Refinancing a conventional mortgage into a VA loan gives borrowers an opportunity to get a low-interest rate. Qualified borrowers can easily refinance their existing loans into a new VA mortgages, by submitting new applications, title reports, and fulfilling other required paperwork. Borrowers defaulting on refinancing options with other conventional loans can refinance with VA loans, irrespective of the market value of their property or their credit score. This post discusses three ways in which a borrower can refinance into a VA loan through a VA approved lender. 1. Cash-out Refinance Qualified veterans who don’t have enough equity to refinance with FHA or conventional loans can refinance with a VA cash-out loan at lower interest rates. The proceeds from the loan are received in form of cash, which allows borrowers to take care of other expenses, such as credit card payments and home upgrades. The maximum amount of cash available to the borrower during refinancing is determined by calculating the current appraisal value of the subjected property. Most VA approved lenders in Texas allow a cash-out amount of up to 80 percent. Unlike the IRRRL, a cash-out VA loan is thoroughly documented, and the borrower is required to submit their most recent paycheck stubs, W2 forms, and their federal tax returns for the last two years. 2. IRRRL or Streamline Refinance IRRRL (Interest Rate Reduction Refinance Loan) - often regarded as a VA streamline loan - is a refinance option that requires minimal paperwork compared to other available VA loans. It doesn’t require old W2 forms, copies of paycheck stubs or any minimum credit score. Though some lenders may require a minimum credit score, VA guidelines only mention examining the previous year’s mortgage history. The VA doesn’t have any specified maximum loan amount but has a specified maximum amount that it guarantees to the lender, which is 25 percent of the loan amount. 3. Standard VA Loan Unlike VA streamline, which only allows VA to VA loan transactions, the standard VA refinancing option also allows refinancing of other loans, such as FHA loan and conventional loans. Refinancing a conventional loan with a VA loan is a viable option when property value is a concern, as refinancing with a conventional loan goes up to 90 percent of the property’s current value. If, for example, the home mortgage balance is $200,000, refinancing with a conventional loan requires an appraisal value of at least $222,222. If the appraised value is less than $222,222, the borrower cannot refinance their loan with another conventional loan. This is where refinancing with a VA loan is a possible way out. The Bottom Line If the interest rate is low enough for VA loans as opposed to conventional or FHA loan programs, it makes sense to refinance an existing mortgage. The amount of money you receive as refinance, however, depends on the current home value and the policies of the lender. It is therefore important to choose a qualified lender that can not only help you decide whether refinancing will be a wise decision, but is also able to answer all your questions related to eligibility and application procedure.
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6/22/2017 0 Comments Types of USDA Loans: A Brief GuideIf the thought of spending life in a city doesn’t appeal at all, and you always want the place you call home to be surrounded by pastures, you might be eligible for a USDA loan. The Department of Agriculture offers mortgage assistance programs through Texas home loan and mortgage company to improve the economy and quality of life. Launched with an initial investment of almost $20 billion 2014, USDA loans have helped more than 140,000 families to buy their own house. In this blog post, we discuss three types of USDA loans offered under the Rural Development program. Read on. 1. Single Family Guaranteed Loans The loan applicant doesn’t need to make any down payment, and can use this loan to rehabilitate, refinance, buy or improve the existing property. The interest rate is lower than FHA and conventional loan, but to qualify, it is required to apply for loan in a rural area that has a population less than 35,000. The applicant also need to take mortgage insurance. Other expenses include, 2 percent upfront MI fee to be paid at closing and 0.40 percent fee, which is based on the remaining principal balance to be paid annually. 2. Single Family Direct Loans These loans are basically subsidized grants to reduce the mortgage payment to 1 percent for some time. When the title of the property is transferred, or the borrower no longer lives in the house, it is necessary that borrower repays all or certain portion of the subsidy received over loan tenure. No down payment is required, and to qualify for a direct loan, the borrower needs to show inability to secure a loan from other lenders on reasonable terms and conditions. 3. Single Family Housing Repair Loans and Grants The loan is offered to very-low-income homeowners who want to improve or repair their house. The elderly very-low-income homeowners also get grants to remove any health or safety hazard from the house. The maximum limit for loan is $20,000 and grant is $7,500. The applicant may ask for a combined assistance of loan and grant with maximum limit of $27,500. The rate of interest for loan is 1 percent and payback time is over 20 years. The applicant needs to own and occupy the house. The family income should be less than 50 percent of the median income of the area. Way Forward Talk to a participating lender to apply for USDA home loan. If you want USDA direct mortgage or home improvement grant or loan, get in touch with the USDA office in your state. The loan applicants who have credit score of 620 or more get faster approval, and those with credit score below 580 need to meet stringent underwriting standards to get the approval. USDA loans are offered to rural and suburban property buyers at low interest rates. Homeowners can also get a USDA loan for home improvements. These loans are backed by the U.S. Department of Agriculture and disbursed by recognized private lenders. Despite the many advantages of USDA loans such as attractive interest rates and low monthly mortgage insurance, many homeowners have skewed or limited knowledge about them. To help spread awareness about USDA home loans, the post discusses some useful info about them. Take a look.
Types of USDA Loans Guaranteed Loan Guaranteed loans can be raised by households whose income is up to 115 percent of the median income for the area. The loan is provided to borrowers who don’t have a residence but can afford the mortgage payments. Before applying for a Guaranteed Loan, borrowers must check the Maximum Household Income limits set by their county to determine eligibility. As is the case with other USDA loans, borrowers would be required to pay an upfront funding fee of 2.75 percent of the purchase price. Direct Loan Direct Loans are provided to applicants who fall in the very low or low income category (low: between 50-80 percent of the median income for the area, very low: below 50 percent of the median income for the area). A Direct Loan can be used to build, repair, renovate, and relocate a home. Though, borrowers must have a reasonable financial standing to afford mortgage payments, they can be eligible for payment subsidies. Rural Repair and Rehabilitation Loan Rural Repair and Rehabilitation Loans are provided to senior homeowners (age: 62 years or more) who fall in the very low income category. Borrowers can use the loan amount to finance necessary repairs, and renovations that can help address safety and hygiene issues. These loans are provided to homeowners who are unable to secure credit elsewhere. Pros and Cons of USDA Loans Benefits
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Conclusion Easy payment plans, zero down payment, and flexible qualifying criteria make USDA loans one of the most accessible government loan programs. Though borrowers are required to get mortgage insurance, they can finance the cost into the loan which helps in lightening the payment obligation. Individuals looking to raise a USDA loan must visit USDA’s official site before applying for a loan as the eligibility criteria keeps on changing every year. |
AuthorDarrick encourages readers to post issues that need immediate attention in terms of home buying; such interactions will enhance reader engagement and provide a road-map for others Archives
November 2017
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