insurance (PMI)
  • No loan limits
  • Can be used multiple times

VA loan mortgage rates 2023

When compared to other loan types — conventional loans and FHA loans, for example — VA home loans offer consistently lower rates than loans for the average consumer.

  VA Conventional FHA
December 2021 2.99% 3.38% 3.39%
November 2021 2.95% 3.32% 3.32%
October 2021 2.88% 3.22% 3.22%
September 2021 2.85% 3.17% 3.20%
August 2021 2.88% 3.19% 3.23%
July 2021 2.94% 3.27% 3.27%

Source: Ellie Mae Origination Insight Report, June 2021

A lower interest rate translates to a lower monthly mortgage payment and substantial savings over the life of your loan.

VA Home Loan Lender FAQ 

Do all lenders provide VA loans?

No. Only approved lenders can offer VA loans, so you’ll need to be choosy about which mortgage company you work with. That said, most major lenders are authorized to originate VA loans. 

Who is the best lender to get a VA loan from?

That really depends on your financial situation, where you’re buying, your budget, and the level of service you want. A great place to start is our best VA home loan lenders guide.

Who is eligible for a VA home loan?

VA loans are only for active-duty military members, veterans, and their families (including surviving spouses), so there are strict service requirements you’ll need to meet to qualify.

The VA doesn’t set specific financial standards for its loans, though private lenders — the companies who actually issue the loans — do. These vary from one lender to the next, but in most cases, borrowers need at least a 620 credit score and a debt-to-income ratio of 41% or less.

If you fall short of these requirements, you still might qualify. Just make sure to shop around for your lender, work on improving your credit, and consider making a down payment.

What is the VA funding fee?

To get a VA home loan, you’ll need to pay the VA funding fee. This is a one-time cost at closing which helps the VA maintain the VA home loan program and continue to offer valuable home loan products to military homebuyers. The VA funding fee can be financed into your total loan amount and paid down over time.

The amount of the VA funding fee depends on your loan type, the nature of your military service, the number of times you’ve used your VA loan benefit and the amount of your down payment.

What is the minimum credit score for a VA loan?

The VA doesn’t have a minimum credit score for these mortgages, but individual lenders do. These minimums vary and are usually around 620 or 640.

What is a VA direct loan?

This is a loan issued directly by the VA (meaning the VA is the lender). They’re only available for Native American veterans buying or refinancing in certain areas of the country. 

What is the max loan amount for a VA loan?

There are no maximum loan amounts for VA mortgages. While there is a cap on how much you can borrow without making a down payment, the loan program technically has no limits.

What is the lowest VA mortgage rate ever?

The lowest VA rates have typically been in the low 2% range. You’ll get lower rates on shorter loan terms (so, 15-year loans typically have lower rates than 30-year ones). Higher credit scores will also help you qualify for lower interest rates.

Can I use a VA loan to buy a second home?

You cannot use the VA loan for a second home or investment property. The VA home loan program is intended to help military service members become homeowners and is specifically meant for the purchase of a primary residence.

Do different lenders offer different rates on VA home loans?

Yes. All mortgage lenders offer slightly different rates and fees. Your rate will also depend on your creditworthiness and the size of your down payment (if any). 

Which lenders offer VA home loans for people with bad credit?

There aren’t any bad credit VA home loan lenders per se, but every VA lender sets its own credit score minimums. This is why it’s so important to shop around — especially if you have a low credit score. Generally speaking, most lenders require a score of at least 620 or 640. If your score is below this, you can often make up for it with a larger down payment or by having more in cash reserves.

How do I decide which lender to use?

You’ll want to compare the loan estimates, factor in the service and responsiveness you’re receiving, and look at online reviews and ratings. Not all lenders are created equal, nor will they come with comparable pricing.

VA home loan lenders: The bottom line

Because the Department of Veterans Affairs guarantees VA loans, lenders can offer substantial benefits to veterans, active-duty service members and their families. The VA home loan program includes some of the best mortgage products on the market.

Get a personalized mortgage quote. Start here (Apr 29th, 2023)

Source: militaryvaloan.com

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A new home may be one of the biggest purchases you’ll make in your life. Before you begin shopping for the right home to buy, you’ll need to explore mortgage options if you’re planning to finance the purchase.

Not all home loans are the same, though. So, doing your research before moving forward can help you select the most suitable option for your financial situation and possibly keep more money in your pocket. Plus, you’ll know what to expect, in terms of guidelines, when you apply.

Types of mortgages

  • Conventional loan – Best for borrowers with a good credit score
  • Jumbo loan – Best for borrowers with excellent credit looking to buy an expensive home
  • Government-insured loan – Best for borrowers who have lower credit scores and minimal cash for a down payment
  • Fixed-rate mortgage – Best for borrowers who’d prefer a predictable, set monthly payment for the duration of the loan
  • Adjustable-rate mortgage – Best for borrowers who aren’t planning to stay in the home for an extended period, would prefer lower payments in the short-term and are comfortable with possibly having to pay more in the future

1. Conventional loan

Conventional loans, which are not backed by the federal government, come in two forms: conforming and non-conforming.

  • Conforming loans – As the name implies, a conforming loan “conforms” to the set of standards put in place by the Federal Housing Finance Agency (FHFA), which includes credit, debt and loan size. For 2023, the conforming loan limits are $726,200  in most areas and $1,089,300 in high-cost areas.
  • Non-conforming loans – These loans do not meet FHFA standards. Instead, they cater to borrowers looking to purchase more-expensive homes or individuals with unusual credit profiles

Pros of conventional loans

  • Can be used for a primary home, second home or investment property
  • Overall borrowing costs tend to be lower than other types of mortgages, even if interest rates are slightly higher
  • Can ask your lender to cancel private mortgage insurance (PMI) once you’ve reached 20 percent equity, or refinance to remove it
  • Can pay as little as 3 percent down on loans backed by Fannie Mae or Freddie Mac
  • Sellers can contribute to closing costs

Cons of conventional loans

  • Minimum FICO score of 620 or higher is often required (the same applies for refinancing)
  • Higher down payment than some government loans
  • Must have a debt-to-income (DTI) ratio of no more than 43 percent (50 percent in some instances)
  • Likely need to pay PMI if your down payment is less than 20 percent of the sales price
  • Significant documentation required to verify income, assets, down payment and employment

Who are conventional loans best for?

If you have a strong credit score and can afford to make a sizable down payment, a conventional mortgage is probably your best pick. The 30-year, fixed-rate conventional mortgage is the most popular choice for homebuyers.

2. Jumbo loan

Jumbo mortgages are home loan products that fall outside FHFA borrowing limits. Jumbo loans are more common in higher-cost areas such as Los Angeles, San Francisco, New York City and the state of Hawaii, where home prices are often on the higher end.

Pros of jumbo loans

Cons of jumbo loans

  • Down payment of at least 10 percent to 20 percent required in many cases
  • A FICO score of 700 or higher usually required
  • Cannot have a DTI ratio above 45 percent
  • Must show you have significant assets in cash or savings accounts
  • Usually require more in-depth documentation to qualify

Who are jumbo loans best for?

If you’re looking to finance a home with a selling price exceeding the latest conforming loan limits a jumbo loan is likely your best route.

3. Government-insured loan

The U.S. government isn’t a mortgage lender, but it does play a role in making homeownership accessible to more Americans. Three government agencies back mortgages: the Federal Housing Administration (FHA), the U.S. Department of Agriculture (USDA) and the U.S. Department of Veterans Affairs (VA).

  • FHA loans – Backed by the FHA, these home loans come with competitive interest rates, and help make homeownership possible for borrowers without a large down payment or pristine credit. You’ll need a minimum FICO score of 580 to get the FHA maximum of 96.5 percent financing with a 3.5 percent down payment.  However, a score as low as 500 is allowed if you put at least 10 percent down. FHA loans require two mortgage insurance premiums, which can increase the overall cost of your mortgage. Lastly, with an FHA loan, the home seller is allowed to contribute to closing costs.
  • USDA loans – USDA loans help moderate- to low-income borrowers who meet certain income limits buy homes in rural, USDA-eligible areas. Some USDA loans do not require a down payment for eligible borrowers. There are extra fees, though, including an upfront fee of 1 percent of the loan amount (which can typically be financed with the loan) and an annual fee.
  • VA loans – VA loans provide flexible, low-interest mortgages for members of the U.S. military (active duty and veterans) and their families. There’s no minimum down payment, mortgage insurance or credit score requirement, and closing costs are generally capped and may be paid by the seller. VA loans charge a funding fee, a percentage of the loan amount, which can be paid upfront at closing or rolled into the cost of the loan along with other closing costs.

Pros of government-insured loans

Cons of government-insured loans

  • Mandatory mortgage insurance premiums on FHA loans that cannot be canceled unless refinancing into a conventional mortgage
  • Loan limits on FHA loans are lower than conventional mortgages in most areas, limiting potential inventory to choose from
  • Borrower must live in the property (although you may be able to finance a multi-unit building and rent out other units)
  • Could have higher overall borrowing costs
  • Expect to provide more documentation, depending on the loan type, to prove eligibility

Who are government-insured loans best for?

Are you having trouble qualifying for a conventional loan due to a lower credit score or minimal cash reserves for a down payment? FHA-backed and USDA-backed loans could be a viable option. For military service members, veterans and eligible spouses, VA-backed loans are often better than a conventional loan.

4. Fixed-rate mortgage

Fixed-rate mortgages maintain the same interest rate over the life of your loan, which means your monthly mortgage payment always stays the same. Fixed loans typically come in terms of 15 years or 30 years, although some lenders allow borrowers to pick any term between eight and 30 years.

Pros of fixed-rate mortgages

  • Monthly principal and interest payments stay the same throughout the life of the loan
  • Easier to budget housing expenses from month to month

Cons of fixed-rate mortgages

  • If interest rates fall, you’ll have to refinance to get that lower rate
  • Interest rates typically higher than rates on adjustable-rate mortgages (ARMs)

Who are fixed-rate mortgages best for?

If you are planning to stay in your home for at least five to seven years, and want to avoid the potential for changes to your monthly payments, a fixed-rate mortgage is right for you.

5. Adjustable-rate mortgage (ARM)

Unlike the stability of fixed-rate loans, adjustable-rate mortgages (ARMs) have interest rates that fluctuate with market conditions. Many ARM products have a fixed interest rate for a few years before the loan changes to a variable interest rate for the remainder of the term. For example, you might see a 7-year/6-month ARM, which means that your rate will remain the same for the first seven years and will adjust every six months after that initial period. If you consider an ARM, it’s essential to read the fine print to know how much your rate can increase and how much you could wind up paying after the introductory period expires.

Pros of ARMs

  • Lower fixed rate in the first few years of homeownership (although this isn’t a guarantee; as of late, 30-year fixed rates have actually been similar to those for 5/6 ARMs)
  • Can save a substantial amount of money on interest payments

Cons of ARMs

  • Monthly mortgage payments could become unaffordable, resulting in a loan default
  • Home values may fall in a few years, making it harder to refinance or sell before the loan resets

Who are adjustable-rate mortgages best for?

If you don’t plan to stay in your home beyond a few years, an ARM could help you save on interest payments. However, it’s important to be comfortable with a certain level of risk that your payments might increase if you’re still in the home.

Other types of home loans

In addition to these common kinds of mortgages, there are other types you may find when shopping around for a loan:

Construction loans

If you want to build a home, a construction loan can be a good choice. You can decide whether to get a separate construction loan for the project and a separate mortgage to pay it off. A construction-to-permanent loan, which merges construction costs and financing into a single loan product, is also an option.Both options typically require a higher down payment and proof that you can afford the monthly payments.

Interest-only mortgages

With an interest-only mortgage, the borrower makes interest-only payments for a set period – usually between five and seven years- followed by payments for both principal and interest You won’t build equity as quickly with an interest-only mortgage, though, since you’re initially only paying interest for a set period. Still, these loans are best for those who know they can sell or refinance, or for those who can reasonably expect to afford the higher monthly payment later.

Piggyback loans

A piggyback loan, also referred to as an 80/10/10 loan, actually involves two loans: one for 80 percent of the home price and another for 10 percent. You’ll make a down payment for the remaining 10 percent.These loan products are designed to help the borrower avoid paying for mortgage insurance. While eliminating those PMI payments might sound appealing, keep in mind that piggyback loans require two sets of closing costs, and you’ll also accrue interest on two loans. Crunch the numbers to find out if you’re really saving enough money to justify this unconventional arrangement.

Balloon mortgages

Another type of home loan you might come across is a balloon mortgage, which requires a large payment at the end of the loan term. Generally, you’ll make payments based on a 30-year term, but only for a short time, such as seven years. When the loan term ends, you’ll make a large payment on the outstanding balance, which can be unmanageable if you’re not prepared or your credit situation deteriorates. You can use Bankrate’s balloon mortgage calculator to see if this kind of loan makes sense for you.

Next steps to getting your mortgage

Now that you have an idea of the right kind of loan for your home purchase, it’s time to find the right mortgage lender to make it happen. Every lender is different, and it’s important to comparison shop to find the best terms that fit your finances. From the brick-and-mortar bank and credit unions in your neighborhood to online-only mortgage companies, there is a wide range of options to choose from. Read Bankrate’s lender reviews of some of the leading names in mortgages, and follow this guide to find the best lender.

Check out these resources for more information about types of mortgages and available lenders:

Source: thesimpledollar.com

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Posted on: February 2, 2022

A VA loan is a mortgage loan that’s backed by the U.S. Department of Veterans Affairs. These loans are reserved for military service members, veterans, and their spouses. The VA home loan program is one of the lowest-cost, most valuable mortgage loan options currently available.

See if you’re eligible for a VA home loan. Start here. (Apr 26th, 2023)

Benefits of a VA loan

VA loans come with a number of significant benefits to home buyers, particularly when compared with other types of mortgage programs.

Just a few VA loan advantages include:

  • No down payment required: Most other loan programs require at least 3% down ($9,000 on a $300,000 house).
  • Competitively low interest rates: Rates on VA loans are some of the lowest you’ll find. This saves you both monthly and in the long run.
  • Closing costs are limited: You can’t be charged an origination fee of more than 1%, and sellers can contribute a large portion of your closing costs.
  • No prepayment penalty: This means you can pay off the loan or refinance quickly without an added fee.
  • No private mortgage insurance (PMI) is required: The majority of other loan products require mortgage insurance, which adds upfront and monthly fees.

VA loans are also assumable, which means if you eventually sell the house, the buyer can take over your loan, too — a huge perk, given the low rates and other benefits VA loans come with.

VA mortgage rates 2023

When compared to other loan types — conventional loans and FHA loans, for example — VA home loans offer consistently lower rates than loans for the average consumer.

VA Conventional FHA
December 2021 2.99% 3.38% 3.39%
November 2021 2.95% 3.32% 3.32%
October 2021 2.88% 3.22% 3.22%
September 2021 2.85% 3.17% 3.20%
August 2021 2.88% 3.19% 3.23%
July 2021 2.94% 3.27% 3.27%

Source: Ellie Mae Origination Insight Report, June 2021

*These rates are only averages. Your VA loan rate could be higher or lower than average depending on factors like your credit score and down payment size. Check with a lender to find out what rate you qualify for.

Click here to request a VA home loan quote. (Apr 26th, 2023)

Types of VA loans

There are several types of VA loans to choose from. The right one depends on your goals as a borrower, as well as how you’ll be using the funds.

The four main types of VA loans include:

  • VA purchase loan: These are VA loans designed for purchasing a property. You can buy a single-family home, a multifamily home with up to four units, a manufactured or mobile home, an approved condo unit, or a new construction home.
  • VA Streamline Refinance: The VA’s Streamline Refinance — also known as a VA Interest Rate Reduction Refinance Loan (IRRRL) — is for existing homeowners looking to refinance their mortgage and reduce their interest rate.
  • VA cash-out refinance: With a VA cash-out refinance, you take cash out of your home. It replaces your existing mortgage with a newer, larger one, giving you the difference in cash.
  • VA energy efficient mortgage: Also called EEMs, these are VA loans that can help you finance energy improvements on your home.

The VA also offers NADL loans, which are mortgages reserved strictly for Native American veterans buying on federal land.

VA loan eligibility requirements

VA loans are only for qualified veterans, active-duty service members, and, in many cases, their surviving spouses. To qualify, you’ll need to meet specific service requirements.

These service requirements vary slightly based on when you served, but generally speaking, you will need to have at least one of the following:

  • 90 consecutive days of active service during wartime
  • 181 days of active service during peacetime
  • 6 years of service in the National Guard or Reserves
  • A veteran/service member spouse who died in the line of duty or due to a service-related disability or injury

To prove you have the above service record, you’ll need to submit a Certificate of Eligibility (COE) to your lender. This is a document that details your service record, the nature of your release from the military, and your VA loan entitlement.

You can get your COE through the VA eBenefits portal online. Or, when you apply for a VA loan, the lender can request a COE on your behalf. This usually takes only a few minutes.

Qualifying for a VA loan

Beyond service eligibility requirements, the VA doesn’t set specific financial standards for these mortgages. The individual private lenders that issue VA loans, however, often do. While these vary from one lender to the next, you can typically expect to need a 620 credit score and a 41% debt-to-income ratio or lower.

The good news is, there’s no down payment required for a VA loan. So eligible borrowers can qualify for a VA home loan with very little cash upfront.

VA property requirements

The VA home loan program is designed to help military service members and their families purchase a primary residence, which means you cannot use your VA home loan benefits to purchase a second home, vacation home, or investment property.

Additionally, the home must meet certain standards set by the VA to ensure the home is safe and livable.

How does a VA loan work?

The VA loan process is fairly similar to that of other mortgage programs, just with a few added steps along the way.

Are you considering a VA loan for your home purchase or refinance? Just follow these steps:

#1. Verify eligibility and request your Certificate of Eligibility (COE)

The first step is to make sure you meet the VA’s service requirements (you can see the full list here). If you do, you’ll need to request your Certificate of Eligibility, which proves you’re eligible for the program. You can get your COE in your eBenefits portal, request it by mail, or ask your lender to pull it on your behalf.

#2. Get prequalified

The next step is to get prequalified for your loan. To do this, you’ll give a lender some basic information about your finances. They’ll then determine if you’re a good candidate for a VA loan and how much home you can likely afford.

#3. Get pre-approved

Next, you’ll apply for a full pre-approval. This requires filling out an application and submitting to a credit check, both of which your lender will consider in detail. Once they’ve analyzed it all, you’ll get a pre-approval letter stating how much you can borrow and at what interest rate. You can use this to guide your home search.

#4. Put in an offer

After you’re pre-approved, you can start shopping for a house. When you’ve found that perfect property, submit an offer, and include your pre-approval letter. If the seller accepts, it’s time to move through the rest of the VA loan process.

#5. Go through the VA appraisal and underwriting

You’ll need to fill out your lender’s full loan application next, and your lender will order an appraisal of the property you intend to buy. They’ll also begin underwriting your loan, which essentially means verifying all your information to ensure you can meet the obligations and pay your mortgage.

#6. Close on your new home

When your loan is fully underwritten, you’ll be scheduled for a closing appointment, which is when you’ll pay your closing costs, sign your paperwork, and get your keys.

What is the VA funding fee?

The VA funding fee is a one-time fee you’ll pay at closing. It varies from 0.5% to 3.6% of your loan amount and is used to help sustain the VA mortgage program.

The amount of the VA funding fee you’ll pay depends on the nature of your military service, the size of your down payment, the type of loan you want and the number of times you’ve previously used your VA home loan benefit.

First-time use purchase VA funding fee

Down Payment Veteran/Active Duty Reservist/National Guard
Less than 5% 2.3% 2.3%
5% to 9.99% 1.65% 1.65%
10% or more 1.4% 1.4%

How does VA loan assumption work?

With a VA loan assumption, the VA loan transfers with the house. The buyer assumes the seller’s VA loan, including its same rate, terms, and balance, and resumes making payments as initially planned through the original loan. Though the buyer doesn’t need to be a veteran or military member to assume a VA loan, they do need to meet all the financial requirements of the loan program (and the lender) to be eligible.

Ready to get started? Request a VA home loan quote here. (Apr 26th, 2023)

VA Home Loan FAQ

What is a VA loan?

A VA loan is a mortgage backed by the Department of Veterans Affairs. Only active duty military members, veterans, and their spouses are eligible.

What are the benefits of a VA home loan?

There are many benefits to a VA loan. They require no down payment, have low interest rates, and do not require mortgage insurance. They also come with limited closing costs and are assumable.

How does a VA loan work?

VA loans are guaranteed by the Department of Veterans Affairs, meaning it will pay back the lender if a borrower defaults on the loan. This reduces the risk that lenders take on and allows them to offer loans with no down payments, no mortgage insurance, and lower credit score minimums.

What’s the difference between a VA loan and a regular loan?

VA loans are only for military members and veterans, so that’s the biggest difference. They also require no down payment, which is rare when it comes to mortgage loans. Most other loan programs require 3% to 3.5% down payments minimum.

What is the interest rate on a VA home loan?

Your interest rate will vary depending on your credit score, debt-to-income ratio, loan amount, down payment, and other details. Generally speaking, VA loan rates are lower or comparable to rates on other loan programs.

What credit score is needed for a VA home loan?

The VA doesn’t have a set credit score minimum for its loans, though individual lenders often do. This is typically between 620 and 640, depending on your mortgage company.

What is the minimum income for a VA loan?

There is no minimum income to be eligible for a VA loan. Your lender will, however, consider your debt-to-income ratio to be sure you can comfortably make your monthly payments.

What are VA loan limits?

There are no limits on VA loans. You can borrow as much as you can financially qualify for, given your credit history, debt-to-income ratio, and other financial details.

What is the VA funding fee?

The VA funding fee is a one-time fee all VA borrowers pay at closing. It goes toward supporting and sustaining the VA loan program. Funding fees vary between 0.5% and 3.6% of the loan amount depending on your down payment size, type of loan, and the number of times you’ve used your VA loan benefit.

What is needed for a VA home loan?

For a VA loan, you (or your spouse) will need to meet the military service requirements set out by the Department of Veterans Affairs. You will also need to submit a Certificate of Eligibility, as well as various forms of financial documentation, including tax returns, W-2s, and more.

What is needed to get a VA home loan?

To get a VA loan, you’ll need to work with a VA-approved mortgage lender, submit your COE, and meet the remaining eligibility and documentation requirements of your lender.

How does a VA assumable loan work?

VA loans are assumable, meaning when a VA-financed home is sold, the buyer may be able to assume the VA loan attached to it, too. The buyer does not need to be a military member for this to happen, though they will need to meet other financial requirements set out by the VA and the lender.

What are the pros and cons of a VA loan?

The pros of a VA loan are many. There’s no down payment or mortgage insurance, and rates are competitively low. On the downside, they come with strict appraisals and can sometimes take a bit longer to process than loans through other programs.

Is a VA loan really worth it?

If you can qualify, VA loans are most often worth it. With zero down payment and no mortgage insurance requirement, they can make buying a house much more affordable than an FHA or conventional mortgage. They also have no hard-and-fast credit score minimum.

Do you pay back a VA loan?

You repay a VA loan just as you would any other type of mortgage or loan product. VA loans come with either a 15- or 30-year loan term, which means your monthly mortgage payments are spread out over either 15 years or 30.

If I’ve previously used a VA loan, can I use it again?

Your VA loan benefit never expires. After you pay off your existing VA loan, you can continue to use the VA loan again and again. In some cases, you may be able to have two VA loans simultaneously.

Are VA loans a good deal?

When compared to other mortgage loans, VA loans are absolutely a good deal. Thanks to the VA guarantee, your mortgage lender can afford to pass significant benefits along to borrowers. VA home loans have fewer upfront costs, low interest rates, and no mortgage insurance, making them one of the best mortgage loan products on the market.

See if you’re eligible for a VA home loan. Start here. (Apr 26th, 2023)

Source: militaryvaloan.com

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Posted on: April 28, 2022

One of the biggest hurdles VA home buyers must clear is the VA appraisal. VA appraisals are much like regular appraisals — an approved appraiser will come out to the house you’re looking to buy and establish its value.

The main difference is the VA has stricter guidelines when it comes to houses. The Department of Veterans Affairs is a government agency that guarantees VA home loans, so they want to make sure the house meets its standards.

Check today’s VA rates (Apr 26th, 2023)

VA appraisal process

The VA appraisal process is very similar to any other home appraisal. Your VA lender will order an evaluation with a VA-approved appraiser as a part of the loan process.

The VA appraiser’s job is to establish a “fair market value” for the property and ensure the home meets the VA’s Minimum Property Requirements. If the requirements aren’t met, then a property may not qualify for a VA loan. 

What if the VA appraisal comes in too low?

Unfortunately, VA appraisals can work against the home sale. If a VA appraisal comes in low compared to the loan amount, problems can occur.

For example, a home on the market for $275,000 can get a VA offer with all $275,000 financed. But if the VA appraisal report says the home is only worth $265,000, then suddenly the VA will only finance up to $265,000. This means the VA home buyer needs to make up the $10,000 difference between the purchase price and the appraisal value.

But even if your VA appraisal comes in low, you have options.

Getting a reconsideration of value

If a VA appraisal comes in low, a reconsideration of value (ROV) could be the best option.

An ROV is when the VA reevaluates how much the home is actually worth. Depending on how it goes, it could completely change the VA appraisal.

One way to get an ROV is to find better comps. “Comps” is short for “comparable homes” or “comparable sales”: similar homes to the one you’re trying to buy. If you can find comps closer to your expected price range, the VA may reevaluate their decision. For example, a similar home with no view may be valued the same as the home you’re buying. But that view has a market value, and you can make the argument the home should be valued higher.

There’s also always the chance the appraiser made an error in valuation, or they missed something when appraising the house. If this is the case, then a new appraisal could shift the value of the property in the borrower’s favor.

While they help some VA buyers, ROVs don’t always work out. If the appraised value is still too low, there are other ways to avoid paying huge costs to make up the difference.

Ask the seller to lower the sales price

One of the most common ways VA home buyers get around a low appraisal is by getting the seller to lower the sales price. Some homes are overvalued, and a low VA appraisal should be a wake-up call to the current homeowner that their home might not be worth what they think. They could then lower the asking price to the same value as the appraisal, clearing the way for the VA loan to go through.

Cover the ‘appraisal gap’ in cash

Another possibility is that you, the home buyer, cover the additional costs that exceed the mortgage loan. There’s a good chance you’ll have to cover the costs from out of pocket, meaning cash, if the downpayment is too low or if no downpayment is being paid at all.

Split the gap between buyer and seller 

Then there’s the compromise between buyer and seller to split the additional costs equally. So, in our scenario where an additional $10,000 is owed, the seller would reduce the purchase price by $5,000 and the buyer would make up the additional $5,000.

Negotiate the extras

Along with these options, there are other ways to reduce the cost of the home. It’s common for home sellers to include appliances and/or furniture with the sale, including the costs in the total price. Unfortunately, VA appraisers won’t include this – their job is to evaluate the value of the home without including anything in it. Choosing to let the buyer keep the appliances can lower the total cost of the loan without changing the value of the house.

If all else fails, walk away

If there’s no way around the low VA appraisal, then you should always be prepared to walk away from the deal. VA appraisers are professionals, and they have to be certified by the VA to evaluate homes. If sellers are unwilling to budge or your Realtor cannot work out a new deal, it could be in the buyer’s best interest to find a different house. It’s not the happiest of endings, but it could be worth avoiding large, out-of-pocket payments just to get the specific home.

Common VA appraisal problems & what to do

A VA appraisal is a critical part of the homebuyer process for veterans. The hope is that you encounter no issues and sail smoothly to closing. But some VA buyers will face appraisal problems.

Here’s what to do if you run into VA appraisal problems: 

Repairs ordered

The Department of Veterans Affairs requires that all properties meet a list of ‘Minimum Property Requirements.” This list aims to make sure that veterans are moving into homes that are safe, sound and free of any living hazards. 

Unfortunately, some homes will not meet these basic criteria. With that, the VA appraiser may order repairs before closing can occur. 

If the appraisal comes back with ordered repairs, it is important to be open with the seller. Ask your real estate agent to share the list of required repairs. Let them know that you are unable to move forward with the home purchase unless these repairs are completed, due to the restrictions of the VA loan. In some cases, the seller will comply easily with the repairs or negotiate a new price that factors in the repairs for a smooth closing. 

If the seller is unwilling to complete the repairs, then a VA homebuyer will not be able to move forward with the purchase.

Low appraisal value

The fast pace of the current market means some homes may be appraised low. If you receive a low appraisal, you can ask for a Reconsideration of Value from the VA. 

If the reconsideration doesn’t affect the appraisal value, negotiating with the seller for a better price is an option. But in a hot market, most sellers will be unwilling to leave any money on the table. 

If this happens, you have the option to make up the difference in cash. However, that may amount to more money than you have available. You may have to walk away from the sale if you’ve exhausted all of your options.

How to avoid VA home appraisal issues

VA appraisals aren’t as complicated as they may seem. There are early signs homebuyers can find to tell if a home will clear an appraisal or not. Here are some tips to find out more about how to avoid VA appraisal issues during the home buying process.

The VA appraisal process doesn’t need to be intimidating so don’t let it deter you from taking advantage of one of the best mortgage products on the market.

VA appraisal FAQ

Are VA appraisals typically low?

No, VA appraisals are not typically low. If you are looking at a VA mortgage, you may have heard the myth that VA appraisals are typically low. The good news is that is not the case. When an appraiser shows up to determine the value of a home, they aren’t looking at the type of loan you want to use. Instead, they are looking at the home’s features to determine its value. 

How often do VA appraisals come in low?

Like any other type of appraisal, VA appraisals can come in lower than you expected. The unfortunate reality is that some homes are overpriced by the seller. 

According to Fannie Mae, appraisals come in low around 8% of the time. With that, borrowers seeking a VA loan may find their appraisal comes in low. But borrowers with other types of loans are in the same boat. 

How do I fight a low appraisal?

If a VA appraisal comes in low, you have the chance to appeal. Whether you are the buyer or seller, you can request a formal Reconsideration of Value. 

With this, you may present facts about the property that the original appraisal may have overlooked. A few important facts could be recent sales of comparable homes in the area, errors on square footage, omitted upgrades, and more. 

To challenge an appraisal, you can present these facts to the mortgage lender in writing. At that point, the original appraiser will consider the information. They may or may not adjust the appraisal amount. If the appraised value isn’t raised, you can ask for a letter detailing their reasoning. 

If you are seeking a valuation change of more than 10%, the lender will send the request to the Department of Veterans Affairs. In that case, a member of the agency will review the original appraisal and submitted facts to issue a revised value. 

What happens if the appraisal comes back low for the buyer?

If the appraisal comes back low, the lender will not lend more than the appraised amount. With that, the buyer will have the opportunity to make up the difference. The buyer can negotiate with the seller for a lower price or pay the difference out of pocket. 

Does the borrower have to complete the sale if the appraisal comes in low?

If a home’s appraisal is lower than expected, the buyer may be able to walk away from the sale if there is a contingency clause in place. The contingency would allow buyers to not complete the sale without losing their earnest money. 

With this in mind, a buyer should never waive their appraisal contingency unless they are willing to make up the difference out of pocket or lose their earnest money. 

Is a second VA appraisal possible?

If a VA appraisal comes back with a significant error, you can challenge the report. In some cases, you can present facts about the property that the original appraisal may have overlooked. For example, the appraiser may have missed the fact that you are on city water or have miscalculated the square footage of your home. 

With this document submitted, the appraiser may reevaluate their determination and adjust the property’s value. If not, you can appeal to the Department of Veterans if you are trying to adjust the property’s value by more than 10%. At that point, a VA employee will look at the documents to reissue a valuation. 

If you are pursuing a VA Streamline Refinance, an appraisal isn’t required by the VA. However, your lender will likely require an appraisal to finalize the loan. 

Check today’s VA rates (Apr 26th, 2023)

Source: militaryvaloan.com

Apache is functioning normally

Dollar Bank is a regional bank with over 60 offices in three U.S. states. Founded in 1855 as “Pittsburgh Dollar Savings Institution,” it didn’t shorten its name to Dollar Bank until 1986.

At this time, they began offering an increased amount of services, including credit cards, lines of credit, and term loans. As of March 2016, Dollar Bank is the largest independent mutual bank in the U.S.

Key Points of Dollar Bank 

  • Founded in 1855, but did not become a lender until 1986
  • Currently the largest independent mutual bank in the U.S. as of early 2016
  • Offers a variety of mortgage products, from traditional fixed-rate loans to no closing cost refinance loans
  • A large variety of educational resources to help borrowers in the process of taking out a mortgage, as well as refinancing and buying a home
  • Only have 12 complaints on the Better Business Bureau site, despite being established since 1855
  • Bank’s headquarters is a Pittsburgh landmark and is on the U.S. Register of Historic Places

Overall Review of Dollar Bank 

Even though Dollar Bank is only available in three U.S. states, it offers a wide variety of financial services to its customers. It has served primarily as a bank for over 150 years, but it has grown in recognition in the mortgage lender and credit industries.

Dollar Bank offers plenty of different types of mortgage lending products, such as fixed rate, adjustable rate, VA, and FHA loans. No matter what kind of loan is right for you, you can rest easy knowing that Dollar Bank’s customer support can help you at every stage of the borrowing process.

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Dollar Bank Loan Specifics

Dollar Bank’s mortgages are mostly comparable to other offerings in the industry. Their home loan options include:

Fixed Rate Loans 

Fixed rate loans from Dollar Bank are meant for homebuyers who plan on living in the space for an extended period. These types of mortgages typically have higher initial interest rates than adjustable rate mortgages.

However, many buyers like the security of a fixed payment and interest rate, as it gives them a predictable number to budget. Dollar Bank offers fixed-rate loans in 30-year, 20-year, and 15-year increments of time, as well as in the form of Federal Housing Administration (FHA) loans.

Adjustable Rate Loans

Adjustable rate mortgages are best for homebuyers who plan on moving or refinancing in the next five or so years. These loans come with lower monthly principal and interest payments. It’s worth being aware of the fact that adjustable rate mortgages have a fixed rate for only a specific amount of years.

After that time, rates adjust with industry standards. Adjustable rate loans with Dollar Bank have a rate cap, which keeps the costs from rising too high. There are plenty of choices you can make when choosing what type of ARM you’d like, including:

  • 7-year ARM
  • 5-year ARM
  • 3-year ARM
  • Construction mortgage
  • FHA 5-year ARM

VA Loans

The U.S. Department of Veterans’ Affairs helps veterans, current members of the U.S. Armed Forces, and their spouses get affordable mortgages. Qualified individuals may be able to get a loan worth 100 percent of the home’s purchase price.

However, this program has a maximum limit of $203,000 for no money down loans. If you choose not to put a down payment on the home, you will typically have a higher than average interest rate to make up for these costs.

CRA Loans

Dollar Bank offers plenty of mortgages through the Community Reinvestment Act. This option allows buyers to pay as little as 3 percent down on the home and even gives grants to first-time buyers. CRA mortgages make it easier to buy a house for qualifying homebuyers.

No Closing Cost Refinance Mortgages

With these loans, Dollar Bank will pay your closing costs, which can save you hundreds of dollars. You can qualify for terms up to 30 years with fixed rate security for 15, five, or three years.

Interest Only ARMs

Dollar Bank offers mortgages with much lower monthly payments than other types of loans, which puts more cash back into your hand. You can get a five-year or three-year interest only ARM with Dollar Bank.

Dollar Bank Mortgage Customer Experience

Dollar Bank operates in only three U.S. states but has plenty of online resources that allow potential borrowers to do some research before getting a mortgage. Dollar Bank makes it easy and convenient to find mortgage rates online with the following materials:

  • Mortgage calculators that help you estimate how much you would pay for certain types of loans to see how much you can afford on a home

  • Helpful videos that walk you through the mortgage process and answer any overarching questions you have about buying and refinancing a home
  • An online tool that allows you to get a free quote online after filling out a short form, without having to input your Social Security Number
  • A resource center with articles describing different types of loans, which can help you gain insight into the mortgage market as a whole and the benefits of working with Dollar Bank

If you are interested in a loan with Dollar Bank, you can fill out the online application or contact a mortgage sales representative directly over the phone.

Customer reviews on WalletHub and Bankrate seem to be mostly positive about Dollar Bank. However, these reviews do not only reflect the mortgage offerings.

Many reviews are about the banking and credit services the bank provides. J.D. Power does not include information for Dollar Bank on its Primary Mortgage Originator Rankings, and the CFPB does not have consumer complaint information for this bank.

Dollar Bank Lender Reputation

Dollar Bank has been around for about a century and a half, meaning it has garnered a plethora of both positive and negative reactions.

However, the bank has only offered mortgages for about 20 years, so it seems that a majority of its reputation comes from its other financial services.

The CFPB has never filed a complaint against Dollar Bank. The bank has 12 complaints on the BBB, although it is not currently accredited.

Dollar Bank Mortgage Qualifications

Qualification requirements for Dollar Bank are standard in comparison to other mortgage lenders. It does not mention their income requirements for borrowers or their credit score requirements. However, when applying for a mortgage with the bank, they request that borrowers have the following information available to see what they can afford:

  • Current monthly mortgage payment (if applicable)
  • Total annual income
  • Current monthly debt, excluding existing mortgage, insurance, and utility costs
  • An estimate of monthly insurance and tax costs for the new home
Income Requirements Down Payment Requirements Credit Score Requirements
None specified 0-20%, based on loan type None specific; credit score will affect monthly costs
  • Homepage URL: https://www.dollar.bank/Personal
    • Company Phone: 1-800-828-5527
    • Headquarters Address: 340 Fourth Ave, Pittsburgh, PA 15222

  • States Serviced:
    • Ohio
    • Pennsylvania
    • Virginia

Source: goodfinancialcents.com

Apache is functioning normally

The terms “prequalified” and “preapproved” are often used interchangeably by mortgage borrowers, but they aren’t quite the same. Prequalifying for a home loan isn’t as involved — it simply gives you an idea of if you’ll qualify for a mortgage, and if so, how much and at what interest rate. Getting preapproved requires more legwork and indicates that the lender is committed to moving forward with the mortgage.

What is the difference between preapproved and prequalified?

Getting prequalified for a loan is easier than receiving a preapproval, which also means prequalification means less to home sellers regarding your ability to get the mortgage.

Prequalifying involves submitting some basic financial info and getting your credit checked to get a general idea of whether you can get a mortgage, how much you could borrow, and the interest rate.

For a preapproval, lenders will do a deeper dive into your financial situation and will require more documentation of the financial details you provide as well as a formal loan application. Preapprovals hold more weight and are more useful when trying to buy a home.

What is a mortgage prequalification?

Mortgage lenders give borrowers the option to see if they are prequalified.

It involves submitting some basic financial information and undergoing a credit check to determine how much house you can afford and possible interest rates you’ll qualify for.

A mortgage prequalification is only a general indication that you could be approved for a mortgage if you were to formally apply. It might be your first step in the homebuying process, and can usually be obtained with a phone call or brief online application. Learn more about the pros and cons of prequalification to see if this step makes sense for you.

What is a mortgage preapproval?

A mortgage preapproval is a letter or written statement that specifies your maximum loan amount and the lender’s commitment to fund the loan if your financial situation remains the same.

To get a mortgage preapproval, you’ll need to submit a formal loan application and provide extensive documentation regarding your income, savings and debt, such as credit cards and student loans. Your mortgage lender uses this information to determine whether to offer you a loan, and at what maximum amount and interest rate.

It’s not set in stone until the loan goes through underwriting and the information in your application is confirmed by the lender. If there are discrepancies, your loan terms could be modified, or the lender might deny your application.

While it’s more complex than prequalification, a preapproval can still be very fast. Some online lenders issue preapproval letters in minutes. Others might require a full day or even a week to review the information you submit.

Regardless of how long it takes, the wait is worth it, since you’ll need a preapproval in hand before making an offer on a home.

“Preapproval carries more weight because it means lenders have actually done more than a cursory review of your credit and your finances, but have instead reviewed your pay stubs, tax returns and bank statements,” says Greg McBride, CFA, Bankrate’s chief financial analyst. “A preapproval means you’ve cleared the hurdles necessary to be approved for a mortgage up to a certain dollar amount.”

Differences between prequalified and preapproved
No formal application required, but might require credit check Requires formal application and credit check
Provides estimate of how much you might be eligible to borrow Provides conditional loan approval
Relatively quick process and rapid response from lender Could take time to gather documentation and complete application, then anywhere from a few minutes to a few business days for response
Not a viable approval, and not used when making an offer on a home Demonstrates to home sellers you’re a serious buyer and on track to full approval

Which should I choose: Preapproval or prequalification?

Both preapproval and prequalification are indications from a mortgage lender that you are eligible for a mortgage, but a preapproval is much more detailed — and more of a guarantee.

“Because prequalification may not always lead to loan approval, it is important for homebuyers to avoid making any firm plans based on their qualification status,” McBride says. “If the mortgage lending process were a highway intersection, prequalification would be the yellow traffic light and preapproval would be the green light.”

That green light is important in today’s housing market. Since some markets are especially hot, sellers might be getting competing offers. If they’re comparing one offer without a preapproval letter to an offer that does have one, they’re likely to go with the preapproved buyer — it’s a safer bet.

While there are differences between getting preapproved vs. prequalified, both processes usually involve credit checks. Typically, these are recorded as one inquiry on your credit report if they’re done within a short window, usually 45 days.

How to get started with the preapproval process

Before you ask a mortgage lender to preapprove you for a certain amount of money, take a look at your budget to determine how much you can contribute to a down payment. Most lenders will want an idea of what you plan to cover to have an estimate of your loan-to-value (LTV) ratio.

Additionally, gather all the documentation that will be requested so you’re ready to hand it over.

Remember, just because you get preapproved or prequalified from one lender, it doesn’t mean you have to actually get your mortgage through that specific lender. Always shop around before you make the final call on a lender, because rates and terms vary. By shopping with multiple lenders, you can determine if you’re getting the best deal.

Preapproved vs. prequalified FAQ

  • If you can’t afford to make a cash offer on a home, you’re going to need to borrow money in the form of a mortgage to make the dream of owning a home a reality. A mortgage lender needs to review your finances and sign off on approving your loan before you’ll get the keys.

  • To get prequalified for a mortgage, you’ll usually only need to provide high-level financial information like basics about your income and expenses, without any supporting documentation.For preapproval, however, you’ll need to fill out a more formal application and provide documents that serve as evidence: recent pay stubs from your employer, bank and credit card statements, W-2 tax statements and anything else that shows a complete picture of your personal finances.

  • Because a prequalification is a less detailed process, you can usually get one quicker than a preapproval. It can even happen in a matter of minutes over the phone, or seconds online.However, you can also get a preapproval quite fast. Some lenders promise preapproval letters with turnarounds of just a few minutes. Others, though, might take a few days to get back to you. If your financial situation is more complicated — if you’re self-employed, for example, or have another reason for a deeper investigation — the preapproval will likely take a bit longer.

  • You should get preapproved or prequalified before you begin looking at homes. A seller will want the assurance that you’ve done the prep work — and that a bank or credit union has done enough research to feel confident about loaning you the money.

  • Yes. There is no requirement to get prequalified first. Instead, jumping ahead to preapproval speeds up the process and puts you closer to being fully approved.

Source: thesimpledollar.com

Apache is functioning normally

The mortgage market is essentially made up of purchase-money lending and refinance lending, with home equity lending sprinkled in.

Over the past couple years the market has been decidedly refinance-heavy thanks largely to the extremely favorable interest rate environment spurred on by the Fed and an overall gloomy economy.

Unfortunately, things changed pretty rapidly and now refinance business is drying up, forcing banks to replace it with purchase lending.

The problem is the home purchase business isn’t robust enough to make up for the once booming refinance sector, so some previously high-flying lenders are taking a big hit.

Today, National Mortgage News tweeted out an image of the lenders who rely most heavily on refinances to stay afloat.

Mortgage Investors Corp. Only Did Refis

Topping the list was Mortgage Investors Corp., a St. Petersburg, Florida-based VA loan lender that focused entirely on refinancing existing VA loans.

Last fall, they announced massive layoffs and pretty much began winding down their entire business.

According to NMN, they had a 100% refi share in both the fourth quarter of 2012 and the fourth quarter of 2013, giving them the #1 spot.

Their volume fell from nearly $1.4 billion to just $265 million during that time, which explains why they had to make a quick exit.

They were followed by Embrace Home Loans (Rhode Island), which boasted a 71.4% refi share in the fourth quarter of 2013, down from 87.7% a year earlier.

As a result of the slowdown, their loan origination volume was essentially cut in half, falling from over $1 billion to just about $500 million.

Bank of America was third on the list; its refi share fell from 87.6% to 68.1% year-over-year, and production slid to just $13.5 billion compared with $22.5 billion in the fourth quarter of 2012.

Wells Fargo claimed the fourth spot with a refi share of 68%, down from 72% a year earlier. While those numbers don’t look too bad for the nation’s largest mortgage lender, volume plummeted from $126 billion to just $51 billion.

Rounding out the top five was Astoria Federal Savings, which saw its refi share fall from 86.9% to 67.6%. Loan volume dipped to $186 million from $332 million.

Top Refi Share in Fourth Quarter 2012

1. *Mortgage Investors Corp. – 100%
2. Provident Funding Associates – 95%
3. Goodmortgage – 94%
4. AimLoan – 90%
5. Embrace Home Loans – 87.7%

Top Refi Share in Fourth Quarter 2013

1. *Mortgage Investors Corp. – 100%
2. Embrace Home Loans – 71.4%
3. Bank of America – 68.1%
4. Wells Fargo – 68%
5. Astoria FS & LA – 67.6%

*The numbers from Mortgage Investors Corp. are estimates because the company did not disclose its refinance rates.

Expect the refinance numbers to keep dropping and dropping in 2014. And if you’re wondering why there have been so many mortgage-related layoffs lately, or where they might originate from, take a look at this list.

Of course, dwindling refi volume is just one issue, there are also massive layoffs in loss mitigation departments nationwide because fewer borrowers are missing payments and/or getting foreclosed on.

Finally, remember that real estate agents often determine which lender a borrower ultimately uses for their purchase loan, so buddy up.

Source: thetruthaboutmortgage.com

Apache is functioning normally

There are many different types of mortgages, broadly put into three buckets: conventional, government-insured and jumbo loans, also known as non-conforming mortgages. There are also different loan terms within these categories, such as 15 years or 30 years, and different interest rate structures, generally either fixed or adjustable (also known as variable).

Conventional mortgages

Conventional loans are often ultimately bought by Fannie Mae or Freddie Mac, the big government-sponsored enterprises (GSEs) that play an important role in the mortgage lending market. They are offered by virtually every type of mortgage lender, with some programs allowing for a down payment as low as 3 percent. A conventional loan can be either conforming or nonconforming; the conforming loans are the ones backed by the GSEs.

Government-insured mortgages

FHA loans, VA loans, USDA loans

Government-insured or government-backed loans are backed by three agencies: the Federal Housing Administration (FHA loans), the U.S. Department of Agriculture (USDA loans) and the U.S. Department of Veterans Affairs (VA loans). The U.S. government isn’t a mortgage lender, but it sets the basic guidelines for each loan type offered through private lenders. Government-backed loans can be good options for first-time homebuyers as well as borrowers who have a lower down payment or smaller budget. The requirements are usually looser than those for mortgages not secured by the government (conventional mortgages). The interest rates on FHA, VA and USDA loans are usually similar to those on conventional mortgages, but fees and other costs are higher.

Non-conforming mortgages

Jumbo mortgages

Jumbo mortgages are loans that exceed federal loan limits for conforming loan amounts. For 2023, the maximum conforming loan limit for single-family homes in most of the U.S. is $726,200, and $1,089,300 in more expensive locales. Jumbo loans are more common in higher-cost areas and generally require more in-depth documentation to qualify. Jumbo loans are also a bit more expensive than conforming loans.

Fixed-rate mortgages

A fixed-rate mortgage has an interest rate that doesn’t change throughout the life of the loan. In that way, borrowers are not exposed to rate fluctuations. For example, if you have a fixed-rate mortgage with a 6.8 percent interest rate and prevailing rates shoot up the next week, year or decade, your interest rate is locked in, so you don’t ever have to worry about paying more. Of course, if rates fall, you’ll be stuck with your higher rate unless you refinance. There are many types of fixed-rate mortgages, such as 15-year fixed-rate, jumbo fixed-rate and 30-year fixed-rate mortgages.

Adjustable-rate mortgages

Adjustable-rate mortgages, or ARMs, have an initial fixed-rate period during which the interest rate doesn’t change, followed by a longer period during which the rate might change at preset intervals. Unlike a fixed-rate mortgage, ARMs are affected by market fluctuations, so if rates drop, your mortgage payments will drop. However, the reverse is also true: When rates rise, your monthly payments will also rise. Generally, ARM rates are lower to start than with fixed-rate mortgages, but since they’re not locked into a set rate, you won’t be able to predict future monthly payments. ARMs do come with an interest rate cap, however, above which your loan cannot rise.

Compare fixed-rate vs. adjustable-rate mortgages.

Source: thesimpledollar.com