Critical Ways That VA Home Loans Differ from Standard Mortgages

Veterans who are looking to purchase a new home or refinance their current home should always consider a VA home loan as an alternative to a standard mortgage. These loans come with a wide variety of benefits that could protect a homeowner’s finances for years on end. Here is a closer look at five of the primary differences between a VA home loan and a traditional mortgage.

Down Payments

The minimum down payment for most homes is around 5 percent, but those wanting a larger home or lower payments may have to provide a down payment as high as 20 percent. With a VA loan, however, veterans could purchase their home with an incredibly low down payment or even no down payment in some situations.

Government Guarantee

The VA does not provide home loans directly to veterans, but instead helps guarantee loans offered by approved lenders. If the loan is defaulted on, then the VA will help to pay back some or all of the money. This government guarantee means that lenders are much more willing to make quick sales with little in the way of a down payment.

Credit Score

Maintaining good credit is absolutely vital when it comes to an affordable mortgage, and even a minor drop in one’s credit rating could affect their chances of receiving a loan. VA home loans are approved at a much higher rate as long as the veteran is not deemed a major financial risk. In some instances, the approved credit rating can be as low as 620 depending on a number of factors such as the overall value of the home. If you aren’t sure if you qualify for a VA home loan, contact Low VA Rates or a similar institution for a professional analysis.

Mortgage Insurance

Along with the down payment, one of the largest initial costs of purchasing a home is mortgage insurance. Unless the buyer can provide a down payment of at least 20 percent, most lenders will require mortgage insurance until sufficient equity has been built. VA home loans, on the other hand, often require little or no mortgage insurance.

Foreclosure

Around one out of every 200 homes that are sold will be foreclosed upon, but VA home loans are rigorously guarded by lenders. Instead of allowing the home to be foreclosed, these lenders will often do everything in their power to make alterations to the loan in order for it to be financially manageable.

Those who are looking to save themselves time, money, and stress should consider their options for VA home loans if they are a past or current member of the military.

Courtesy of: Home Advisor

What Can the GSFA Platinum Program Do For Homebuyers?

First of all, it is important to know what the GSFA Platinum Program is and how it got started. The GSFA Platinum Program was originally created to help low-to-moderate income homebuyers in California purchase a home by providing down payment and/or closing cost assistance, currently in the form of a non-repayable grant.

It is essential to note that the GSFA grant is not a second mortgage and does not create a lien against the property. The grant is sized up to 5% of the loan amount and it can be used towards your homes down payment and/or closing costs associated with your home, whichever is more suitable to your situation.

The GSFA Platinum Program was created to accommodate homebuyers who were previously struggling to purchase a home. Whether you previously have a mortgage loan or not, this program is designed to help your financial situation. The non-repayable grant that we offer is available with various mortgages loans. Applicants with Conventional, FHA, VA, and USDA 30-year mortgages, are still able to apply for the GSFA grant.

Whether you have previously owned a home, or if it is your first time buying a home, the GSFA Platinum Program is not limited to first-time homebuyers. Your home-buying history doesn’t matter. Everyone who is eligible for the program is able to apply.

In order to qualify for the program, homebuyers only need to meet a few simple requirements. Applicants must have a FICO score of 640 and up, and the home they are looking to purchase must be occupied as their primary residence. Another requirement is that their qualifying income, the total income used to qualify for the mortgage, must not exceed Program Income Limits. In addition, it may not exceed the maximum debt-to-income ratio of 45%.

The GSFA Platinum Program is designed to be flexible to your individual financial situation.

Call us today for more information regarding the program and find out if you qualify!

Mark McDonell

Branch Manager

NMLS#251067

Email: Mark.McDonell3@gmail.com

Cell: 714-240-4511

5 Mortgage Myths Dispelled

If the idea of buying a house both scares and excites you, that's how it should be. If you're only intimidated or only enthusiastic, you're probably going into the mortgage-buying process ill-informed.

After all, in the years before the Great Recession, homebuyers weren't intimidated at all. For quite a few years, many people purchased homes that were out of their price range and often on shaky credit, but since lenders didn't seem concerned, homeowners weren't either.

Now, the tide has turned, and prospective homeowners are understandably more leery about making what will likely be the largest purchase of their lives. But maybe they’re too leery. According to a survey of 2,017 adults released last month by Wells Fargo & Co., the country’s largest mortgage lender, many borrowers who can afford a home may be frightened off, believing that buying a house is something they simply can't do.

If you're on either end of the spectrum – squeamish about homebuying or ecstatic with no worries whatsoever – here are some misconceptions about mortgages that may bring you to the middle.

Your credit has to be perfect or near-perfect. Two-thirds of the Wells Fargo survey respondents believed you have to have a very good credit score to buy a house. While there's no doubt that a high credit score will help you get a better loan, it isn't a deal-breaker if your score is middling. If you have some credit blemishes and financial scrape-ups but for the most part pay your bills and make steady income, you probably don't have much to worry about, experts say.

"While credit is scrutinized, some loan types will allow credit scores as low as 620," says Gaye Rowland, senior vice president of SharePlus Bank, headquartered in Plano, Texas. "Other compensating factors such as larger down payments or low debt-to-income ratios can offset some negative credit information. Every situation is analyzed individually."

You must have a down payment worth 20 percent of the purchase price. This, too, is a myth. More than 40 percent of Wells Fargo respondents believed the only way to buy a house was to give a lender at least 20 percent of the purchase price of a house.

Again, it helps to have a 20 percent down payment, particularly if you want to avoid paying monthly private mortgage insurance. But many banks and mortgage companies – especially now that the recession is several years in the rearview mirror – offer loans that don't require a down payment anywhere close to 20 percent.

"We offer many programs that either have 100 percent financing or a 3.5 percent down payment," says Alyssa Schwabe, a spokeswoman for GSF Mortgage, headquartered in Brookfield, Wisconsin.

A house is a great investment. It can be a good long-term investment, but nothing in real estate is guaranteed. Particularly if you plan to live in the home for several years, and you can’t afford to lose a lot of money, you need to think of your house as a house – not a financial tool designed to pad your investments or retirement.

"People tend to purchase their homes with a little bit too much of an investment mentality," says Michael Goodman, a certified public accountant and financial planner at Wealthstream Advisors in New York City. "I'm not saying it isn't part of your overall net worth, but the home purchase really should be for somewhere you're going to live."

He adds that some wealthy homeowners additionally get too caught up in the idea that owning a house is a way to reduce taxes. "People will tell me that they need a tax deduction or a better tax deduction, and so they're going to buy a bigger home. I think that's the stupidest thing I've heard," Goodman says.

Courtesy of: U.S. News

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