Posts Tagged mortgage insurance
5 Great Reasons to Finance With an FHA Mortgage!
Posted by Victoria Belle-Miller in Finances on 03/16/2010
FHA mortgages are great for people looking to purchase a home and current homeowners who want to refinance their mortgages. With all of the advantages this type of loan offers, borrowers can finance their homes and save money in the process! A low down payment requirement and competitive rates leave borrowers with more money to spend on other expenses.
Easy to Qualify
The Federal Housing Administration (FHA), which insures these loans, does not have strict income or credit score requirements. The FHA only considers the preceding twelve months of a borrower’s credit history to determine if he or she qualifies, though most lenders still require a minimum credit score of 620. So, an applicant with a troubled financial past can qualify for this type of financing if he or she has had no delinquent payments within the last twelve months.
Low Interest Rates
Because the FHA insures this loan, lenders can offer lower interest rates than on other home loans. A homeowner will save money on his or her monthly mortgage payment when he or she has a low interest rate and, over time, can end up saving thousands of dollars in interest!
Low Down Payment Requirement
This type of financing is great for first-time homebuyers who may not have a lot of money or who have yet to build up their credit histories. Compared with other home loans, this loan has a fairly low down payment requirement. Typically, the FHA requires a down payment of 3.5% of the purchase price of the home. By paying less money out of pocket, first time homebuyers can have more money to cover the other expenses associated with buying a new home.
Refinancing Options
With the rate/term refinance mortgage, a homeowner can change the rate and/or terms of his or current mortgage. If current interest rates are lower than when the homeowner took out the original mortgage, he or she may be eligible to receive the lower interest rate. Homeowners can also switch from an adjustable mortgage rate to fixed rate. This change can end up saving the homeowner thousands of dollars over time because the rate will no longer fluctuate. The length of the mortgage can also be changed, if desired.
With the cash-out refinance mortgage, a homeowner can receive cash back by refinancing his or her mortgage. The homeowner would take out a loan for a higher amount than his or her current mortgage and receive whatever is left over after paying off the existing mortgage. There are no restrictions on how the cash is used. The funds can be used to pay for home repairs, medical expenses or other expenses.
There is also a debt-consolidation refinance mortgage. This FHA mortgage allows homeowners to combine some or all of their debt into one monthly payment. This not only makes it easier to pay off the debt, but it also saves the homeowner a significant amount of money in interest and tax savings.
Finance Now Before FHA Guidelines Change
The FHA plans to implement a few guideline changes very soon. Some of these changes include an increase of the mortgage insurance premium, as well as an increase in the down payment amount for borrowers who have credit scores below 580. Interest rates are also subject to change daily, so now is a great time to see what an FHA mortgage can offer you.
Victoria Belle-Miller is the newest member of the FHAMortgageBank.com writing staff. Her background in journalistic writing and ability to evaluate the issues that Americans face in daily life make her a strong addition to the FHA loans team and a valuable source of sound mortgage advice.
Different Types of VA Refinance Mortgages Help Homeowners
Posted by Anne Johnson in Finances on 02/25/2010
One of the benefits of serving in the United States Military is the right to use the VA loan benefit. A VA refinance mortgage can help homeowners refinance their current mortgage loan in order to lower their current interest rate, eliminate mortgage insurance, and/or consolidate debt.
Types of VA Refinance Mortgages
There are three main types of VA refinance mortgages that can be used in different situations. If a homeowner who is a current service member or veteran of the Armed Forces wishes to not only refinance his current mortgage, but also consolidate debt, the cash-out VA refinance mortgage would be the best product, regardless of his or her current loan type. If a homeowner currently does not have a VA loan, but wants to take advantage of the benefits offered by this program, he should use the VA rate-term refinance mortgage. If a homeowner currently has a VA loan and wishes to lower his interest rate, the type of refinance that may best suit him is the Interest Rate Reduction Refinance Loan.
Cash-Out VA Refinance Mortgage
This type of VA refinance loan is available to anyone, regardless of their current loan type, provided that they qualify on the basis of military service, credit, and income eligibility. Currently, most lenders allow borrowers using a VA loan to cash out up to 90% of their home’s value. This money can be used to consolidate debt or simply to obtain additional funds for whatever reason the homeowner chooses. Many homeowners use this type of loan to eliminate costly revolving debt and to decrease their monthly payment obligations. Unlike credit card interest, the interest on a homeowner’s mortgage can be low, fixed, and tax deductible.
Rate-Term VA Refinance Mortgage
A rate-term VA refinance mortgage allows homeowners to refinance up to 100% of their home’s value and take advantage of all the benefits that this program has to offer. With a VA loan, the homeowner will never be required to pay monthly mortgage insurance and will have access to low, fixed rates. This type of VA refinance mortgage can significantly lower monthly payments without high out-of-pocket expenses.
Interest Rate Reduction Refinance Loan (IRRRL)
This type of VA refinance mortgage is a streamlined mortgage and is only available to homeowners who currently have a VA home loan. This refinance can be used to obtain a lower interest rate, change the terms of the loan, change the current borrowers, and change to a fixed interest rate from an adjustable rate. When a borrower uses an IRRRL, there are no out-of-pocket costs and no appraisal is required. As a convenience to those who have already used their VA home loan benefit, there are also reduced documentation requirements for income information, asset information, and employment, as well as quick application processing.
There are many different types of VA refinance mortgages that are set up to benefit veterans in different situations. VA home loans can provide great benefits to those who have served their country.
As a former psychology major, finding solutions to resolve people’s problems has always been a subject of interest to me. I hope that my writing will give people the knowledge and confidence to make important decisions about VA loans. In addition to writing, I love to read, knit, spend time with friends and family, and watch the Missouri Tigers and Green Bay Packers!
Benefits of Applying For a VA Loan
Posted by Victoria Belle-Miller in Finances on 02/20/2010
Veterans and men and women currently serving in the military who are considering home financing options should look into a VA loan. Because of their service to the United States, they have earned the privilege of having certain benefits. One of these benefits is a VA mortgage to help them finance their homes. This type of financing offers several benefits that may not be available with a traditional mortgage.
VA Loans Save Borrowers Money
These loans do not require a down payment and they do not require any mortgage insurance. These two advantages alone can save borrowers hundreds of dollars on their monthly mortgage payment! Not having a down payment is especially great for a first time home buyer who may not have a lot of money to put down on a new house. And not having to pay mortgage insurance eliminates one home-related expense right away.
Some of the costs associated with this loan can often be financed, so the borrower does not have to pay a lot of money up front. Because these loans are guaranteed by the Department of Veteran Affairs, they tend to have lower interest rates, which also saves borrowers money on their monthly payments.
It’s Easy to Qualify
Compared with other loans, VA loans have easier qualification requirements. Borrowers are not required to have high credit scores or large incomes in order to qualify. The Department of Veteran Affairs does require that borrowers have clean credit histories of at least one year and that they meet minimum residual incomes to ensure that they can make their monthly payments. The residual income is based on regional location, family size and the amount of the loan. The borrower must not have been dishonorably discharged from the military in order to be eligible for this type of financing.
Refinancing Benefits
There are several options available when refinancing with this type of loan. Many borrowers refinance in order to lower their interest rates, especially if the market has changed or the value of their home has increased. Borrowers can also refinance to change the terms of their loan, including extending the time frame of their loan or switching from an adjustable rate to a fixed rate, which saves them money over time.
Borrowers can also refinance in order to consolidate their debt or receive cash back for other expenses if they have enough equity. The cash they receive can be used for any of their personal expenses. Also, potential borrowers can refinance a non-VA loan to a VA loan in order to take advantage of the many benefits this type of financing offers.
Additional Benefits available to Disabled Veterans
If a veteran was disabled as a result of service, he or she is eligible to receive additional loan benefits. Their funding fees will be waived and, depending on their state, they may not have to pay property taxes, which can save borrowers who are disabled a great deal of money. Also, disabled veterans may be eligible to receive grants to help them make their homes more accessible for their disabilities.
These loans offer several benefits to both veterans and current members of the US military. Now is a great time to speak with a VA loan specialist about taking advantage of this type of financing.
Victoria Belle-Miller is the newest member of the VeteransLoans.com writing staff. Her background in journalistic writing and ability to evaluate the issues that Americans face in daily life make her a strong addition to the VA loans team and a valuable source of sound mortgage advice.