I don’t know if it’s in response to the recent celebration of Veteran’s Day or what, but I’ve been working more V.A. loans than usual. I actually like providing these safe, secure, and easy to qualify for loans to Veterans. If you know a Veteran the information in this article could prove helpful to them.
Just what is a V.A. loan? It is a guaranteed loan made by private lenders to eligible veterans for the purchase or refinance of a home. If the loan is approved (and most of them are), the V.A. will guarantee a portion of it to the lender. If the Veteran has never used his/her entitlement before, or, has previously used it for a home which has been sold and the loan paid in full, then he/she has full entitlement available and can apply for maximum V.A. funding.
Currently the V.A. maximum purchase loan amount is $417,000 which equals current conventional conforming loan limits. In December 2004, V.A. guidelines were modified so the maximum entitlement will index and increase accordingly with conforming loan limits, therefore always equaling 25% of the current conforming limit.
Requirements for V.A. home loan approval are simple. 1) Applicant must be an eligible Veteran who has available entitlement; 2) The Veteran must occupy the property as their primary residence. That’s it.
V.A. loans can be used to purchase a home and even multi-family homes up to 4 family units for one Veteran, including townhouses or condos in a V.A. approved project. The loan can also be used to build a home or refinance an existing home to take cash-out, reduce the interest rate (“IRRRL”) or convert and adjustable rate mortgage to a fixed rate mortgage.
Some of the advantages the V.A. loan provides the Veteran are: 1) 100% financing – no down payment; 2) No cash reserves required; 3) More leniency on derogatory credit; 4) Sellers can contribute up to 4% of the purchase price toward Veteran’s closing costs; 5) No monthly mortgage insurance; 6) Low interest rates – in most cases near conforming levels.
One thing many Veterans are surprised to learn about is the up-front funding fee associated with every V.A. loan. The funding fee is a one-time, up-front charge applied as a percentage to the “base loan amount”. The funding fee may be financed into the loan provided the entire loan amount does not exceed current limits of $417,000.
A Veteran purchasing a home who has never used their eligibility is charged a 2.15% funding fee. The percentage of subsequent entitlement usage is 3.35%. The percentages are slightly higher for Reservists and National Guard Veterans. The same percentages apply to first time and subsequent cash-out refinance loans. But if the Veteran is simply reducing the interest rate on their home loan the up-front funding fee is only .50% and if the Veteran receives V.A. disability benefits, then the funding-fee is waived for all home loan transactions.
If you need a copy of your certificate of eligibility there are two ways to get it. The quickest and easiest way is to meet with your mortgage lender. In most cases when Veterans come to my office, I am able to access their certificate on-line in a matter of minutes and there is no charge for this service. On the rare occasion when the certificate is not available on-line I can provide the form the Veteran must complete and mail to the Department of Veteran Affairs Eligibility Center P.O. Box 20729 Winston-Salem, NC 27120.
For a comprehensive government website please go to: www.homeloans.va.gov.
Friday, November 21, 2008
Which is Better? A Will or a Trust?
His cell phone rang and he pulled it out of his pocket. Before pressing the green button he checked the display to see who was calling. “MOM.” He pressed the send/end button, “Hey You!” he said, giving her the greeting she had grown accustomed to. “What are you doing?” Her usual response was “Oh, nothing. Just coming home from…” She was always coming or going somewhere. But this call was different. She sniffled and called him by the name every mother calls her son when the purpose of the call was serious, “Son.” He braced himself. “Your Uncle Joe is gone.”
Uncle Joe had been in the hospital for several weeks and his condition had steadily declined. Uncle Joe’s wife had died several years earlier and Joe had lived alone supported by the daily phone calls and irregular visits from the three children. The next visit the kids made would be to a house filled with stuff but missing its most important asset, the occupants who had made the house a home.
The children got along well enough, but then each one had their own idea of how best the “stuff” could and should be distributed. To further complicate matters, no one was quite sure whether their dad had drawn up a will or if he had used a trust. They knew their father had drawn up some papers shortly after their mother’s death, but they didn’t know what type of documents to expect. He had put the papers in the safe deposit box at the bank but it was Saturday evening and they wouldn’t have access to the papers until Monday morning.
This kind of suspense does no one any good. So to help my readers avoid undue stress and to answer some of the questions that surround the differences between these two legal instruments, I spoke with Richard Harris of the Oklahoma City firm Walls, Walker, Harris, & Wolfe (harrisr@wwhwlaw.com). “Regardless of the instrument chosen, the most important thing is to communicate with your loved ones where these documents are stored and the name, if any, of the attorney who will be overseeing the distribution process” says Harris. “It can be very disturbing to the heirs when they walk into a meeting expecting a will but being told that a trust was prepared.”
A will is the most common document used to convey ownership of property or assets to the heirs. Wills can be prepared by an attorney for around $500.00. Self-help will packets can be purchased on-line for even less. “Extreme care should be exercised” Harris says, “before this type of document is chosen. Although many of these sites say they are legal in your state, the requirements for a valid will vary from state to state, and it’s always a good idea to have an attorney review the will to make sure everything is in order and that your last wishes are fully and properly stated.”
Using a will can cost less up front than a trust, but almost always costs significantly more in attorney fees down the road. In most situations a will must be probated. This requires hearings in front of a judge, newspaper notices and a public inventory of your assets at the time of death. A trust bypasses probate altogether.
Preparing a trust may seem more costly up front ($2,000 plus) when compared with a will, but administering the trust typically incurs fewer attorney fees than does the execution of a will. Choosing which instrument is better for your circumstances will require you to do some research or perhaps seek the counsel of an estate planning attorney.
Talk with a trusted friend or co-worker who has already prepared their will or trust. Ask them how they made their decision. Then contact an estate planning attorney and take an hour to discuss your specific situation. Most attorneys, including Richard Harris, provide these consultations at no charge. Once you make up your mind which instrument is in your best interest, communicate your choice with your loved ones. You and your family will be glad you did.
(Trey Bowden is a licensed Mortgage Professional in Edmond)
Uncle Joe had been in the hospital for several weeks and his condition had steadily declined. Uncle Joe’s wife had died several years earlier and Joe had lived alone supported by the daily phone calls and irregular visits from the three children. The next visit the kids made would be to a house filled with stuff but missing its most important asset, the occupants who had made the house a home.
The children got along well enough, but then each one had their own idea of how best the “stuff” could and should be distributed. To further complicate matters, no one was quite sure whether their dad had drawn up a will or if he had used a trust. They knew their father had drawn up some papers shortly after their mother’s death, but they didn’t know what type of documents to expect. He had put the papers in the safe deposit box at the bank but it was Saturday evening and they wouldn’t have access to the papers until Monday morning.
This kind of suspense does no one any good. So to help my readers avoid undue stress and to answer some of the questions that surround the differences between these two legal instruments, I spoke with Richard Harris of the Oklahoma City firm Walls, Walker, Harris, & Wolfe (harrisr@wwhwlaw.com). “Regardless of the instrument chosen, the most important thing is to communicate with your loved ones where these documents are stored and the name, if any, of the attorney who will be overseeing the distribution process” says Harris. “It can be very disturbing to the heirs when they walk into a meeting expecting a will but being told that a trust was prepared.”
A will is the most common document used to convey ownership of property or assets to the heirs. Wills can be prepared by an attorney for around $500.00. Self-help will packets can be purchased on-line for even less. “Extreme care should be exercised” Harris says, “before this type of document is chosen. Although many of these sites say they are legal in your state, the requirements for a valid will vary from state to state, and it’s always a good idea to have an attorney review the will to make sure everything is in order and that your last wishes are fully and properly stated.”
Using a will can cost less up front than a trust, but almost always costs significantly more in attorney fees down the road. In most situations a will must be probated. This requires hearings in front of a judge, newspaper notices and a public inventory of your assets at the time of death. A trust bypasses probate altogether.
Preparing a trust may seem more costly up front ($2,000 plus) when compared with a will, but administering the trust typically incurs fewer attorney fees than does the execution of a will. Choosing which instrument is better for your circumstances will require you to do some research or perhaps seek the counsel of an estate planning attorney.
Talk with a trusted friend or co-worker who has already prepared their will or trust. Ask them how they made their decision. Then contact an estate planning attorney and take an hour to discuss your specific situation. Most attorneys, including Richard Harris, provide these consultations at no charge. Once you make up your mind which instrument is in your best interest, communicate your choice with your loved ones. You and your family will be glad you did.
(Trey Bowden is a licensed Mortgage Professional in Edmond)
Friday, October 10, 2008
Now Is a Great Time to Buy a Home
Even my optimism has been challenged over the past two weeks. Between the hate crimes being alleged in almost every political advertisement and the cries for financial bailout coming out of Washington, I’m on information overload. I view my responsibility in this weekly article to be both informative and instructional. This week I will do my best to fulfill both mandates.
At the risk of appearing like the ruler in the classic tale, “The Emperor’s New Clothes” I offer this article filled with positive information and encouragement to help my readers feel good about their investments in the Edmond, OKC metro housing markets. I also hope to motivate others who are standing on the edge of the housing pool for fear that the water is not deep enough. Jump in, the water’s fine. And if you’re already in, don’t panic.
Housing Inventory. There are plenty of great homes to be bought. In fact, there is a slight surplus of inventory in our market. And it is this surplus that makes it a great time to buy a home. Buyers have larger than normal selections of houses to choose from. The result is that most of them are taking a bit longer to make their decision.
Sellers, here’s a word to the wise. Your realtor may suggest a few things that will help separate your home from the rest of the available inventory. Before quickly dismissing these suggestions as unnecessary or frivolous, consider that potential buyers may see a dozen or more houses like yours. But it might be one of the small suggestions your Realtor makes that separates your home from the others.
Housing Values. Over the past twenty plus years property values in the OKC metro have increased a modest 3 to 5 % per year. This is both safe and realistic growth. And now with many areas of our country experiencing a property value crisis, we see the value in our slow and steady growth in home values. Property values in this market have held and will continue to hold. We may see small adjustments but even these will be regained in another year or two.
Home Loans. Contrary to popular opinion (which is quite often quite wrong) there is still plenty of money to loan for qualified borrowers. None of the lenders we work with have contacted us telling us that they are running out of money. Requirements for getting a home loan have tightened over the past few month, and rightly so. But there is still plenty of money.
Mortgage Rates. Just this week we have seen the stock market take a nose dive of historic proportions. Yet interest rates have not kept pace. Rates are still quite low. It’s still possible to get a rate in the low to mid 6% range without paying any discount points.
Realtors are hungry. The average sales cycle has stretched out and this means that realtors are working with each buyer/seller longer than before. As a result, they are working harder on more transactions, but they know this pace is only temporary. The good ones have seen similar markets before and they know that excellent customer service and hard work always pays off. If you have a realtor, stick with them. If you don’t, my advice is to get one. Your potential for significant financial mistakes are higher without a realtor’s assistance.
Lenders are hungry too. Contact your lender and ask for a printed Good Faith Estimate of Closing Costs and a Truth in Lending. These two reports will help you identify and eliminate any unnecessary fees and charges. Once found your lender should be a mood to void any superfluous charges.
The national media would have us believe that all the forces have converged for what could accurately be named the perfect financial storm. Fortunately our market remains a safe haven. Kind of makes you glad you live here, doesn’t it? Kind of makes you want to go out and buy a home too. At least I hope it does.
At the risk of appearing like the ruler in the classic tale, “The Emperor’s New Clothes” I offer this article filled with positive information and encouragement to help my readers feel good about their investments in the Edmond, OKC metro housing markets. I also hope to motivate others who are standing on the edge of the housing pool for fear that the water is not deep enough. Jump in, the water’s fine. And if you’re already in, don’t panic.
Housing Inventory. There are plenty of great homes to be bought. In fact, there is a slight surplus of inventory in our market. And it is this surplus that makes it a great time to buy a home. Buyers have larger than normal selections of houses to choose from. The result is that most of them are taking a bit longer to make their decision.
Sellers, here’s a word to the wise. Your realtor may suggest a few things that will help separate your home from the rest of the available inventory. Before quickly dismissing these suggestions as unnecessary or frivolous, consider that potential buyers may see a dozen or more houses like yours. But it might be one of the small suggestions your Realtor makes that separates your home from the others.
Housing Values. Over the past twenty plus years property values in the OKC metro have increased a modest 3 to 5 % per year. This is both safe and realistic growth. And now with many areas of our country experiencing a property value crisis, we see the value in our slow and steady growth in home values. Property values in this market have held and will continue to hold. We may see small adjustments but even these will be regained in another year or two.
Home Loans. Contrary to popular opinion (which is quite often quite wrong) there is still plenty of money to loan for qualified borrowers. None of the lenders we work with have contacted us telling us that they are running out of money. Requirements for getting a home loan have tightened over the past few month, and rightly so. But there is still plenty of money.
Mortgage Rates. Just this week we have seen the stock market take a nose dive of historic proportions. Yet interest rates have not kept pace. Rates are still quite low. It’s still possible to get a rate in the low to mid 6% range without paying any discount points.
Realtors are hungry. The average sales cycle has stretched out and this means that realtors are working with each buyer/seller longer than before. As a result, they are working harder on more transactions, but they know this pace is only temporary. The good ones have seen similar markets before and they know that excellent customer service and hard work always pays off. If you have a realtor, stick with them. If you don’t, my advice is to get one. Your potential for significant financial mistakes are higher without a realtor’s assistance.
Lenders are hungry too. Contact your lender and ask for a printed Good Faith Estimate of Closing Costs and a Truth in Lending. These two reports will help you identify and eliminate any unnecessary fees and charges. Once found your lender should be a mood to void any superfluous charges.
The national media would have us believe that all the forces have converged for what could accurately be named the perfect financial storm. Fortunately our market remains a safe haven. Kind of makes you glad you live here, doesn’t it? Kind of makes you want to go out and buy a home too. At least I hope it does.
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