Category Archives: Veteran

VA Loan Right for You?

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Why should you use VA loan:
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The VA loan is hands down the best mortgage loan there is. Here are some reasons why.

First, VA guarantees the loan for 100% of the appraised value of the property (technically, the loan is for the Notice Of Value amount, which in most cases is the same thing). This guarantee means that the lender is willing to make the loan. The loan amount for 100% financing goes as high as the maximum amount in each county.

Veteran buyers can get a loan for more than the county maximum; they just have to pay 25% of the amount above the county maximum. In pricey California, for example, a veteran could buy a home for $800,000 with a $40,963 down—roughly 5%. Which brings me to the next reason to get a VA loan:

There is no mortgage insurance. A buyer with a 700 credit score will pay about $400 per month for mortgage insurance if he puts 3% down on a conventional loan.

The rates are slightly lower in some cases. Also, underwriting standards are easier. Where conventional loans use dent-to-income ratios to qualify, VA loans use “residual income.” This looks at how much money they actually have available each month after meeting normal expenses from their take-home pay. Conventional loans are typically capped at a 45% debt ratio (or thereabouts). VA loans can many times be approved above 50% depending on the overall strength of the borrower.

When rates drop, refinancing is easy. VA loans offer a “streamline” refinance option, called an Interest Rate Reduction Refinance Loan (IRRRL). This allows the veteran borrower to reduce his or her rate with no appraisal, and very little underwriting of income. The primary criterion for approval is that the borrower has an acceptable payment history and that they are improving their position.

If a veteran wants to refinance and get cash out of his or her equity, there is no pricing adjustment for that process. A conventional loan will typically be about .25% higher in rate to get cash out.

For anyone who is a qualifying veteran, NOT getting a VA loan would be a costly mistake.

Hope this helps!

Three Credit Mistakes to Avoid When Going Through Divorce

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Is your divorce affecting your credit score? Divorce is a challenging time. Between parenting plans, splitting of assets, who gets the dog. Many divorcing couples overlook is the effects of their divorce on their credit score. Simple things can reduce your score overnight by over 100 points or more if you are not careful.

3 Mistakes to avoid while going through divorce

  1. Stop paying your bills

    The number one category for credit scoring is how well you pay your bills. Payment history makes up 30% of the credit score. Many times when couples split up before the divorce is final or they ever meet with an attorney, they will stop making payments on their credit accounts. If you stop paying credit cards, car loans or mortgages it will adversely affect your credit score and can prevent you from refinancing your home, purchasing a new one, renting or even buying a new car.

    A better plan is to freeze all revolving accounts so additional debt cannot be added to the family budget. You must continue to make the minimum monthly payments on the credit cards. Make your payments as usual on your auto loans and home loans.

    These simple steps will protect your credit score for future use and limit the amount of debt the family will have post decree.

  2. Over Charging/Going over the Limit on your credit cards

    Another large part of the credit score is your available credit.  If you go over the limit, I have seen scores drop over 125 points in one day by just adding $200.00 of debt.  The $200.00 in debt put two credit cards over the limit causing the client to go from a 667 credit score to a 542 credit score, that changed their loan from approved to denied.

    Over charging or going over the limit can happen when one of the spouses moves out and uses joint accounts to furnish the new residence or it can occur if you are using your credit card to pay your attorney fees with credit cards.

    Yes, $200.00 severly impacted the Credit Score from 667 to ↓ 542 

  3. A better plan is for each spouse to get their own credit upon one or the other moving out so that all expenses are traceable to each party.  As mentioned, it’s advised to freeze the account so that no additional debt can be incurred.

    Finally, if you cannot get a new card and you are getting close to a limit, call the credit card company to increase your credit limit.  Credit card companies are more likely to increase credit lines if you are abiding by your contract limits, once you go over the limit they are less likely to assist you. 

  4. Closing Accounts

    When couples are faced with divorce, they want to protect themselves from further loss.  Couples either on their own or at the advice of their attorney close all the credit accounts. If it’s due to circumstances surrounding the divorce, closing the accounts may be advisable.  However, if we can do this collaborativelyContinue reading→