Current Mood: Happy

Amid the housing collapse and credit crunch, one federal program continues to abet military homebuyers in financing a home. The VA Home Loan Guaranty program alleviates qualifying and financial pressures for veterans and active-duty service members.
               The program eliminates stringent financial and credit requirements. As a result, about 80 percent of those who qualified for a VA loan did not qualify for a conventional one. This stems primarily from VA-certified lenders looking for credit scores of 620 or higher and debt-to-income ratios of 41 percent or lower. On top of that, military homebuyers can still qualify for a VA loan despite a previous bankruptcy or foreclosure.
               Even though not every veteran and service member is eligible for a New Jersey VA loan, the service requirements encompass a majority of those who served. The most immediate and clear-cut disqualifying factor is a dishonorable discharge. Otherwise, homebuyers who may be eligible often fall into one of three groups:
               -Military personnel who served on active duty for 90 or 181 days during wartime or peacetime, respectively.
               -Reservists and National Guard members who served for at least six years.
               -Spouses who have not remarried and whose spouse died while serving or due to a service-related injury.
               There’s no shortage of financial benefits to a New Jersey VA loan. The most noticeable feature is the miniscule down payment. Most of the time VA loan borrowers pay nothing down, and completely finance their home. In Middlesex and Monmouth counties the VA loan limit is $735,000. That maximum gives homebuyers the option of using a VA loan to finance the full value of homes worth that much. Finding a property in those counties and Monroe Township in particular puts you within an afternoon’s drive of New York City and Philadelphia.
               As though the tiny down payments weren’t enough, others aspects of the VA loan program save borrowers’ money in the long run, such as no private mortgage insurance and negotiable interest rates. There are also refinancing options unique to the program that allow homeowners to lower their interest rates. To learn about additional benefits to New Jersey VA loans, contact a VA-certified lender today.
               Getting a New Jersey VA loan starts with the Certificate of Eligibility (COE). Complete this short form through the VA or through an approved lender to confirm you meet the eligibility standards for the program.

Matt Polsky is a mortgage commentator for VA Mortgage Center. For more information on the VA home loan process visit VA Mortgage Center.com

I know for many first time homebuyers the mortgage process is a mystery especially with all the documentation involved. At times it can be very difficult to concentrate while your loan officer is at your table or on the phone. Your application process will go much more smoothly if you know what is involved, what types of questions will be asked and the documents you will need to provide. I have attached a sample (Uniform Residential Loan Application), Mortgage App. for us less formal people

Reading this application and some of the other sample forms/contracts and docs on the left sidebar will give you a better understanding of the homebuying paper trail. If you have any questions or concerns while reviewing any of these please feel free to drop me an email and I will explain anything you are not sure of. db086@comcast.net If you have any suggestions or requests for forms not shown here definitely let me know, if I have access to them or can find them for you they will appear here. Have a great night!

**Special thanks to Dave for providing our Mortgage App. and both Dave and Cris for all your help today! **

PS..For anyone interested..Sams Club has a great price on Whole Fresh Pineapple’s!

Q: What are the benefits of seller financing?

A: Seller financing offers benefits to both buyers and sellers including tax breaks for the seller as well as offering an alternative when conventional loans can’t be found.
The risks involved are the same risks facing any lender. Is the borrower a good credit risk? Will the property hold enough value over time to allow for the repayment of all loans made against it?
Sellers should run a full credit check on the borrower, require hazard insurance on the property and include a due-on-sale clause. There also are financing, disclosure and repayment-term requirements that should be met.

Q: How are the rates set for seller financing?

A: The interest rate on an owner-carry loan is negotiable. Ask your agent to check with a lender or mortgage broker to determine the current rate on institutional first (or second) loans.
Seller financing typically costs less than conventional financing because loan fees (points) typically aren’t charged. The interest rate on a seller-carry loan will also be influenced by current Treasury bill and certificate of deposit rates. Sellers usually aren’t willing to carry a loan for a lower return than they would earn if their money was invested elsewhere.

Q. How does a construction loan work?

A. A construction loan (also known as an interim loan) is a short-term loan, usually for no longer than one year. The proceeds from the loan are typically not paid in one lump sum to the borrower. The lender will usually disburse loan proceeds in stages as construction progresses. These types of loans generally carry an adjustable rate and the borrower makes interest-only payments (not repaying the principal). Once construction is completed, the borrower obtains a standard mortgage loan to pay off the construction loan.
Before a lender will approve a construction loan, he/she will require detailed plans to be supplied by the borrower or by the borrower’s contractor. In addition, if you have to buy the property on which the home will be built, this would require a third loan, which would actually be the first loan you would take out.

Q. What are single-close construction loans?

A. The problem with traditional construction loans is that the borrower must obtain another loan to pay off the construction financing. In some cases the home builder might have to take out as many as three loans: one to purchase the property, the construction loan to finance the building of the dwelling and then the final mortgage loan that would combine and consolidate the other loans. This means that the borrower has to pay additional settlement fees. Since construction can take up to a year, the borrower also runs the risk that interest rates could rise and disqualify him/her from permanent financing. To respond to this need, many lenders offer construction/permanent loans or “single-close’ loans. With these programs, the borrower obtains one loan to finance construction. This means only one closing, one set of costs and peace of mind knowing that you will have financing after construction is completed.
Posted by the Asbury Park Press

Get prequalified, or get preapproved?

If you’re considering the purchase of a new home, you may be concerned with the issue of finance. Attaining the right mortgage is a key step in the home buying process, but it doesn’t have to be a stress-inducing one. Most lenders offer prequalification, pre-approval or both to help you know where you stand. Let me explain the difference between prequalification and preapproval:

Prequalification: Prequalification is a preliminary estimate of how much you can afford to pay for a home based on information you provide. Because credit and employment information aren’t validated for prequalification, it can only be considered a rough idea of a monthly mortgage payment and loan size. This can be a useful guide as you begin the home buying process, however.

Preapproval: Preapproval is a written commitment from a lender to finance your home purchase up to a set amount. This indicates that the lender has taken a close look into your financial history and has agreed to lend you a specific amount of money, reliant on certain details like a finalized sales contract and professional inspection. Pre-approval indicates to sellers that you are a serious homebuyer.
Regardless of which option you utilize, or even if you take both steps, you’ll be able to shop with much more confidence. Why wait until you find the perfect home to discover problems with obtaining a mortgage?

Compliments of RE/MAX Central Daniel Bozza Callmehome.com