Having an idea about what the restrictions are under the official VA loan guidelines can help you in making a decision about financing. Basically, VA Loans can be used to buy or build a primary residence, refinance a current VA Loan, as well as provide a refinancing option for standard loans or other forms of debt obtained by record of lien. These loans can also be used to make home improvements or renovations for the purposes of increasing energy efficiency.

According to these same guidelines, you cannot use a VA loan to purchase l and, investment properties, or non-residential items like RVs or houseboats. Furthermore, a VA loan cannot be used to buy multiple units in a housing complex unless the applying veteran plans to use these units as part of his or her main place of residence.

There are a number of reasons to consider VA loans but it is important to keep the restrictions in mind so you can make the right decisions about what course to take as far as what type of home financing you plan to use.

VA Loan Guideline Restrictions is a post from: Establish Your Mortgage

As you begin your search for the perfect home, and you research your mortgage loan options, the tax consequences of a mortgage loan with mortgage interest doesn’t ever cross the minds of most consumers. But as you decide which product you need, or think you need, the tax repercussions and benefits should play a role, even if it’s a small one, in the final decision.

For many consumers, the first thought that’s given to their tax return, and tax liability, comes from the mortgage lender. Quite often, mortgages are touted as being one of the best venues for reducing your tax liability at the end of the year. Yes, your mortgage interest payments will reduce your tax liability, but is that your ultimate goal? Is that why you’re looking at mortgage packages? No. Your ultimate goal in choosing a mortgage is to pay for your home.

Every situation in this case, and this case would apply to the average consumer shopping for a mortgage loan, is probably not going to get that much benefit from the tax deduction that comes from their mortgage interest payments. The average consumer should first look at their monthly payment and choose a mortgage based on affordability, not tax liability.

The smart consumer will not allow the flashy ads displayed by many mortgage lenders to influence their mortgage loan decision. The smart consumer will examine the interest level, the term of the mortgage loan, the affordability of the monthly payment, and base their decision upon their ability to pay in relation to the mortgage that achieves their primary purpose: the payout of the loan.

You and I rarely consider the impact of any financial decision on itemized deduction statement; however many of those decisions do affect itemized deductions. Our itemized deductions and major portion of our tax liability? No. Do they contribute to a reduction in tax liability? Yes. The relativity of the contribution when contrasted to the required time in examining the actual benefit we derive from the itemized deduction calculations warrants the point mute. It’s just not worth the effort.

If you happen to be in your mid-40s and your purchasing your first home, I would suggest that you consult a financial adviser prior to making a mortgage decision; however most individuals in their mid-40s would already realize the benefit of a financial adviser. A young couple purchasing their first home would truly benefit from the interest deduction, not to the extent however off more than $40-$50 of the bottom-line for their tax liability. As you age, and your way to earning power increases, the benefit of the itemized deduction decreases. Does the average person understand how tax is configured? No. The only person who can truly enlighten a consumer would be a tax professional, and many average individuals would spend more money in the determination of the benefit than they would reap.

The new guy on the mortgage loan law, known as the interest only mortgage loan will bring the greatest benefit to the consumer. The interest-only lawn in the amount of interest you can deduct on your tax return are one and the same, but does the benefit of the mortgage interest deduction outweigh the added expense of an additional five years on the mortgage loan?

What about the mortgage loan refinance? Any equity you remove from your home in the form of cash that can be used to pay down or pay all high interest credit card accounts will transfer a nondeductible expense to your deductible expenses. However you should remember the trade-off you now owe more against your home, and you have used your equity reserves. Was the deduction worth the trade? Many times the answer is no. For many consumers, paying off high-interest credit card debt only increases the probability of additional credit card charges. In other words, not only have use your equity, you’ve returned to high-interest debt.

Prior to a final decision of your mortgage along product, take a moment to review your tax situation. Each situation is unique. The lower your income, the greater the benefit, but rarely is the benefit worth the cost. Behold, the Tax Man, cometh.

Mortgage Interest and Your Tax Liability is a post from: Establish Your Mortgage

With the FBI investigating some lending institutions and mortgage brokers, it becomes clear that most brokers do not represent anyones interests but their own. Mortgage brokers are regulated by state agencies but are not under any compulsion to get the buyer the best or safest deal. Brokers make money by closing deals for lenders or banks and then taking a commission or fees off the value of the loan from the lender. You may not realize that you are paying the broker, but they are getting paid. Some are getting paid by the borrower and the lender is paying others. In some cases, it was even shown that mortgage brokers might end up getting paid more if they steered clients to mortgage loans that had high prepayment penalties, making it difficult for the borrower to refinance later.

What a Broker Should Do

Mortgage brokers should assess your financial capabilities and try to find a market product that suits your present situation. The problem comes in when they are steering you to products that are risky. You also need to do your own homework in deciding whether any product offered is a good deal or not.

The broker works with a lending institution in providing the paperwork and application forms necessary to substantiate your income and ability to pay the lender. This can include all the copies of your tax returns, W-2s, and bank account statements. Be prepared to give your mortgage broker any type of document they need to apply for your loan.

What a Broker Shouldnt Do

If you are not in a position to buy a home because of your income, steer clear of any mortgage broker that fudges the numbers. The numbers are set so that you don’t borrow above your means. Lying on a loan can have serious consequences, both legal and financial. So, if you see a discrepancy between what you stated to your mortgage loan officer and the final paperwork, speak up before you sign.

If you are in a fixed rate loan with little incentive to refinance, you may still get brokers who call trying to sell you all the benefits of a refinance. Keep in mind that they are paid to close deals, not necessarily to make sure you get a better deal than the one you have.

The mortgage broker should also provide you with a good faith estimate and the cost of fees assessed to your loan before you close. Any paperwork that is missing or different at closing should be reviewed thoroughly before you sign.

How to Spot a Good Mortgage Broker is a post from: Establish Your Mortgage

If your business is relying on quality customers who are looking for mortgages, a dependable mortgage lead for your business, then you might want to look for companies that specialize in find them. There are many professionals out there looking for a good mortgage lead because bad ones cost them money. A realtor, for instance, may spend a lot of time looking at homes with a potential client only to find out after all that they did not even qualify for a mortgage. This is a huge drain of time and money for them. But, they arent the only ones looking for a decent mortgage lead.

If you are a mortgage broker, a good mortgage lead is your bread and butter right now. With fewer people in the market to buy and those that are being scrutinized more by lenders, you need quality referrals to be able to close and make your profit. If you find someone who can steer a good mortgage lead your way, they are worth their weight in gold because competition for good customers is fierce in the real estate market right now.

Despite the bad rap investors have gotten for the subprime fallout, there are still many investors out there buying up homes. These might be people waiting for the market to turn around and make a profit later, or those that buy foreclosed homes and resell them. Either way, they will also need to find buyers eventually and they also don’t want to waste time with poor mortgage leads.

Generating a good mortgage lead is becoming even more important for areas of the market that have to compete for customers. Strategies for developing a database of potential leads vary and some simply choose to call in a third party who specializes in this area. Realtors may be pushing clients to prequalify. Mortgage brokers that are able to generate a larger and more reliable customer base will survive the layoffs that are going across the board in this industry. Lenders are trying to work with old clients to help refinance loans and keep business, rather than take on another house that is foreclosed upon. This is certainly tough times for this industry and those that can network best with potential, credible, clients who qualify for a loan are going to survive the tough economic client that is present today. Those that don’t have the skills or the patience necessary to unearth the gems looking for a mortgage that qualify may have to find another niche or market that can prove more profitable for them in the short-term.

Fighting For the Mortgage Lead Scraps is a post from: Establish Your Mortgage

There is a big debate these days whether it even pays to take out a mortgage loan or if renting ends up being cheaper. Since most people cant buy a house outright with cash, and depend on getting a mortgage loa, there are some reasons that might make renting more attractive in the short-term. However, if you are looking for stability, a way to build wealth and a home you can call your own a mortgage loa is the way to go.

The Benefits of Renting

Renting allows a certain mobility in your lifestyle. You sign a lease for a particular timeframe, and if you have to move you can still leave by paying a penalty. On the other hand, if you own your home, you cant get out of your mortgage simply by moving. You have to sell the house and that can be a problem if your job takes you to many places. If you are very mobile, its difficult to make up the 6% you will have to pay the real estate agent to sell your home.

You do have fewer maintenance issues when you rent. If something breaks, you just call the landlord. A mortgage loa does not cover the monthly expenses of maintenance and they can cost a lot. If your roof needs to be replaced, you will spend in the thousands of dollars. However, if you rent the maintenance and appliances are taken care of by the leasing company.

The Benefits of a Mortgage Loa

While these types of benefits for renting are huge, there can be even bigger rewards for buying. When you rent, all of the money you spend for rent is not tax-deductible and does not serve to build up equity for you. In that sense, rent can be like throwing your money away. If you buy, you can find ways to generate equity and use the interest on the home mortgage loa payments as a tax write-off too. This can put you in a lower tax bracket and easily save you thousands, on top of the thousands you make in equity in a rising market.

There are many different types of mortgage loans out there. You can get an adjustable rate mortgage loa or a fixed rate mortgage. Often, the payments you make on a mortgage can be less than what you would pay for an apartment. However, this all depends on the housing market. Right now, there are some markets where rentals are cheaper than buying, so be sure to check your local market to find out which is best for you.

Mortgage Loa Versus Renting is a post from: Establish Your Mortgage

With all the hoopla about the overload of inventory in most states (due to foreclosures), and the dropping of interest rates by the Federal Reserve, you may be wondering why mortgage rates haven risen in the past year over all. The mortgage industry is not the same as the banking and the housing industry. They are connected to these two sectors of the market, but lending products are usually priced on their own merits and not just those of the economy.

The Lenders Point of View

So, while the amount of inventory can affect home prices and spur competition amongst lenders, it can lower the rates if one lender is trying to grab a bit more business. On the other hand, the mortgage crisis has been so severe in some states that many lenders are wary of lending to unreliable borrowers. They have tightened their credit requirements and when you don’t meet those newer requirements, they may raise the rate to hedge their risk. So, even with a market rate of 6.00% on a 30-year fixed rate mortgage, you could still end up paying more if you don’t meet the new credit requirements of a FICO score of 720 or more, solid employment, and a sizable down payment.

The Markets Point of View

Mortgage rates can also increase, even if the Federal Reserve decides to lower interest rates. This may spur banks to lend out more money and attract more customers. As the new customers start to flood the market, the demand increases. When the demand of any product goes up, so does the price. That’s why the mortgage rates can even increase when the Federal Reserve cuts rates.

Your Point of View

It is very difficult to time to buy a house at the bottom of mortgage rate drop cycles. Typically, you can do this better if you are refinancing than if you are buying because you are then comparing your new loan to whatever you had before. If it saves you money or drops by at least 1 to 2 points of your mortgage interest, then you are pretty confident that buying at that time is a good move. Otherwise, if you are new buyer and have nothing to compare it to, you still can be relatively comforted by the fact that despite rises and falls over the short-term, mortgage rates are at a historically low-point for now in comparison to years past. They may not drop more than 1 point more and should they do so, you can always refinance your mortgage rates later.

Why Can Mortgage Rates Rise in a Down Market? is a post from: Establish Your Mortgage

There are different reasons to seek a mortgage refinance. You can use a mortgage refinance to cash out equity in your home. This can keep you staying in your home while making needed home improvements. Or, you can use the money for other things like to pay off college expenses for your kids. Most people looking to mortgage refinance these days are doing it because they are stuck in an adjustable rate mortgage where the interest rate has reset or is set to reset. Some of these borrowers will find that they can refinance their mortgage and others will that either their situation, the local real estate market, or prepayment penalties will block this avenue. However, mortgage brokers are still trying to get people qualified, so it doesn’t hurt to try.

Lower Interest Rates

Another key reason people attempt to mortgage refinance is to lower their interest rates. Even with fixed interest rate loans, if the new rates available are at least one point less than the old one, it can be a good reason to look into refinancing. You do have to pay closing costs, which can add up to thousands, however if you intend to stay in your home a shift in your interest rate can easily make up for the closing costs, especially if the spread is wider between the old and new rate.

The uncertainty of Adjustable Rate Mortgages (ARMs) is also important when seeking a lower rate. If you refinance from a fixed to an ARM, the interest rate will eventually climb back up. However, if you have an ARM and find a lower rate on a fixed rate mortgage, this can be one way of locking into a much more attractive interest rate for the long term.

Modifying Terms

Lastly, the mortgage refinance can be a way to modify the terms of the agreement to opt for longer or shorter mortgage terms. Longer terms usually increase the amount you pay in your mortgage refinance but lower your monthly payments. Shorter terms typically increase your monthly payments but build up equity much faster and settle the loan quicker.

You can refinance a loan so that you are financing the home to take some of the equity out as cash. So, if you have 50% equity and want to take money out while modifying the terms of your loan, you can opt for a 40-year loan with only 20% down. That will give you 30% in equity to pay off closing costs and use the rest of the money for whatever else you want.

Reasons To Mortgage Refinance is a post from: Establish Your Mortgage

A reverse mortgage is the exact opposite of a traditional mortgage. Instead of you paying the bank to live in the house, the bank pays you to live in it. This may seem a bad deal for the bank, but there are a lot of reasons why a bank will allow a reverse mortgage. Typically a reverse mortgage is only approved for someone 62 or more years of age that has paid off his or her original mortgage. With all that equity in the home, the senior sitting in it might want to stay in the home but face additional expenses in medical or living costs that they cant cover. Instead of selling the home and downsizing, they may choose to do a reverse mortgage with a bank instead thus allowing them to remain in the home.

How It Works

The reverse mortgage is a little more complex to close than a traditional mortgage. There are a number of different rules surrounding this type of mortgage loan. The age limit is one barrier and also the condition of the home may be another. The home has to be in good condition, free of major faults, before the bank considers doing this type of mortgage. Closing costs are significantly higher than the traditional loans and fees can also eat into equity. However, the upside is that you can get a disbursement of cash to help you pay immediate expenses while not having to vacate your home. This cash can come as a lump sum, a monthly payment, or even a credit line. The terms of the loan may differ with the bank involved and you should check to see what happens if you eventually sell the home instead of staying in it until you die.

The Potential Negatives

Seniors are targeted by unscrupulous lenders with predatory lending practices that can include a high fee reverse mortgage. Most lenders will be asked to undergo counseling before they take out a reverse mortgage, but that might not be enough to assess whether the mortgage is what you need at this point in your life. As always, if you arent certain of what you are signing, don’t sign. Instead, try to review the documents with someone who is knowledgeable and can answer any questions you might have about this type of mortgage. There are some downsides to a reverse mortgage. They can impact your ability to receive Medicaid benefits and government financial assistance. So, be sure to not only look at the terms of the mortgage but also check with your local government offices to see if the mortgage product might actually reduce your income instead of increasing it, due to the offset of benefits.

Is A Reverse Mortgage Right For You? is a post from: Establish Your Mortgage

The term second mortgage is easier to understand than home equity loan, but they are essentially the same. A second mortgage is any new loan, beyond the primary mortgage, taken out holding the home as the collateral for the loan. While, you can use a home equity loan to get money out of your home while still living in it, there are also other uses for second mortgages that are not tied to a home equity loan. There are different situations and times when people may try to get a second mortgage to save money or to tap money in equity.

Two Mortgages at Closing

Some people took out second mortgages during the closing of their first mortgage as a piggyback mortgage. This allowed them to put down the needed 20% as a down payment and avoid private mortgage insurance (PMI) costs. This works out well for buyers who have this type of access to credit but are low on down payment funds. If they only had 5 or 10% to put down, the PMI would automatically be triggered and added to their monthly payment. However, if they took out two loans and used the second to bring down the primary mortgages loan-to-value ratio then they wouldn’t have to pay PMI.

The difference in monthly payment is not that significant using this strategy, but there are other paybacks including the ability to deduct the second mortgages payments from your taxes, in some cases. PMI, on the other hand, gives you no such tax benefits. Equity also accrues faster by taking out two mortgages upon closing to satisfy the PMI requirements.

The problem with this approach is that lenders are becoming wary of allowing someone to immediately take out a piggyback mortgage to bring up the loan-to-value ration of the first mortgage. If the home approaches foreclosure, the second mortgagee holder finds themselves in the position of absorbing a loss or having to buy the primary mortgage to get something out of the foreclosure on the piggyback mortgage. So, this type of financial two-step may end up being harder and harder to get approved by lenders.

Home Equity Loan

The other type of second mortgage strategy is to get a home equity loan after closing. This can be done any time, as long as the value of your home and your equity in it is enough to support the loan. There are risks for the borrower as the home is being used as collateral. If the home equity loan terms are not satisfied or payments are not made, the lender can foreclose even though it is not the primary mortgage. So, this type of financial tool should be taken on only after carefully reviewing the risks and benefits of a home equity loan.

Why Some People Take Out a Second Mortgage is a post from: Establish Your Mortgage

You’ve heard its tough getting a home mortgage today, and thats true. However, the formula for getting approval isn’t too difficult to understand and there are strategies to help you eventually get a home mortgage eventually. You just have to follow the same guidelines that the mortgage brokers will use to determine your creditworthiness to decide whether its time to apply for a mortgage. Even if you are turned down, what you learn from the experience will eventually help you qualify later. And, as the credit market eases in panic, you may even find yourself in a great position to buy a low-priced, quality, home with just the right qualifications the lenders are looking for in a borrower.

Your Credit Reports

If you haven’t checked your credit reports in years, do so before you apply for a home mortgage. There are three major credit bureaus that you will need to ask for a copy of your credit report: Equifax, TransUnion, and Experian. You will need to ask for a copy from each of these credit bureaus, as the information is not common between all of them. Some may have entries that others don’t and the key is to clear up all your credit reports so that your credit is sparkling clean by the time you apply for a home mortgage.

Once you receive your credit reports, check out any inconsistencies on it that might be disputed and then dispute them. You wont get your actual FICO score when you get a free credit report, for that you have to pay. This is actually well worth paying for as the new FICO score that lenders are looking for is anything above 720. The higher your score about this number, the more leverage you have for scoring a low interest rate and favorable home mortgage terms.

Seek Home Ownership Programs

If you arent able to qualify for a loan right now there are agencies set up to help low-income people qualify for a home by educating them on the entire process. You will want to check out if you are eligible to participate in any home mortgage and ownership classes to help you resolve issues way ahead of time. Places to find such programs include the Department of Housing and Urban Development and your states Housing Finance Agency. Also check out your local yellow pages, but be aware to check the credential of any program with the state agencies so that you don’t end up being defrauded. Other issues that can be discussed in these programs are your income level, your level of debt, and your reasons for buying a home.

Strategies to Help You Get a Home Mortgage is a post from: Establish Your Mortgage