Category Archive: Purchases

You Don’t Have to, but Should You: Down Payment & VA Loans

Qualified veterans are eligible for mortgages that are guaranteed by the Department of Veterans Affairs (VA), and these VA mortgages can be a very good deal. One of the most attractive benefits is the fact that VA mortgages don’t require borrowers to make a down payment. However, if you’re an eligible veteran and you’ve got the funds for a down payment, should you make one?

Benefits of a down payment

There are reasons for veterans to make a down payment for their VA mortgages:

  • Lower funding fee. VA mortgages have a funding fee, which helps finance the VA mortgage program. The fee can be financed with the mortgage. The fee for an eligible first-time homebuyer is 2.15 percent of the loan amount if he or she makes no down payment, and it’s 3.3 percent for non-first-time VA homebuyers. With a 5 percent down payment, the fee drops to 1.5 percent, and a 10 percent down payment lowers it to 1.25 percent.
  • Lower monthly payment. Of course, a down payment means your monthly payment will be lower because you’re not borrowing as much money.
  • More home equity. A down payment means you’ve got more equity in your home, which can improve your financial picture. For example, it can make it easier to sell the home if you need to move.

Keeping your cash

Even if you do have cash available, you might find better uses for it than making a down payment. For example, you can save it for emergencies, use it to renovate your new home, or pay off higher-interest rate debts, like credit cards. If you’re thinking about a VA mortgage, contact Embrace Home Loans at 407-733-6425. We’ll work with you to help you decide whether or not a down payment is right for you.

VA Streamline Mortgages in Florida are on the Rise

Eligible veterans and active military members in Florida can take advantage of the Department of Veterans Affairs (VA) Interest Rate Reduction Refinance Loans (IRRRLs) to lower their interest rates and mortgage payments on their VA mortgages. Increasing numbers of Florida veterans are doing so. In fact, IRRRLs in Florida increased by a whopping 83.5 percent from 2014 to 2015, with 10,582 loans issued in 2014 and 19,419 loans issued in 2015.

The current low-interest rate is fueling this dramatic increase in VA refinance loans, but there are other reasons that eligible veterans and military personnel are rushing to refinance their home mortgages. VA refinance mortgages are called “streamline” loans because many of the traditional refinancing documentation isn’t required. That makes the VA IRRRL a fast and efficient option for VA mortgage refinancing.

VA Streamline Refinance Advantages

A VA IRRRL doesn’t require a property appraisal like many other mortgages do. And VA lenders aren’t required to get credit reports, set minimum credit scores, or verify income or savings. However, many VA lenders have internal policies for credit scores, some as low as 580 and credit reports to verify mortgage payment history only. The good news is that these requirements are typically much more lenient than those for other mortgages.

Other advantages include the fact that VA refinances allow the borrower to close the refinance loan without any out-of-pocket costs since the VA allows origination fees, VA funding fees, closing costs, and other costs to be rolled into the new refinance loan.

Benefiting You

The main rule that VA streamline refinance loans must follow is that the new loan must benefit the veteran. Obviously, lower interest rates and mortgage payments do benefit the veteran, but there are other benefits that veterans can pursue, including converting from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage, or getting cash (up to $6,000) for energy-efficient improvements to the home. If you’ve got a VA mortgage in Brevard County or elsewhere in Florida, Embrace Home Loans can work with you on a VA streamline refinance. Call us today at 407-733-6425.

How to Raise Your FICO Score

FICO originally stood for the Fair Isaac Corporation, and it’s the largest and best-known company that calculates credit scores. Now known simply as FICO, the company uses “predictive analytics” to evaluate your credit and predict whether or not you’ll pay your bills on time. So, if you’re shopping for a Brevard County mortgage, or elsewhere in Florida, your FICO score will have a large impact on whether or not you can get a mortgage and how much your interest rate will be.

What Goes into Your FICO Score?

Your FICO score is calculated from data in your credit report, and that data is grouped into five categories, which are then weighted to create your score. The breakdown is:

  • Payment history, 35 percent
  • Amounts owed, 30 percent
  • Length of credit history, 15 percent
  • Credit mix, 10 percent
  • New credit, 10 percent

Improving Your Score

With this information, you can easily see what actions you can take that will have the greatest impact on your FICO score. Here are some tips to boost your score:

  • Pay your bills on time. It seems obvious, but this is one of the best ways to improve your score. Your payment history is 35 percent of your score. A year of on-time payments can really improve your score.
  • Check your credit. Mistakes happen, and if they do, you need to find them. Get a free copy of your credit history, and review it carefully. Dispute any mistakes as quickly as possible.
  • Get a credit card. If you don’t have credit, you may need to establish it – responsibly, and show a history of on-time payments.  The longer you have established credit, the better. Don’t charge too much, and pay your bills on time.
  • Pay off debt. FICO looks at how much money you owe vs. how much credit you have available. For example, if you’ve got a credit card with a $5,000 limit and you owe $1,000, your debt utilization is 20 percent. Anything over 30 percent will typically drop your score.

Find out more about FICO scores

If you’re interested in obtaining a Brevard County mortgage, Embrace Home Loans can help you evaluate your FICO score and suggest ways you can get the best possible mortgage rates. Contact us at 407-733-6425 and let us work with you to get you the financing you need.

Top 5 Mistakes First-Time Homebuyers Make

Home buying is on the rise, according to the fourth annual Mortgage Service Index from TD Bank. According to the survey, 42 percent of Americans expect the housing market to improve over the next six months, and 56 percent feel it’s a good time to buy a home.

That means, if you’re shopping for a new home in Florida, there’s going to be more competition for the available homes. First-time homebuyers can help themselves clinch the deal by avoiding some common mistakes:

  • Choosing a home that’s too expensive. With the financial meltdown of 2008 still fresh in everyone’s mind, it’s surprising that people are buying the most expensive homes for which they can qualify. Qualification doesn’t tell you how much you should spend on a house, it just tells you how much the bank will lend you. Huge mortgage payments may leave you with no money left for bills or savings.
  • Not educating yourself. Learn about your market and the value of the homes in it. Make sure you also understand ALL the expenses involved, like insurance, taxes, utilities, association fees, and more (see mistake #1). Don’t make the mistake of buying the first home you see. Shop around.
  • Not getting your finances in order. Make sure you’ve got a budget and you know exactly what you can afford (see mistakes #1 and #2).
  • Not scouting the neighborhood. Things are much different at night than they are in the daylight. Visit your prospective neighborhood at different times of the day. Park your car and walk around. Are there noisy neighbors? Barking dogs? Cars roaring through residential streets? Do your homework, and make sure that this neighborhood is right for you.
  • Working with the seller’s agent. The seller’s agent is working for them, not you, and is trying to get the highest possible price on the home. In short, they’re not on your side. You need your own licensed Realtor® who is working for you.

Make the right move

While it seems to fly in the face of the advice above, one final mistake is falling victim to the “grass is always greener” mentality. Some home shoppers are convinced that there’s always something better, so they refuse to commit to buying a home. If you’ve done your homework, then trust yourself. Being indecisive means you might miss out on the home of your dreams. If you’re a first-time buyer looking for a home in Brevard County or the state of Florida, Embrace Home Loans can work with you to get you qualified for a Florida mortgage and help you avoid some of the mistakes others make. Contact us today at 407-733-6425.

Top 4 Myths About VA Loans

Mortgage loans guaranteed by the Department of Veterans Affairs (VA) are usually referred to as VA mortgages or VA loans. These loans aren’t actually issued by the VA but are offered by qualified lenders to eligible veterans, active service members, and some family members. These loans are a significant benefit to eligible borrowers in Florida and other states, and they offer many advantages, including no down payment, no private mortgage insurance, very competitive interest rates, and less stringent qualification standards.

While VA loans are very advantageous to home buyers, some people may shy away from using VA mortgages. Frequently, it’s because of some myths about VA loans, which simply aren’t true:

  • VA loans are slower. Wrong. VA loans can frequently close faster than conventional mortgages. In general, though, closing times for VA loans are comparable to conventional mortgages.
  • VA buyers can’t afford expensive homes. Not true. VA borrowers can buy homes up to $417,000, which is the same conforming limit set by government entities Fannie Mae and Freddie Mac, with no down payment. For more expensive homes that are priced over the conforming limit, VA borrowers can make a down payment and obtain a VA jumbo loan.
  • VA loans are hard to get. In fact, as noted above, the income, credit and asset qualification requirements are more flexible for VA loans than conventional mortgages.
  • VA appraisals are complicated. VA loans aren’t intended for “fixer-uppers,” and the VA appraisal process is designed to weed out homes that aren’t safe or structurally sound. If the home is in good condition, the VA appraisal isn’t very different from conventional appraisals.

VA mortgages are one of the best mortgage options available today, and anyone who is eligible should consider the VA lending program. At Embrace Home Loans, we’re experts in VA lending in Brevard County and in the state of Florida, and we’ll be happy to the advantages of VA loans with you. Call us at 407-733-6425 for more information.

VA Loans and a Surviving Spouse

Mortgage loans guaranteed by the Department of Veterans Affairs (VA) are very beneficial to eligible servicemembers and veterans in Florida and other states. Florida VA mortgage loans offer highly competitive rates, no down payment, and no private mortgage insurance. One lesser-known benefit, however, is that the surviving spouse of a deceased eligible veteran can also use VA loan program.

For the surviving spouse to qualify, the deceased service person must have:

  • Died in the line of duty
  • Passed away from a service-related injury or disability
  • Been missing in action or a prisoner of war for 90 days
  • Have died from any cause after having been a totally disabled veteran for 10 years

In addition, surviving spouses are exempt from VA funding fees. This fee is based on a percentage of the loan amount, and it’s used to support the VA loan program, so this exemption could save the surviving spouse thousands of dollars over the life of the mortgage.

Most spouses can’t qualify if they’ve remarried, but those who remarried after the age of 57 and after December 16, 2003, may qualify. In fact, thousands of surviving spouses qualify each year for the VA mortgage loan. In 2014, 2,369 spouses qualified, and in 2015, the VA guaranteed mortgages for 3,116 spouses.

Surviving spouses may also qualify for streamlined mortgage refinancing through the VA. The streamline refinance option can lower the interest rate and the payments for existing VA loans. In addition, income verification is usually not required. The VA streamline refinance option can be very helpful for surviving spouses since income could be a problem if the service person has passed away. To qualify, the spouse must have been married to the eligible veteran at the time of death and be named on the original VA loan.

If the spouse is not on the original loan, he or she may still be able to use a VA cash-out loan to tap into the home’s equity. If you’re the surviving spouse of an eligible veteran and you’re interested in a Florida VA mortgage loan, call Embrace Home Loans today at 407-733-6425. We help veterans and surviving spouses get VA mortgages in Brevard County and across Florida. We can review your mortgage options and help you decide what might be right for you.

10 Secrets for First-Time Homebuyers

If you’re considering buying your first home, congratulations. Home ownership has a lot to recommend it, including building up equity and even tax breaks. But buying a home can be complicated, so here are 10 things you should remember:

 

  • Start early. For most people, buying a home is the biggest purchase they’ll ever make. So be prepared to spend some time shopping around. As you look at different options, you’ll get a much better idea of what you do and do not like, where you might want to live, and how much your house should cost.
  • Clean up your credit. One advantage to starting your home search early is that it gives you more time to work on your credit score, which can help you get a lower interest rate. Check your credit report for mistakes, reduce credit card debt, and pay all your bills on time.
  • Find or work with a licensed Realtor®. They can help find the home of your dreams and answer resale value questions.  You probably won’t live in your home for the rest of your life, so think about when you might eventually sell your home. There are renovation loans for homes, but you can’t renovate in an unfavorable neighborhood.
  • It’s not just a mortgage. Home ownership comes with a lot of other costs, like insurance (both homeowners and Florida mortgage insurance), taxes, utilities, neighborhood association fees, and more.
  • Get pre-approved. Pre-qualified and pre-approved are not the same thing. Pre-qualification can take as little as 10 minutes, but it just gives you an estimate of how much mortgage you might get. Pre-approval is more detailed, and your lender will verify your financial information and give you a firm idea of how much mortgage you can get. It’s still not guaranteed, but it’s much more certain.
  • Don’t over-spend. It’s tempting to buy the biggest house you can get, but you may not want to spend that much. You might want a less-expensive home in a better location, or you may just want some “breathing room” in your budget. Find a home that fits your finances and personal situation.
  • Get a good inspection. Home inspections are a crucial part of buying a home. You need to have an expert check the home for serious flaws and any other potential problems. You should always make any offer contingent on a home inspection.
  • Remember you’re also buying appliances. Be careful – you don’t want your air conditioner to die or your dishwasher to start leaking a few months after you move in. Find out how old the appliances are, and ask your home inspector if you have questions.
  • Check the property line. Remember, you’re buying the land, too. Make sure your neighbors didn’t build a fence on your property or you don’t own a tree that could fall down during our next Florida tropical storm and create liability. If it’s a significant lot, you may want to get it surveyed by a professional to confirm your property lines.
  • Location, location, location. Don’t just look at the house, check out the neighborhood. Take walks, and visit at different times of the day and night. Roll down your windows and listen. Do you hear dogs barking constantly? Can you smell a landfill nearby? If you can, talk to your neighbors. Find out as much as possible before you buy.

 

Most importantly, when you’re shopping for a home, be ready to walk away. Don’t get caught up in a bidding war and spend more than you can afford. If your inspector finds problems, it might be best to look elsewhere rather than trying to fix them. Remember, you’ll be paying for this house for a long time. You want it to be a good decision. If you’re currently shopping for a home, check with Embrace Home Loans. We’ll help you get pre-approved for a Florida mortgage and make sure you can get the financing you need before you start shopping. Call us today at 407-733-6425.

Millennials, Mortgages, and Student Loans: Can You Buy a Home?

Many millennials are pointing to their student loan debt as a reason that they can’t buy a home. However, according to the 2016 National Association of Realtors® Home Buyer and Seller Generational Trends study, 35 percent of all recent buyers were millennials. So, how are these buyers reconciling student loan debt with mortgages?

One investment advisor, John Burkey of Burkey Capital, plans to launch a jumbo mortgage product that would allow borrowers to roll their student debt into a mortgage. However, the program would be for jumbo loan mortgages, which start at $417,000, and would initially only be available to borrowers with very strong credit, high incomes, and a high level of job security.

Other options

What can millennials who aren’t high earners do to qualify for a mortgage? It may be possible to alter your debt-to-income ratio (DTI) to make it more favorable. Your DTI is the total amount of debt you have compared to the amount of money you earn. Clearly, student loan debt can raise that percentage, but there may be ways you can nudge it back down:

  • You may be able to apply for a deferment, which can decrease or even stop your monthly payments for a set amount of time. If your student loan has been deferred for at least one year, it won’t be factored into your DTI if you are a Veteran and apply for a loan guaranteed by the Department of Veterans Affairs (VA). Conventional loans and Federal Housing Administration (FHA) loan will include student loan debt in the qualification process regardless of deferment.
    ● You may be able to apply for a graduated payment plan, which lowers your student loan payments for two years and then increases them every two years after that. If you’ve got a solid job and expect your income to increase, this could be a good option.
    ● You may be able to consolidate your loans, which might increase your payment term from 10 years (typical for student loans) to up to 30 years. However, remember that a consolidation loan may be issued by a private lender, which means you won’t be able to apply for a deferment.
    ● You may be able to get rid of other debt, like credit cards, to lower your DTI. And if your installment debt, such as a car loan, will be completely repaid within 10 months, some lenders may be willing to remove it from your DTI.

Don’t let student loans stop you

Student loans don’t have to be an obstacle to homeownership. Find out how much debt you need to reduce before you qualify for a mortgage, and get started. Set a budget that will help you reduce your debt and save for a down payment. If you need more information about mortgages and your student loan debt, contact Embrace Home Loans at 407-733-6425. We can work with you to help you figure out how you can qualify for an affordable mortgage.

Buying a Condominium with a VA Loan

There are a lot of good reasons to buy a condo in Florida. You may not want to maintain a yard, for example. And condos frequently come with a range of amenities, like pools, gymnasiums, or proximity to the beach. Or you may prefer to be closer to work, and condos are often located closer to cities than single-family homes.

So, it’s no wonder that some veterans who are eligible for a VA mortgage may want to purchase a condo. If you’re an eligible veteran interested in shopping for a condominium in Florida, here are some things you should know:

  • The condo must be approved. The Department of Veterans Affairs has an approval process for condos, and the homeowner’s association (HOA) of the condominium needs to submit an application and pay a fee. That means you probably shouldn’t spend any time looking at condominiums that aren’t on the approved list. If you do want to purchase a condo that isn’t already approved, you’ll need to work with your real estate agent, loan officer, and the condo’s HOA to get it approved.
  • You can search for approved condos. The VA maintains a searchable database of condominiums on its website. You can search by condo name or ID, the regional VA office that registered the condo, or its city/county and state.
  • The condo must meet VA standards. To be approved by the VA, the condominium must meet certain requirements:
    • At least 50 percent of the units must be occupied by owners, not renters.
    • Less than 15 percent of the owners can be behind on their HOA dues.
    • If the condo is new or recently converted from apartments, at least 75 percent of the units must be sold.

Investing in a condo

While you’re the only person who can decide if a condo is right for you, there are some general guidelines. If you’re planning to stay in one place for several years, the money you would normally spend on rent could be invested in your own place. As already noted, perks like pools, gyms, and clubhouses can be very attractive. Of course, you should also be aware of resale value – generally speaking, condos are more popular in areas with large amounts of young professionals or in areas with large concentrations of retirees. If you think a condo is right for you, and you’d like to see how you can use your VA mortgage benefit to buy one, talk to the experts at Embrace Home Loans at 407-733-6425. We’ll work with you to finance a condo that’s just right for you.

The Top 5 Things First Time Homebuyers Need to Know

Buying your first home can be a bewildering process. But first time home buyers in Florida have some advantages over seasoned buyers, and here are some ways you can be more effective in your search for a new home:

 

  • Get Your Finances in Order. A good credit score and solid down payment puts you in a good spot to beat competing offers for the home you want. Check your credit report for errors at www.annualcreditreport.com and take steps to clean it up, and save up for your down payment. The bigger, the better, but remember that there are lots of options for mortgage loans, and some (like loans guaranteed by the Federal Housing Administration) will let you put down just three to five percent of the price.
  • Get Pre-Approved. This means a mortgage lender has reviewed your credit and income. Pre-approval gives you an advantage when the seller is in a hurry and needs to close quickly.
  • Use an Agent. You’re new to this process, so a good real estate agent can be essential to guiding you through mortgage applications, price negotiations, home inspections, and more. A good agent is an invaluable asset in finding listings that match your criteria.
  • Take Advantage of Your Flexibility. You’re not in a home now, so you don’t need to sell an existing home to buy a new home. That’s a key advantage other buyers don’t have. You can negotiate with sellers and offer to delay moving in or provide other concessions. Your real estate agent can talk to the seller’s agent to find out exactly what they need to close the deal.
  • Shop Around. Remember, you can be flexible. If you see a listing that seems overpriced, check back in a month. At that point, some sellers will take a lower offer, even if they haven’t reduced their listing price.

 

We’ll Work With You

Embrace Home Loans has financed thousands of homes for first time home buyers in Florida. We can help you understand the process, and we’ll review your mortgage options with you and help you get the financing you need. Talk to us today at 407-733-6425 and find out more tips to help you buy your first home in the Sunshine State.