If you’re a qualifying veteran or service member, a VA mortgage can be a great deal. VA mortgages offer a lot of benefits, including
being one of the few 100% financing options available. There are however, certain situations where you may be better off going with a FHA mortgage or a conventional loan backed by Fannie Mae or Freddie Mac.

Pros of a VA home loan

The government guarantees at least one-quarter of the loan  amount on a VA mortgage, which is why you don’t need to put up a down payment.  It’s also why you don’t have to buy mortgage insurance, which is required on FHA loans and conventional mortgages with less than 20 percent down.

Closing costs are also limited on VA loans, with the lender’s fees limited to 1 percent of the loan amount and restrictions on the
types of fees that can be paid by the buyer.  On the other hand, the seller may pay all closing costs plus an additional 4 percent to cover pre-paids.

In addition, the maximum you can borrow is typically greater than what you can get in an FHA or even conventional Fannie Mae or Freddie Mac loan.

Finally, if you eventually run into a financial hardship, it’s usually easier to obtain forbearance on a VA mortgage than on other types of home loans.

Cons of a VA mortgage

On the downside, you do have to pay an upfront Funding Fee to obtain a VA loan, which varies from 0.5 percent to 2.8 percent of the loan amount, depending on your service history, down payment or whether you’ve previously obtained a VA loan. By comparison, the upfront fee on an FHA loan is a flat 1 percent. However, on FHA mortgages you have to pay mortgage insurance
equal to as much as 1.15 percent of the loan balance annually, so the VA loan will still likely be the better deal.

Conventional loans backed by Fannie Mae or Freddie Mac require private mortgage insurance (PMI) if you’re putting less than 20 percent down. So, if you are putting down 20 percent or more, a conventional mortgage could be the better deal.

VA mortgages can also take longer to close due to additional required paperwork. In addition, the home has to pass an inspection before the loan will be approved, which can further delay the process.

Finally, both VA and FHA mortgages are assumable, meaning you can simply transfer them to a qualified buyer when selling your home, rather than the purchaser having to take out a new mortgage. With mortgage rates currently at historic lows, this could be an attractive selling point a few years down the road, if interest return to higher levels.

On VA loans though, you’re still liable for the mortgage if the person assuming the loan is not a qualifying veteran. If they default,
you’re on the hook. On FHA mortgages, the mortgage can be assumed by any qualified borrower and you’re free of any further liability for it.

Current low mortgage rates have fallen again as the U.S. continues to shows signs of a sluggish economy with a drop in consumer spending.

Dropping by .125%, today’s 30 year fixed mortgage interest rates are at 4.125%. 15 year fixed mortgage interest rates are at 3.500% and 5/1 ARM loan rates are at 2.750%, both remaining the same. Conforming 30 year fixed mortgage loans are the most desired long term mortgage product amongst borrowers because they offer the security of a monthly mortgage payment that remains the same for the entire length of the loan. With 0.7 to 1% origination fee, these are the lowest mortgage rates available to borrowers who have good credit and can also produce documentation to receive lender approval.

FHA 30 year fixed mortgage rates dropped sharply as well and is currently at 4.000%. Remaining the same, FHA 15 year fixed mortgage rates are at 3.500% and FHA 5/1 ARM loan rates are at 3.250%. While FHA low down payment requirements, as low as 3.5%, make home ownership more attainable, these low FHA mortgage rates are keeping the long term monthly mortgage payments low and affordable. FHA mortgage rates are not affected by personal credit scores which does happen with other types of mortgages. FHA offers numerous benefits that overshadow the higher FHA closing costs (APR) which is due to the upfront mortgage insurance premium and other FHA fees.

Again, today’s jumbo 30 year fixed mortgage rates dropped by .125% and are are 4.750%. Jumbo 15 year fixed mortgage interest rates are at 4.375% and jumbo 5/1 ARM loan rates are at 3.250%. Jumbo mortgage loans are used by high end borrowers who require financing above the conforming loan limit, which is $417,000 to $729,750 depending on location. Borrowers must have excellent credit to receive these lowest jumbo mortgage rates with 0.7 to 1% origination fee.

This is a great list to start with when you move with children.  You have to really see it through their eyes and work to understand their concerns.  Many times, it is just about asking them questions and soliciting their feelings to help them through the process.  This is a good list of checkpoints.

Moving with children can be a stressful and traumatic experience, especially for younger children.  However, it doesn’t have to be.  Read through these simple tips on making relocating with children easy and exciting for them, and less stressful for you!

Be Positive! It is not uncommon for kids to echo their parent’s emotions.  It is important to be upbeat and encouraging toward your children about the move.  Even if you are stressed. Trust me, if you alleviate the stress on your children, you’ll alleviate some of your own stress.  Be sure to keep your family’s schedule on track as much as possible, so the kids don’t feel overlooked.

Communication goes a long way. Be sure to involve your children with the moving plans.  Explaining the move with your kids will not only make them feel better about the situation, but also make them feel involved with the process.  You will also want to make sure they understand why.  Sometimes kids don’t understand the reasons for the move.  All they see is the friends and school they are leaving, their home and neighborhood.  Explaining the why is not going to make this better for them, but it may make it easier.

Involvement. If your children are old enough to understand what is going on, you should get them involved in the moving process.  As I mentioned above, they are leaving their friends, neighborhood, and school.  Getting them involved in the move will make it a more positive experience for them rather than a negative one. If you know specific information about things such as possible schools, recreational areas, clubs, etc, share it with them.  Involve them with choosing your future home, and if possible take them on the house hunt.  Ultimately, involving your children in any way will give them a sense of control in a situation where they may otherwise feel helpless.

Packing. Even you having a moving company coming to pack your things, it is a good idea to let your children pack up a few things that belong to them.  Maybe help them to choose items that are important to them or have some sort of sentimental value.  Pack them up in a box and put their name on it (i.e. “Molly’s Stuff). Then take this box with you instead of the moving company.  That way the things that mean the most to your child will be right there with them.

Say Goodbye. Sounds simple, but for your children this may be the most traumatic part of their experience.  People grieve over people they leave behind, even if a death is not involved.  If you are moving across the country and your child is leaving behind a very good friend.  Let them say goodbye.  Perhaps throw a going away party for your child and let them invite those who mean a lot.  It may be a good idea to make some sort of scrapbook about the things your child is going to miss.  This way they can look back and experience these things even after they move.  You could get them an autograph book to have their friends and teachers sign.  All these ideas will help your child with the moving process and possibly the grieving process that may follow.

Kids first. Once you make the move be sure to meet your kids’ needs first, if possible.  Set up their rooms first; this will help them to feel secure and at home with their new surroundings.  Get them on their schedule as soon as possible and stick with it.  If there are community events or recreational programs that interest your children, get them involved!  This would be a great way for them to not only move on with their new life, but maybe even find new friends!

All in all, relocating is not a fun experience for anyone.  You will be surprised how these few tips will relieve the pressures on your own life as well as your children’s.  Be sure to take care of yourself and your spouse in the process as well.  Remember no one is doing this alone and you all are in it together.

The demise of subprime, no-documentation and no-down-payment loans is more than three years in our rear view windows. Many folks with credit challenges and little cash have turned to Federal Housing Administration (FHA) and Veterans Affairs (VA) loans for their home financing needs.\

While the FHA has recently tightened itsstandards, it’s one of the only options for a low down payment. Consider the following:

• FHA loans require just a 3.50 percent down payment in most areas.
• Maximum allowable loan amounts vary from $271,050 to $793,750, depending upon the area.
• Interest rates are competitive. Today’s 30-year fixed rates are as low as 4.50 percent with no points or origination fees.
• 3/1 and 5/1 adjustable-rate mortgages are available.
• Most lenders will accept FHA applicants with credit scores as low as 620.
• FHA allows gift funds for 100 percent of the down payment from a family member.
• FHA allows the seller to contribute up to 6 percent toward the buyer’s closing costs and or prepaids.

The downside to an FHA loan is the mortgage insurance premium, or MIP. FHA applicants must pay MIP in two ways: first, an upfront fee of 1 percent of the loan amount, which can be financed into the loan, and second, an additional annual premium of 1.15 percent, added to the mortgage payment. But if an FHA loan is the only option, it’s well worth it.

Let’s look at the example of a $300,000 purchase. The down payment would be 3.50 percent, or $10,500. The loan amount would be $289,500 plus the 1 percent upfront MIP premium of $2,895, totaling $292,395.

At 4.50 percent, the monthly principal and interest payment (P&I) equals $1,482. Add the annual 1.15 percent premium of monthly $277 payments, and the total monthly payment, excluding hazard insurance and real estate taxes, equals $1,759. Its not a bad deal for a $300,000 house. If you’re a looking to buy and are hoping for a low cash outlay, an FHA loan is definitely worth investigating.

When you review your credit report, or just begin to investigate your credit status, keep in mind that federal law provides you with a set of rights to aid in your task of gauging your credit rating. Here is a brief summary of your rights under the law.

• Notification of any occurrence in which your credit report has been used to deny the granting of credit, insurance, or a job. You have the right to know which credit agency provided the data. 
• A free copy of your credit file each year, as well as whenever you are denied a loan, insurance, or a job because of information in your file.
• Access to your credit score, though not necessarily free of charge.
• Response to your identification of data on your report that you believe to be inaccurate or incorrect. The credit reporting agency must investigate your claim(s) unless they can show them to be frivolous. If the investigation finds your claim to be true, the agency must correct the report in a timely fashion.
• Purging of old information that would lower your credit rating. If you have slow or missed payments that are more than seven years old, they should not be included in the report. Personal bankruptcies are deleted after ten years.
• Limited access to your report. No one should have access to see your report unless they have a valid reason, such as in response to your application for credit, a job, or an apartment lease. You must give written permission for your employer or potential employer to access data.
• Right to sue a credit agency or user of data that violates your rights under the Act.
• For detailed information and procedures in exercising your rights, go to www.ftc.gov/credit.

A mortgage is a loan where the house and land are used as collateral for the loan. If the borrower fails to make his payments, the bank forecloses on that property. In the case of foreclosure, the bank may sell the house to clear the mortgage debt.

Here are some types of mortgages can help first-time home buyers understand the fundamentals:

Conventional Mortgage – this is a mortgage loan wherein the underlying terms and conditions meet the guidelines of Fannie Mae and Freddie Mac. Depending on market conditions and consumer trends, about 35-50 % of mortgages are conventional mortgage.

FHA Mortgage – this was initially intended for low income individuals. FHA mortgages are home loans that meet underwriting guidelines set by Federal Housing Administration (FHA) and supported by Government National Mortgage Association (Ginnie Mae).

VA Mortgage – this is offered to veterans of the United States Armed Forces and secured by the U.S. Department of Veterans Affairs. This type of mortgage requires a lower down payment , ofter zero down.

The type of mortgage that best fits a home buyer is chiefly determined by his/her financial status. Each mortgage loan requires a different down payment, different qualifying criteria, and different credit score standards.

Fixed-rate Mortgage (FRM) – this is a mortgage loan where the interest rate on the note remains the same through the term of the loan. They are the most popular. For first-time home buyers, the common choice is the 30-year fixed-rate loan, but other terms are also available.

Adjustable-rate Mortgage (ARM) – this is a mortgage loan where the interest rate on the note can periodically change. The interest rate adjusts with the market at some point during the term. The borrower benefits from a lower introductory rate.

Included in your credit report is the following:

* Personal information; your name, current and previous addresses, Social Security number. Any civil judgments, tax liens (federal or state), and bankruptcies.

* A list of your current active, and closed, credit accounts, including bank credit cards and store accounts.

* Any record of slow payments, missed payments and delinquencies.

* Length of time each account has been open.

Look for the following when reviewing your report:

* Any Incorrect information – an account that you never opened, one that you know you have closed, any payments that are not showing and that you have evidence of having paid. Accounts that you never opened could be a sign of identity theft – someone opening an account under your identity.

* Any of your personal data that is wrong.

* Persistent history of late payments, especially involving penalties for missing due dates. If this data is accurate, you probably will not qualify to get the best terms on your loan.

* A habit of making the minimum payment on credit cards, thereby creating a growing balance, will lower your credit rating.

* More than a few active credit cards and more than four or five store accounts will have a negative effect on your credit rating.

* Outstanding debt that is a large percentage of the credit extended to you. If you are “maxing” out your credit cards, lenders will not be eager to extend credit to you on favorable terms.

If you find negative information on your credit report, and it is correct, you have two options. You can push back the home purchase decision until you can improve your credit rating, or you can move ahead and accept whatever loan terms you are offered. Changing your credit rating may take several months of diligence on your part, but it will save you a lot of money in the long run and make the purchase easier. If you decide to go ahead, contact a lender early to see what type of loan you can get with your current credit history. Be careful of taking on more debt.

The difference between the cost of the house and the amount of cash you have to put down is filled by one or more mortgage loans. A mortgage loan differs from other types of loans in that the loan is secured by the property you are buying. In other words, the lender does not have to depend on your word to assure that the loan will be repaid. If for some reason you cannot or are unwilling to make your payments on time, there is a legal procedure called “Foreclosure” through which the lender takes over the property or will have it sold to satisfy what you owe. That is the main reason the terms on mortgage loans can be much more liberal than on a credit card or other unsecured loan.

The loan terms you get will depend on two main factors: the economy and your personal risk assessment. The primary effect the economy has on your loan is to determine the interest rate. Interest rates rise and fall according to the supply and demand of money in the financial markets coupled with the forecasted rate of inflation. Rates also vary for different kinds of mortgage loans. In almost all cases, “fixed-rate” loans will be more expensive than “adjustable-rate” loans.

The better you look to the lender, risk-wise, the lower your interest rate and costs will be… and the more likely you are to get a low down-payment loan. A lot will depend on your credit score which is a good indication to the lender of your ability/willingness to pay your loan payments on time. Credit score is a number that condenses the information on your credit report to a scale between 400 and 850. It may make you uncomfortable that someone has reduced you to a number, but the risk of extending you a loan based on some criterion. Credit scores are not perfect, but they are an improvement over judging you based on more superficial criteria, such as your family status, or social class. Indeed, you can always take steps to improve your credit score.

From a home inspector’s point-of-view, my advice is to buy simple and buy smart. Buy what you can afford, not what will make you look good to others. “Keeping up with Jones’s” is not reasonable in real estate. You can no longer expect a fast-rising market to bail you out of a purchasing mistake, as was often the case in the past.

For New Construction

When I say buy simple, I mean select a home of good, quality construction. When I say buy smart, I mean choose the features you need- do not be lured into closing by extravagant upgrades that you will not use anyway. Think Honda, not Jaguar. Fancy trim on the outside = more painting and places for rot. Lots of crown molding and fancy trim inside = more dusting, more painting, and more cracks as the trim shrinks.

By all means, upgrade to the stone countertop, it will last. Forego the Jacuzzi that you will use only until the novelty wears off. If you do purchase a Jacuzzi, be sure to get the optional heater; otherwise, the water cools too quickly and you will likely only use it once a month.

Despite what the flooring representative claims, hardwood floors are always a better choice than pre-finished laminate veneer. Most of the homes I inspect are not new. I SEE what lasts and what does not.

The fancy stove range that does everything is very appealing in theory. In reality, however, most individuals spend very little time cooking. Restaurant sales in America prove this, as does my experience of seeing 4-year old homes with ratty microwaves, while the 2nd oven has the factory sticker still on the inside door. Spend upgrade money on something you will use, such as better cabinets, a better faucet/sprayer, or bigger sinks.

Get the garage door opener first, as you will likely be buying curtains and furniture for your new home after closing. Besides, most people don’t have the tools, ladders and other things that you will eventually have to buy, even if you do not want to.

Here is the best advice I can give (though most individuals tend to ignore it): opt for the most energy efficient furnace and a/c unit you can obtain.

For Resale’s

Evaluate the outside of the home and the surrounding neighborhood. This is what visitor’s see first and what buyers will look at when YOU go to sell. I do not recommend the practice of buying a home in a bad neighborhood because it is cheap. It is cheap for a reason. When it comes to buying in “up and coming” neighborhoods, be very careful.

From a home maintenance point-of-view, water is the biggest concern. Water will destroy your home far quicker than termites. Leaks, rot, and mold go hand-in-hand. Elaborate roof lines with valleys and gables cost more to re-roof and tend to leak more. Once again, simple is better.

Siding is also a top home maintenance consideration. Brick is best, followed by Hardiplank (cement), vinyl is ok, but it depends on the grade (vinyl is never painted, so if you do not like the color, walk away). It is also important to note that starter homes were often built with cheaper (thinner) vinyl. Stucco is a mixed bag. There is hard stucco and EIFS. Both can have problems if the original installation was poor. Wood will require more frequent caulking and painting than any other siding.

Once you buy, here is what you need to know: Homes are not throwaway items.

That statement seems simple and almost stupid to put in print, but you would be amazed how many new home buyers treat it as if it was.

Simple repairs become big repairs if left for too long. Some can even become a nightmare. Clogged gutters can become a basement/crawlspace water problem, and if left even longer, this can cause a mold issue.

A little drip from the icemaker line can ruin floors, cause mold problems, and damage the floor on the other side of the wall. Leaking drains underneath kitchen sinks will quickly ruin the cabinet bottom. All cabinets are particleboard these days and can not withstand water exposure for extended periods of time.

Once per year, go around the outside of your home and touch-up any caulk that is cracked, hard or has peeled free. In addition, annually inspect the functionality of your downspouts during a fairly hard rain – check to see if the gutters are overflowing and note where the water runs.

In terms of the a/c unit, do not buy those 59 cent mesh filters with the flimsy cardboard frame. If you spend the extra money for the $5.00 pleated paper filter, your home will be cleaner, your a/c will work better, and you won’t be paying to have the a/c coil cleaned in 4 or 5 years. Change a/c filters once per quarter, not every month. Ensure you have the correct size- just because the old one in there is 16×20 does not mean that it is the right size. You may need a 16×25. Look inside the slot or furnace where the filter goes to determine the correct size.

Watch your garage door open and close from the inside. Check for loose hinges, as this is common. Does it go up crooked or jerky? The track may be loose, bent, or the springs may be misadjusted. Chain drive garage door openers often get loose and will cause jerking movements if left un-tightened.

In the bathroom, keep the shower curtain inside the tub and tight against the wall at the shower end of the tub. Over time, water escaping from the shower will pop the floor tile loose, rot the floor, and create mold in the ceiling below.

Reseal wood decks at least every 2 years. Wait a minimum of 4 days after preparatory pressure washing to give the wood sufficient time to dry before sealing. Double or triple coat the end grain of the lumber

Reseal wood decks at least every 2 years. Wait a minimum of 4 days after preparatory pressure washing to give the wood sufficient time to dry before sealing. Double or triple coat the end grain of the lumber

When mowing the lawn, keep grass clippings away from the a/c unit. You should flush the a/c coils with a garden hose every spring. You should also perform annual Freon level checks. To do so, run the unit and see if the large diameter copper line going to it gets cold and forms condensation after 10 to 15 minutes. If it does not, it is likely low on Freon. Running an a/c unit on low Freon is the leading cause of compressor failure. It is equivalent to running a car with insufficient water in the radiator. If the unit is low on Freon, call an HVAC guy and get it topped off.

Test the T&P (safety) valve on the water heater annually to ensure it does not get stuck closed. If you are not sure what/where the T&P valve is; your home inspector can show you. I take the time to show all of this and more to my clients.

Kevin Barnaba

CABO (code) Certified Inspector

http://www.NorthernInspections.com

Over 3000 Inspections performed since 1996

The three basic factors affecting your ability to afford a home are 1) the price of the home, 2) how much cash will be required, and 3) the monthly mortgage payment on the loan. As you may suspect, the three are tied together so that when one factor changes, so do the other two. Each is limited by your personal and financial situation and influenced by conditions in the market. Nevertheless, it is possible, with a little research and homework to make estimates of these factors sufficient to give you a good indication of whether you can afford to purchase a home.

The first factor is the cost of a home that will meet your needs. You will need to outline your needs and research asking prices for similar houses that are on the market. Keep in mind average negotiating room as well as typical seller concessions toward closing costs. Such concessions in lieu of a lower price, may be helpful in fitting the financing to your situation.

The second factor is the amount of cash you can afford to invest in the purchase. Despite how good an investment the home purchase turns out to be, you will not be able to access the cash you invest until you sell the house. This is likely to be at least several years, or you probably would not be thinking of buying a home. This is not like putting cash into a bank account; it is more like putting it into a certificate of deposit with a hefty penalty for early withdrawal. Nevertheless, the more you invest in cash, the less your mortgage will cost.

The last part of the affordability picture is the mortgage loan. Lenders have a maximum amount they will lend on a home, based on its market value, or sales price if lower. In most cases, they require some type of mortgage insurance or guarantee to lend more than 80 percent of value on an owner-occupied home. This mortgage insurance is not unusual, it is, in fact, used by the majority of first-timers as well as by many upgraders. Insurance is offered by private companies (i.e., private mortgage insurance) and the federal government (i.e., FHA insurance). The federal Department of Veterans Affairs (VA) offers home-loan guarantees (VA loans) as a benefit to qualified military veterans. All these insurance programs have the effect of reducing the amount of cash down payment you need to finance the purchase.

The three factors are highly connected. If you cannot make the numbers fit, you must find a cheaper home or come up with more cash. For planning purposes, you can calculate the largest loan you think you can get and the highest down payment you think you can arrange. And that will determine the most expensive house you can afford. You might also figure another estimate based on the amounts you feel comfortable borrowing and investing. That will become your baseline number. From there, you can search for homes that fit in your price range.