VA Refinance Recoupment Period

October 26th, 2020
calculator

With a VA loan, the United States Department of Veterans Affairs requires that the closing costs on a VA refinance be recouped in 36 months or less. If the recoupment period is over 36 months the loan will be rejected.

In other words, the refinance closing costs divided by the monthly savings has to be 36 or less, signifying the number of months in the recoupment period.

For example, if the closing costs on a VA refinance are $3,000 and the monthly savings on the refinance are $400 a month, the recoupment period is 7.5 months because $3,000 divided by $400 a month in savings = 7.5 (well within 36 months).

If the closing costs on a VA refinance are $3,000 and the monthly savings on the refinance are $200 a month, then the recoupment period is 15 months ($3,000 divided by $200 a month in savings = 15) which is within 36 months.

If the closing costs on a VA refinance are $5,000 and the monthly savings on the refinance are $125 a month, then this will not be approved since the recoupment period is 40 months. $5,000 divided by $125 a month in savings = 40.

The Department of Veterans Affairs would say the last scenario has closing costs that are too high and an insufficient monthly savings for a VA refinance loan.

It is important to realize that the Department of Veterans Affairs has this recoupment period limit of 36 months when considering your VA refinance.

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Credit Score Simulator

September 26th, 2020
credit cards

A Credit Score Simulator can help with “What If” scenarios to determine what you could potentially do to raise your credit score. It can also show you what could negatively impact your credit score. It is important to see how your credit choices might affect your credit score because your credit score will impact the underwriting of your loan, your interest rate quote, and even the cost of your mortgage insurance.

Some of the various things a Credit Score Simulator can measure to see how they will impact your credit score are: Continue reading Credit Score Simulator

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Mortgage Forbearance

August 29th, 2020
no money

Forbearance, only do it if you absolutely have to. Some people are taking a Forbearance on their mortgage as a way to take a break on their mortgage payment when they really do not need to.

But forbearance does not mean you can skip mortgage payments and never pay them back. You have to repay any missed or reduced payments in the future. So, if you’re able to keep up with your payments, keep making them.

Taking a forbearance will also impede your ability to refinance. Having a forbearance on your credit report means you cannot get a new mortgage. You would have to bring the loan current. Continue reading Mortgage Forbearance

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SELF EMPLOYED LOANS DURING COVID

July 25th, 2020
COVID

Newly revised mortgage guidelines for self-employed people due to the Covid-19 pandemic:  There are temporary requirements for assessing income derived from self-employment.  The additional due diligence is due to the disruption from the pandemic.  Mortgage lenders now need to consider if and how a business has been impacted and the likelihood of income continuance.

There is additional income documentation required and you may need an audited Profit & Loss statement with supporting documentation for the Profit & Loss statement.  The continuity and stability of income is what will be considered. Continue reading SELF EMPLOYED LOANS DURING COVID

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Mortgage forbearance

July 1st, 2020
no cost

Forbearance – you should only do it if you absolutely have to. Some people are taking a forbearance on their mortgage as a way to take a break on their mortgage payment when they really do not need to.

Forbearance does not mean you can skip mortgage payments and never pay them back. You have to repay any missed or reduced payments in the future. So, if you’re able to keep up with your payments, keep making them.

Taking a forbearance will also impede your ability to refinance. Having a forbearance on your credit report means you cannot get a new mortgage. You have to bring the loan current to do so. Continue reading Mortgage forbearance

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How Much Mortgage Can I Afford?

May 28th, 2020
approved or declined

When you buy a new home, you need a mortgage to purchase it. And before you get a mortgage, you need to determine how much mortgage you qualify for. Different sources may qualify you for different mortgage amounts. And how much you qualify for does not necessarily equate to how much you can afford.

How much you can afford is based on your personal budget. When a mortgage lender tells you how much you can qualify for, that is the highest mortgage amount they’ll approve you for. But this may not be the mortgage size you end up closing on.  Continue reading How Much Mortgage Can I Afford?

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6 Tips on Choosing a Mortgage Lender or Broker

April 10th, 2020
bad versus good

People spend a  lot of time looking for the perfect home. There are the countless hours spent poring over real estate listings, the weekend trips to open houses, and the days of driving with your realtor from showing to showing. However, choosing a mortgage lender or broker is often treated as an afterthought—many buyers simply go with their own bank or a broker/lender recommended by their realtor without researching competitive rates and looking for lenders who will also educate them.

This is a critical mistake. Continue reading 6 Tips on Choosing a Mortgage Lender or Broker

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VA $0 Down Payment Loans To Infinity?!

March 29th, 2020
house and calculator

Prior to 2020, veterans could borrow more than the Veteran’s Administration (VA) Loan Limits capped amount, but had to have a down payment of 25% of the difference between the maximum loan limit and the sales price. As of January 1, 2020, the VA has started to allow $0 down loans that exceed the county loan limits.

So now, if a veteran wants to buy a home for $1,000,000 with no money down, they can. $2,000,000? Sure thing. $3,000,000? No problem! However, there are rules and guidelines that come with this new change. Continue reading VA $0 Down Payment Loans To Infinity?!

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Did The Coronavirus Make Mortgage Rates Go Down? Did the Federal Reserve Just Cut Mortgage Rates To 0%?

March 20th, 2020
interest rates are up

Mortgage rates did indeed go down after the Coronavirus spread and financial markets started to panic. But the Coronavirus and mortgage rates aren’t directly connected.

People considering a refinance continue to contact me for low rates, but now that rates have spiked it may no longer makes sense.

The recent mortgage rate reductions we saw may be gone for a period of time, but the rate changes are not as drastic as the media made it sound. Continue reading Did The Coronavirus Make Mortgage Rates Go Down? Did the Federal Reserve Just Cut Mortgage Rates To 0%?

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Getting A Seller Credit In Lieu Of Repairs

March 2nd, 2020
how to get a seller credit

It is very common for a buyer and seller to negotiate a seller credit in lieu of repairs after a buyer does a home inspection. Most sellers do not want to bother with doing a small amount of repairs, and some may not have the money until after they go to settlement, so they negotiate a credit and offer to pay some money at settlement for these repairs. The problem comes when the Realtors word this incorrectly in the contract and end up causing last minute problems.

Continue reading Getting A Seller Credit In Lieu Of Repairs

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