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Home warranty services like Advanced Home Warranty offer to shield you from unexpected repair bills in exchange for $400 to $600 a year plus service fees.

You could sign up within minutes online and have coverage in place after a 30-day waiting period.

But do you really need to?

Would the warranty protect you from out-of-control expenses or would it be just another bill to worry about?

Could you find another way to pay for repairs?

To answer these questions with any certainty, you’d need to know the future, and we can’t help with that. You’ll have to settle for the next best thing: Studying the warranty to find out how it works and how it might (or might not) help you.

About Advanced Home Warranty

Advanced Home Warranty hasn’t been around very long, but its sister company, Choice Home Warranty, has provided warranties for decades. The companies offer very similar warranty plans.

Both companies offer lower-priced options compared to other warranty companies. You can save on premiums and service call fees.

You can also save by opting only for coverage on the systems you need, within certain parameters.

Advanced Home Warranty does not let you build your own customized warranty, but its plan structure lends itself to some customization.

Advanced Home Warranty’s Basic Plan

Advanced’s Basic option will cover the fundamental systems in your home with a couple of notable exceptions. The plan covers:

  • Cooktop
  • Ceiling and exhaust fans

  • Dishwasher
  • Ductwork
  • Oven / range / stove

  • Heating system
  • Electrical system
  • Plumbing system

  • Plumbing stoppages
  • Water heater
  • Whirlpool bathtub

  • Built-in microwave
  • Garbage disposal
  • Garage door opener

The Basic plan is a bargain at about $400 a year. But it does not cover your refrigerator, your clothes washer and dryer, or your air conditioner.

If you don’t need coverage for these systems, you could save with Advanced’s Basic Plan. If you do need this coverage, you’ll need the Total Plan.

Advanced Home Warranty’s Total Plan

The Total Plan includes everything in the Basic plan, along with your:

  • Air conditioner
  • Refrigerator
  • Clothes washer/dryer

The Total Plan starts around $550 a year.

Optional Coverage: Add Flexibility

With either the Basic or Total Plan, you could add coverage as needed in any combination to protect your:

  • Additional spa

  • Central vacuum
  • Pool/spa
  • Roof from leaks (limited protection)

  • Standalone freezer
  • Additional refrigerator
  • Well pump

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  • Septic system
  • Sump pump
  • Septic tank plumbing

Each of these add-ons could cost between $20 and $50 extra a year. This flexibility allows you to include only the coverage you need without paying to protect a system you don’t even have.

When warranties bundle more coverage together, you’re more likely to pay for services you don’t need, like a central vacuum system when all you have is an old upright Hoover, or a sump pump when your home is built on a concrete slab.

How Advanced Home Warranty Works

Advanced Home Warranty gets high marks for giving you more control over how you build your warranty coverage.

But we’re still in the hypothetical phase of the shopping process. How would this translate if you bought a plan that meets your specific needs?

Filing a Warranty Claim

You can buy a warranty on your home right now without needing a home inspection or any documentation. Unless your home exceeds 5,000 square feet, you’ll get a standard pricing plan based on your ZIP code.

Like most warranties, you’d have to wait 30 days after signing the contract before you can file a claim with Advanced Home. After your 30-day waiting period, you could call the company’s toll-free service number 24 hours a day.

Paying Your Service Fee

Assuming your warranty covers your faulty system, the company will send out a technician within two days (four days on weekends or holidays).

The technician will charge you $60 to diagnose the problem. Service fee amounts vary between warranty companies, but charging this fee is standard practice. It works like a deductible on your homeowners insurance policy or a co-pay on your health insurance.

The technician will either:

  • Fix the problem for no additional charge: This is the best case scenario, and if this happens you’ll feel good about your decision to buy the warranty.
  • Have a more specialized contractor come out: You’re still getting the problem fixed, but it’ll take a little longer.
  • Recommend replacing the system: As long as a replacement falls within your warranty’s annual spending caps, which we’ll get into below, you can get the system replaced at no charge.

  • Inform you the warranty won’t fix your problem: This can be infuriating after you’ve already paid the premiums and the service fee. Prevent this scenario by reading the contract carefully before signing.

Your Contract’s Exclusions

Any home warranty comes with some exclusions which could deny coverage even to a covered system in your home.

Many new homeowners who buy a warranty feel surprised when the warranty denies their claims. Advanced Home Warranty’s sample contract spells out the exclusions, which are far too numerous to list here.

Exclusions include:

  • For a refrigerator: Advanced won’t fix racks, shelves, lighting problems, ice makers, Freon, ice crushers, beverage dispensers, door hinges and gaskets, glass, Internet-connected features, spoiled food.
  • For a clothes washer: The warranty won’t fix problems with door seals, filter screens, leveling and balancing, glass, soap dispensers, knobs and dials, hinges, damage to clothing.

  • For an air conditioner: The warranty won’t cover condenser casings, electronic air cleaners, filters, humidifiers, gas air conditioning systems, registers and grills, non-ducted wall units, window units, water towers,  improperly sized units, chillers, roof mounts, jacks, stands or supports, commercial grade equipment — this list goes on and on.
  • Electrical system: The warranty won’t help with alarm systems, attic or exhaust fans, DC wiring, doorbells, fixtures, CO2 alarms, smoke detectors, inadequate wiring capacity, solar power panels or components, running new wires, damage due to power failure or surge. Again, this isn’t all.

The list of exclusions goes on for page after page, but the sampling above should show you the importance of checking the contract thoroughly before signing.

Annual Spending Caps

Your warranty’s contract should also tell you the maximum amount your warranty would pay each year. If your repair exceeds the spending cap, you’ll have to make up the difference out of pocket.

Most warranties have a comprehensive cap and/or a per-system cap.

Here’s a sampling of Advanced Home Warranty’s spending caps:

  • Heating system: $1,500 per year.
  • Electrical system: $500 per year.
  • Plumbing system: $500 per year.

  • Ductwork: $500 per year.

Other Reasons for Non-Payment

Advanced Home Warranty will provide details in your contract about several other conditions which could prevent the company from paying to fix your system.

For example, the warranty won’t pay for damage resulting from:

  • Known or unknown pre-existing conditions
  • Rust or corrosion
  • Mildew or mold

  • Sedentary build-up

Also, expect to cover the cost out of pocket for cutting through concrete or walls to access damaged systems. The company also won’t pay to repair cosmetic damage resulting from this kind of repair.

Alternatives to Advanced Home Warranty

Take a look at some of Advanced Home Warranty’s top competitors to ensure you get one of the best home warranties to protect your home.

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Should You Get a Home Warranty?

At this point, many shoppers ask themselves, “Why even bother with a warranty? Why would anyone pay into a plan with so many exclusions?”

These are good questions. Yet thousands of homeowners buy warranty coverage every year because they like the idea of paying about $500 a year in exchange for a few thousand dollars worth of home repairs.

The key is knowing how to use a warranty: The warranty should repair or replace home systems that wear out from normal wear and tear.

A warranty won’t fix a system which faltered because of misuse, over-use, lack of regular maintenance, or improper installation. A warranty also won’t help with cosmetic issues or personal preferences. It won’t pay for maintenance, inspections, or to get your system up to code.

Warranties vs. Homeowners Insurance

Sometimes your homeowners insurance policy could help you repair system damage that a home warranty will exclude. If lightning strikes your home and fries the electrical panel, for instance, your warranty won’t pay but your homeowners policy should.

It’s easy to confuse these two sources of help. Basically, a warranty can help when a system in your home wears out from normal use. Your insurance should help when an outside force — wind, hail, lightning, a tree, a burglar, or fire — damages or destroys your property.

Understanding this difference can help place a home warranty in context.

Who Needs a Home Warranty?

Whether a home warranty makes sense for you depends partly on your home. In a home where systems will be less likely to wear out, a warranty makes less sense.

In a brand-new construction, for example, you’re less likely to need work on your electrical system or your plumbing system. Something could go wrong, of course, but statistically speaking, you’re less likely to face high repair bills than someone in a 35-year-old home.

However, if you bring your older refrigerator and clothes washer into your new home, those systems will be more likely to need repairs this year. Your warranty should reflect this reality.

Reasons Not To Get a Home Warranty

Along with the condition of your home, your overall financial situation can also help you decide whether to buy into a plan like the one Advanced Home Warranty provides.

If you have several vulnerable systems in your home and you have no idea where you’d come up with a couple thousand dollars if needed, a home warranty could be useful. I’m assuming, of course, the $400 to $600 in premiums wouldn’t be too much of a hardship.

If you have money saved or you have another plan for coming up with repair money, such as a low-interest line of credit, you could rely less on the protection of a warranty.

Also, if you know how to fix just about anything in your home, you’d probably be OK without a warranty. You’ll still need to save some money for parts, perhaps, but you’d have less need for a technician to come out and assess your ailing system.

Bottom Line: Follow the Rules

Home warranty companies like Advanced Home Warranty provide a concrete service: home system repairs.

But they tend to sell customers on an abstract concept: a sense of security.

This sales pitch taps into your sense of fear as you enter homeownership. The pitch gives you an action to take (buying a warranty) to ease your fears of out-of-control repair bills.

To make the best decision as a consumer, you have to look beyond this sales pitch to see exactly how the warranty would (and when it wouldn’t) help you. These four rules can help:

  1. Understand What You’re Buying: We call these plans “home warranties,” but they hardly resemble a manufacturer’s warranty which will replace your phone or food processor. Instead, you’re buying a service contract which doesn’t come with very many guarantees. It can offer convenience and it should help replace or repair worn out systems.
  2. Read The Contract: Read and understand every word of your actual contract before you sign it. A sample contract like the one Advanced Home Warranty provides on its site will give you a good idea how the company works. But it’s not the same as the contract you’ll need to sign. If you don’t understand a clause, call customer service. If the rep can’t help you understand, consider moving on to another company.
  3. Customize Your Coverage: Advanced Home Warranty allows for more warranty customization than many companies. Try to avoid paying for coverage you couldn’t possibly use. Sometimes you’ll have to include a system or two you don’t need, but often you can create a customized plan.

  4. Have a Backup Plan: But wait, you might say, the warranty is my backup plan. Since warranties have so many limitations on service, you should still set aside some money for home system repairs. This can also help if your repair exceeds your warranty’s annual spending cap.

No, you can’t see the future and know for certain whether a warranty could save you money in the coming year. But learning as much as you can about Advanced Home Warranty in the present should help you avoid a lot of future frustration.


Source: goodfinancialcents.com

Apache is functioning normally

Posted on: April 27, 2023

The GI Bill offers veterans, military members, and their loved ones many benefits. But one thing it doesn’t cover? That’d be buying a house.

Fortunately, if you’re looking to purchase a new home as a veteran or active-duty service member, you still have options. While there may not be a specific GI Bill home loan out there, there is a mortgage program designed just for military home buyers — and it’s one of the best home loan programs on the market.

Are you interested in using the VA loan program to buy a house? Let this VA home loan info guide the way.

Check your eligibility for a VA home loan here (Apr 30th, 2023)

Mortgage program for military home buyers

Dubbed the VA loan program, these military-only mortgages are some of the best financing options available. They’re backed by the Department of Veterans Affairs and offer low interest rates, come with no loan limits, and require zero down payment at all.

So while there is no official “GI home loan,” military borrowers have access to a VA home loan benefit, a great mortgage program intended to put homeownership into reach for veterans, active-duty service members and their families.

Benefits of a VA loan

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

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 other benefits of VA loans 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 term 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 for the average consumer.

VA Conventional FHA
March 2023 6.18% 6.54% 6.44%
February 2023 6.04% 6.26% 6.30%
January 2023 5.96% 6.27% 6.22%
December 2022 6.17% 6.36% 6.36%
November 2022 6.56% 6.81% 6.66%
October 2022 6.62% 6.90% 6.73%

Source: Economic Research Federal Reserve Bank of St. Louis

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

Qualify with GI Monthly Housing Allowance (MHA)

One last advantage? If you qualify for GI Bill benefits, you can actually use your GI Monthly Housing Allowance (MHA) to qualify for a VA loan. If you’re considering this option, talk to a VA lender. They can give you an idea of what your MHA qualifies you for.

VA loan eligibility & guidelines

For eligible borrowers, VA loans are usually the best mortgage option available. To qualify, borrowers must meet eligibility requirements set by the U.S. Department of Veterans Affairs and by the individual lender.

VA loan service eligibility requirements

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 exact standards depend on when you served, but generally speaking, you’ll need to have 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

Qualifying for a VA loan

The VA doesn’t set specific financial standards for its loans, though private mortgage 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. These steps can all help you better qualify for a mortgage loan (VA or not).

VA loan property requirements

The VA home loan program is intended to help veterans and active-duty service members become homeowners. That means, with some rare exceptions, these homes are reserved for single-family homes that the borrower plans to use as a primary residence.

A VA appraisal will ensure the property meets the VA’s Minimum Property Requirements, to ensure the home is livable and worth the value of the loan.

See if you’re eligible for a VA home loan (Apr 30th, 2023)

Types of VA loans

You can use a VA loan to either purchase a property or refinance an existing one. In both cases, there are a few options.

These include:

  • VA Purchase Loans: These can be used to buy a home (up to four units), an approved condo, or a manufactured home. You can also use VA purchase loans to build a new construction property or purchase a home and renovate it
  • VA Streamline Refinance: Also known as a VA Interest Rate Reduction Refinance Loan (IRRRL), these streamlined refinance loans allow existing VA loan borrowers to lower their interest rates or get more favorable terms quickly and affordably.
  • Native American Direct Loans: These are VA loans reserved just for veterans of Native American descent. They can be used to buy, build, or renovate properties on federal trust lands or to refinance.
  • VA Cash-out Refinance Loans: These are VA loans that let you tap your home equity. They replace your existing VA loan with a larger-balance one and give you a lump-sum payment in return. Cash-out refinancing can be a good choice if you need to make repairs on your property or if you have unexpected or looming expenses to cover.

VA funding fee

The VA funding fee is a one-time fee you’ll pay at closing. It helps subsidize the VA loan program and keeps costs low for future VA borrowers. The exact fee depends on your loan type, the number of times you’ve used your VA loan benefits, and your down payment size.

VA home loan FAQ

How much is a typical GI home loan?

There is no GI Bill home loan, but VA loans have no loan limits. As long as you have your full entitlement, you can borrow as much as you need to purchase a property. Keep in mind, though, lenders have their own criteria for evaluating borrowers. These tend to be stricter on higher loan amounts.

What are the benefits of a VA home loan?

The VA housing loan is one of the most beneficial financing products out there. The VA guarantee means private lenders can afford to pass along valuable benefits to eligible veterans, active-duty service members and their families. These loans come with no mortgage insurance or down payment, they have low interest rates, and there are no credit score requirements or loan limits either.

How much house can I afford as a veteran?

That depends on your budget, the interest rate you qualify for, and the down payment you’re willing to make. You can use this VA home loan calculator to point you in the right direction.

What is a Certificate of Eligibility (COE)?

A Certificate of Eligibility is an official document from the VA that details your military service. Lenders use it to determine whether you meet the VA loan program’s service requirements, which are detailed above. You can retrieve your COE yourself through your eBenefits portal, or you can ask your chosen VA lender to request the document on your behalf.

Can I get a COE as the spouse of a Veteran?

You can get a Certificate of Eligibility as the spouse of a veteran in some cases, but not all. To qualify for a COE, your spouse will either need to be missing in action, a prisoner of war or have died while in service from a service-connected disability. There are some other nuances, too — especially if you’ve remarried, so be sure to check out the VA’s detailed rules here.

Can I get a Certificate of Eligibility (COE) for a VA direct or VA-backed home loan?

Certificates of Eligibility are required for all VA mortgages, including Native American Direct and VA-backed purchase and refinance loans.

How much is the VA funding fee?

Your VA funding fee will depend on a few factors, including the type of loan you’re using, whether you’re a first-time home buyer, and whether you’re making a down payment. Fees range anywhere from 0.5% to 3.6% of the total loan amount and is typically well-worth the VA loan savings it allows you to access. This money allows the U.S. Department of Veterans Affairs to continue to offer this valuable VA home loan benefit to qualified veterans, active-duty service members and their families.

GI home loans: The bottom line

While there is technically no such thing as a GI home loan, veterans and active-duty service members do have access to excellent VA mortgage program, which offers significant benefits including:

  • Zero down payment
  • 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 term it comes with)
  • No private mortgage insurance (PMI)
  • No loan limits
  • Can be used multiple times

If you’re ready to buy a home (or refinance one), a VA loan might be your best option.

Ready to buy a home with a VA loan? Start here (Apr 30th, 2023)

Source: militaryvaloan.com

Apache is functioning normally

Last Updated on March 29, 2023 by Mark Ferguson

I have been an agent and investor for almost 20 years and I have seen many market cycles. A lot of people think we are due for another housing market crash because housing prices have skyrocketed, people cannot afford homes, and there could be economic problems. Besides these factors, there are many things that drive the housing market. What really drives market prices is supply and demand, which is impacted by these factors and many more. The last crash that occurred in the United States from 2006 to 2012 was the worst in the history of the country, it was worse for housing than the great depression. It took extraordinary circumstances to create that crash and it will not easily happen again. Could it happen? yes Will it happen? Maybe. When will it happen? No one really knows. Even with Covid-19 causing chaos, there is no guarantee a crash will happen.

What caused the last housing crash?

I started my real estate career in 2002 before the last housing crash. I could see something was off in the real estate market but I was young and did not know what all the signs were indicating. It was not uncommon to see:

  • Loans that were 120 percent of a house’s value
  • Investors buying multiple properties with nothing down
  • People with no income buying houses with a no money down loan
  • People simply stated what their income was to get a loan with no proof
  • 6-month ARMs with the payments doubling soon after buying the house

Something seemed off to me but everyone seemed to be happy! Then the bottom dropped out of the market. The banks realized that many people could not pay back their loans and there were too many houses being built for the people who could actually buy a house.

Crazy lending guidelines caused overbuilding and when the party stopped, there was a crash. Prices dropped and more foreclosures occurred because many people had no equity. Banks panicked and tried to sell all their distressed properties at once.

It was the perfect storm and the worst crash in the history of the United States housing market. The big question is can that happen again? I personally do not think so and I will tell you why below.

Are there really too few houses?

Supply is affected by foreclosures, homeowners’ willingness to move, new construction, and many other factors. Demand is driven by the economy, lending guidelines, potential homeowners’ confidence, wages, and much more. I believe the supply and demand affecting today’s housing market is much different than what drove the last housing boom. While prices could level out or decrease in some areas, I do not think we are in for a nationwide crash.

In order to have a crash, we need an oversupply of homes or the demand for homes to disappear. I do not see either scenario happening, even if the economy loses steam or crashes. Some of the stats I show in this article will show you how different the supply side is right now than it was prior to the crash.

[embedded content]

How many housing crashes have there been?

Many people believe that because of the huge increases in prices, a crash is imminent.

“Just look at what happened in the mid to late 2000s. Prices are so crazy now that a crash has to come soon!”

The first thing you have to realize is that the last crash was the worst crash we have ever had. It was worse than the great depression. Those crashes do not happen over and over again. An increase in prices does not mean a crash is coming. Prices can increase or decrease, but that is what happens in a healthy market. A crash is much different from a down market. Other countries have seen increasing prices for decades without a crash. Just because prices go up does not mean they go down. In fact, due to inflation prices will continuously increase over time and they have increased over time.

There are also a lot of people trying to sell books, products, and coaching based on the impending doom that is coming. Be careful buying into what people say based on their motives. Look at the data!

The chart below shows the median sales price in the United States since 1959. As you can see, prices can fluctuate but in the long run, they have always gone up.

Won’t a recession cause a housing crash?

The last crash was the biggest in recent memory and if you look at the data further back it is the same with small adjustments. A lot of people will also tell you we have a housing crash or recession every 10 years. If you average them out we have recessions every 18 years, but not always true for the housing market. The dot com recession did not affect housing much at all. Sometimes we have a recession 5 years after the last one and sometimes we have it 25 years after the last one. Even if we did have a recession every 18 years we have a long time to wait since the last recession was ten years ago.

The chart below shows unemployment in the US, which is a great indicator of recessions. https://fred.stlouisfed.org/series/UNRATE

You can see from the chart that recessions are not every 18 years, but all over the place.

There are also a lot of people who have been predicting a crash for many years. There are people on YouTube promoting their gold and silver businesses by talking about how real estate will crash. One of the big marketing messages they use is that they predicted the last crash! Well, if you look at their predictions they have been predicting a real estate crash every year for the last three decades. They were bound to get it right one of those years! I was an REO (foreclosure) broker during and after the last crash and there were many people talking about how there was going to be a double-dip recession in 2012. We were going to have a tsunami of foreclosures and it would be much worse than the crash we just went through. Well, it never happened, in fact, the opposite happened.

No one knows for sure what will happen to the housing market. It could go up, it could go down, it could crash. But just because it crashed before when prices were high, does not mean it will crash again.

The video below goes over the possibility of a housing crash as well:

[embedded content]

Will Covid-19 cause a housing market crash?

Many people are now saying that coronavirus and its impacts will cause a housing market crash. The interesting thing is that since the coronavirus started, housing prices have increased in many areas! The supply of homes has decreased because many sellers took their homes off the market. This caused prices to increase because the demand for homes has stayed relatively stable. There are the same amount of buyers fighting for fewer homes.

It is true that many people let their mortgages go into forbearance or are behind on rent. The CDC halted most foreclosures for the rest of the year. There has to be a crash right! There will be so many foreclosures being dumped on the market and that will cause prices to drop.

Foreclosures do not cause a housing market crash. Every healthy market has foreclosures. The last crash was caused by millions of foreclosures coupled with too many houses being built. Foreclosures by themselves can cause a downturn but not a crash.

It is also important to remember that Covid-19 will not automatically cause a flood of foreclosures. The government will do everything they can to stop foreclosures and in some states, it takes years to foreclose. Many people also have equity in their homes which means they can sell them instead of letting them default back to the bank.

Home mortgages are harder to get than ever

One of the main reasons people say there will be another crash is that loans are easier to get again!

In 2005, subprime loans were rampant and as a result, the country over-leveraged itself. Subprime loans, the riskiest loan type given to borrowers with low credit scores, totaled more than $620 billion. Now, subprime originations are only 5 percent of the mortgage market and add up to $56 billion. Compare that to 2005 when subprime origination made up 20 percent of the market. This represents a 91 percent decline from the height of bad loans that set up the economic crash.

Source: Inside Mortgage Finance; Equifax

Not only has subprime lending seen a major decline, but mortgages have also become much harder to attain due to stringent lending standards. Loans are still very hard to get compared to before the last crash. This is greatly due to the type of borrowers able to qualify for loans. The current average credit score for borrowers being granted mortgages is 739. In October 2009, the average FICO score was 686, according to Fair Isaac. The lowest one percent of mortgages issued have credit scores averaging 622-624. Compared to the average range in 2001 of 490-510, the standard to get financing has risen substantially, and as a result, the likelihood of default has dropped. Lenders have done this to ensure the economy doesn’t again become propped on bad loans like it was leading up to the Great Recession.

The chart below shows that loans are even harder to get than right after the housing crash. https://www.urban.org/policy-centers/housing-finance-policy-center/projects/housing-credit-availability-index

As you can see, it is not easier to get a loan, in fact, it is harder!

Investors have even stricter lending guidelines and must put 20% down. There are stricter debt-to-income levels for investors and some banks even limit the number of loans investors can have. It is much tougher to get a loan now than almost any other period in the last century.

Is the United States housing market unaffordable?

Another reason people say the market will crash is that housing is not affordable for most people and it has to crash.

It is true that the affordability index continues to be stacked against potential home buyers. As housing and rental prices steadily increase, wages continue to stay relatively stagnant. Historically, the average income-to-housing cost ratio in the U.S. has hovered near 30 percent, but in some metro areas, that number is currently closer to 40 and even 50 percent! This strips away the opportunity to save money as a significant portion of a person’s monthly income is going to keep a roof over their head.

Source: U.S. Census Bureau

However, the United States is still much more affordable than in many other countries. Many of those countries have not seen a huge crash. People tend to find ways to buy homes, even when they are very expensive. Affordability in itself will not cause a crash. Although, it could cause a slowdown.

https://www.domain.com.au/money-markets/as-australias-house-prices-fall-watch-the-bottom-pickers-start-to-emerge-20180426-h0z7g2/

Some of these charts are a few years older, but it’s tough to find updated information. As you can see there are many other markets that have higher prices than the US (even after our last rise) and did not have a housing crash, or they recovered very quickly after a smaller crash. Simply having high prices does not mean a crash is coming.

Why is supply so low?

The biggest factor causing the housing market to increase today is low inventory. The last crash was caused by horrible lending guidelines and overbuilding. We will continue to have low inventory until building picks up, and it simply has not happened. I cannot see another crash occurring until we see more new starts.

The graph below shows new building starts in the United States and as you can see there was a record low building for many years after the crash. We just got back up to the average number of new builds when Covid-19 hit and it dropped again.

There simply are not enough houses for people.

This is why prices continue to increase in the United States. The population is growing and there are not enough houses to meet the demand for everyone who wants to buy a house.

We could absorb a lot of foreclosures and still have a healthy market, a more healthy market than we have now. Having an increase in foreclosures will not crash the market. We would also need an increase in new builds which is not happening at the pace of market demand.

Will migration and population cause a crash?

Another popular theory is that baby boomers will die off and there will be too many houses for those still alive. This idea was pushed back in the early 2000’s by Robert Kiyosaki. While there were a lot of baby boomers born, there are currently more millennials than baby boomers. The millennial generation is actually increasing thanks to immigration. There are fewer people being born now, but those people will not be of house buying age for decades. It is predicted the US population will keep increasing for decades. Other countries have had decreasing populations and have not seen decreasing prices.

This article goes into more detail on baby boomers and a housing crash.

Will interest rates cause a housing crash?

Another prediction is that interest rates could rise and cause a crash. This theory is based on nothing but a guess as rising rates have never caused a crash in the past. Interest rates were 18% in the early 1980s and there was not a crash. While it seems logical that prices decrease when rates increase because houses get less affordable it does not happen. The mortgage rates on a house are typically locked in for many years. If interest rates go up it will cause fewer people to move which will decrease inventory even more! The video below has more details on this.

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Why are others predicting a crash?

A lot of people are predicting a crash, but why? If the data shows that a crash is most likely not going to happen why would they predict one?

Here are some of the people who are predicting a crash:

  • Gold and silver sellers who want people to invest with them and not in real estate
  • Stockbrokers who want people to buy stocks and not real estate
  • Real estate investors who are selling coaching programs about how to survive a crash
  • Anyone who is trying to get their name in the news or create a catchy headline to sell something
  • People who want cheap housing prices so it is easier to invest.

Not everyone who is predicting a crash has an ulterior motive but many do. Some very smart people are predicting a crash who may not know exactly how real estate works either. You have to be very careful who you listen to when it comes to real estate and predictions.

What can we predict?

I buy a lot of house flips and rental properties. One of the most important rules of thumb I work by is to never base my purchases on what housing prices might do. If I am flipping houses or buying rentals, I never assume prices will go up. I base my investment strategies on today’s prices. I also have a plan in place if the market decreases. Yes, we have seen huge price increases, but that does not mean prices will keep going up or that they could not go down. One of the easiest ways to get yourself in trouble is to invest in real estate because you think prices will increase.

I do not try to predict the market and most economists will not predict it either. There are too many variables to know what will happen and predicting when it will happen is even harder. If someone says they know exactly when a crash or downturn will happen, they are probably trying to get attention or sell something!

The market could go up or it could go down. The great thing about real estate is you can make money in every market if you know what you are doing.

Conclusion

The factors that caused the last crash do not exist in today’s market.

  • There is not overbuilding, in fact, there is too little building.
  • There are not loser lending guidelines, in fact, there are more strict lending guidelines.
  • While foreclosures may increase, there are much fewer than before.

Rising prices and unaffordable housing do not cause a crash. They could cause a downturn or cause prices to level out, but a crash is much different than a downturn. If you are waiting for a crash to invest or buy, you may be waiting a very long time!

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Categories Real Estate

Source: investfourmore.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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If you’re planning to make significant changes to your home — be it inside or to the exterior of the house — there’s a good chance you might need a building permit for that. I know, I know, that comes with paperwork and unplanned trips to submit said paperwork, but all that inconvenience is far […]

The post 5 Types Of Home Improvement Permits You Should Know About appeared first on Fancy Pants Homes.

VA Mobile Home Loans | Manufactured Home Requirements 2023

The short answer is yes. Financing manufactured homes (also sometimes called modular or mobile homes) is in fact allowed under VA mortgage guidelines. These are known colloquially as mobile home […]

The post Blog first appeared on MilitaryVALoan.com.