Are Short Sales for a VA Loan Different?

short-sale-VA-loanThe process of a short sale for a home that is mortgage backed by a VA loan is very similar to a traditional short sale process. The following is a breakdown of the important distinctions between the two:

 

Compromise Sale

A short sale program with a VA loan is actually considered a “compromise sale.” Therefore, in the situation of a veteran owning more on a home than it’s worth and sells their home, the VA will cover the remaining balance of the mortgage and early closing costs.

The most significant difference between a compromise sale and a traditional short sale is that the lender receives the full balance owed by the veteran.

As of January 2011, veterans are also entitled to $1,500 for relocation assistance.

 

Compromise Sale Requirements

A compromise sale situation occurs when the veteran is experiencing financial hardship that makes meeting their mortgage obligation impossible. These hardships could include: the recent loss of a job or decrease in salary, major medical expenses, death of the primary wage earner in the home or an involuntary relocation.

It may also be required that the veteran sell any significant assets to help offset the mortgage deficiency. The VA will then review the veteran’s current situation to qualify them to undertake a compromise sale.

 

*The VA warns veterans to be cautious of various scams that take advantage of distressed homeowners. Contact your VA mortgage lender before signing anything.

Short sales for a VA Loan are different, but not that much from the normal process for a short sale.  If you’d like more information about VA loans or the compromise sale process, contact your local VA lender, Darren Copeland at 816-268-4025.

The Importance of a Good Real Estate Agent

real-estate-agentIf you’re ready to become a homeowner, or it’s time to sell and you’re looking for a new home, it’s important to work with someone with local credibility and a reputation for honesty.

For home buyers, the real estate market can be foreign. Therefore, working with a trustworthy real estate agent will help home buyers feel more comfortable. Below are reasons why it’s important to work with a local real estate agent.

The real estate agent will know and understand the market.

Real estate agents are needed to understand the state of the local market and they take it as a full time job. In fact, they fully understand the conditions of the market for the last five years. Their knowledge of the market will allow them to use their experience and expertise while keeping the home buyer’s best interest in mind.

Information Interpretation

An agent will be able to provide home buyers with advice and confidence regarding real estate decisions. This will help protect the home buyer’s investment by assisting them in making a well informed and responsible purchase.

The real estate agent can help lower costs associated with buying a house.

Closing costs are additional costs to the buyer that must be paid before or at the time of settlement. These closing costs will typically consist of prepaid items such as your property taxes and insurance. Most often, any additional fees are then split between the buyer and the seller. However, we recommend that you urge your real estate agent to negotiate these fees to ensure you are able to get the lowest closing costs possible.

A good real estate agent is someone who has been in business long enough to become well established in the area. They will be able to earn your trust by being good listeners and using their knowledge to assist you through the home buying process.

The Copeland Mortgage Team has been in mortgage banking for over 10 years and would be happy to point home buyers to a real estate agent we know and trust.

For more information on the importance of a good real estate agent, or for a recommendation, contact the Copeland Mortgage Team at Midwest VA Loans today.

What is PMI and How Can I Avoid it?

primary-mortgage-insurancePMI, also known as Primary Mortgage Insurance, is put into place to simply protect a lender in the event that a home buyer defaults on their mortgage.

From the mortgage lender’s perspective, PMI is necessary in order to protect their investment and in turn, keep their rates low. This ensures that a mortgage lender can safely do business with you.

When is a PMI payment needed?

A mortgage lender is often going to require a PMI payment if the borrower does not provide a 20% down payment on the home. If this is not possible, the loan becomes a riskier investment for the lender, therefore requiring primary mortgage insurance.

How does PMI work?

Your PMI payment is paid monthly along with the overall mortgage payment to the lender. Once the principal amount increases over the years and the amount has passed the 20% threshold, a borrower may be able to contact their mortgage lender for a lower PMI payment or to have the payment removed.

How can I avoid a PMI payment?

If you are working with the Copeland Mortgage Team, you can avoid monthly PMI payments in 2 ways- by putting down 20% on your new home, or by being eligible for a VA loan.

If you aren’t eligible to avoid a monthly PMI payment in either of these ways, remember that after putting down the original 3.5% or more, you are building equity in your home each month and getting closer to reaching that 20% mark.

The benefit of a PMI is that becoming a homeowner is made easier by significantly lowering down payment requirements. Also, keep in mind that if you’re eligible for a VA loan, a down payment is not required.

If you have any questions about how PMI works, or would like more information about applying for a home loan, contact your local mortgage expert– Darren Copeland at 816-875-6392.

Homes for Heroes in Lee’s Summit

homes-for-heroesAt the Copeland Mortgage Team, we serve our activity duty veterans and other local heroes by helping out with their mortgage loans by providing extraordinary savings.

The Homes for Heroes Foundation in Lee’s Summit gives back to those who serve our nation and its communities each day. This foundation’s mission is to provide or coordinate financial assistance and housing resources to our Nation’s Heroes. Our local heroes of Lee’s Summit include Military Personnel, Police/Peace officers, Firefighters and First Responders who demonstrate a need for assistance.

Homes for Heroes Process

Once an individual qualifies and signs up, they are contacted by Homes for Heroes Affiliates within 24 hours. Local heroes in Lee’s Summit include, but are not limited to: teachers, healthcare workers, firefighters, public safety officers, military personnel, and others who provide quality services to the public each day.

Homes for Heroes Savings

The Affiliates of this foundation offers full service at a discounted rate. Homes for Heroes offers more savings than anyone else because of our strong business relationships. The following rebates and discounts are offered:

  • 25% of the gross commission paid to your Homes for Heroes real estate Affiliate’s company, whether you buy, sell or both

  • Discounted lending fees on purchase or refinances with a HFH preferred lender

  • Discount on Private Home Inspections with HFH preferred Home Inspection company

  • Discount on closing fee when using HFH preferred Title Company

 

The Copeland Mortgage Team is a proud Affiliate to the Homes for Heroes Foundation of Lee’s Summit. We encourage local heroes to Sign Up for Hero Savings today.

For more information about this great program or if you have any questions, please contact Darren Copeland, your local mortgage lender at 816-875-6392.

What Percent of my Income Should be Devoted to My Mortgage Payment?

home-buyers-mortgage-paymentBefore purchasing a home, it’s important to determine the percentage of your income that you will be able to dedicate towards your mortgage. The first step is to assess your current income and outstanding debt and make an accurate but conservative estimate about the amount of house you can afford. Asking the question “What’s my mortgage payment going to be is a great place to start!”

Mortgage Calculators

If you’re using an online mortgage calculator, it’s likely operating on a front-end ratio. This means they’re measuring your gross income rather than net pay to determine what amount you can dedicate toward your mortgage. You’ll often find that online mortgage calculators use 28 percent of your gross income. However, other things to be considered besides the principal and interest on your mortgage payment include property taxes, mortgage insurance and home insurance.

Back-End Ratio

A back-end ratio may be more beneficial for helping to determine a potential mortgage payment if you are carrying a significant amount of debt. The back-end ratio considers your current ongoing debts such as student loans, credit cards, child support, mortgage payments, etc. when determining your potential mortgage payment. This ratio has a standard 36 percent debt-to-income ratio in the mortgage industry.

Percent of Income

When assessing the amount of your income that will be used toward your mortgage, the mortgage product, your credit and a down payment are influential factors. Begin by determining your ideal debt-to-income ratio. Your total debt-to-income ratio includes your housing payment (mortgage, homeowners insurance, property taxes) and your existing debts.

Helpful Tips

We highly recommend that your mortgage payment not exceed 31 percent of your monthly gross income. As far as your total monthly payment obligations (mortgage, student and car loans, child support, etc.), these should not exceed 43 percent of your monthly earnings.

VA Loan Benefits

For home buyers qualified for a VA loan, no down payment in necessary. For more information on qualifying for a VA loan or to get pre approved, contact Midwest VA Loans today.