What is a VA Home Loan?
A VA home loan is a mortgage loan created to benefit the veteran or active duty service member wishing to achieve homeownership. VA home loans are partially backed by the VA which allows VA-approved lenders to give veterans and active duty service members a variety of benefits they would not be able to find with other similar lending programs. In addition to competitive interest rates, flexible eligibility requirements, and lenient loan terms, VA home loans also offer benefits such as:

• Zero down payment required
• No mortgage insurance required
• Flexible debt-to-income ratios allowed
• Regulated closing costs

Why Should I choose a VA Home Loan?
Although the  VA home loan offers a multitude of benefits that can greatly decrease out-of-pocket expenses for eligible borrowers, they are not the only reason why you should choose a VA home loan. Along with competitive rates and zero down payment, the VA loan also has high loan limits which generally provides 100% financing to veterans. For veterans living in Utah where the average cost of a home ranges between $225,000 to $275,000, but can reach higher than $350,000, eligible borrowers can receive a loan up to $417,000, or up to $1,094,625 in the more expensive real estate areas.

Who is Eligible for a VA Home Loan?
Even veterans who are concerned that their credit history may prevent their eligibility as a borrower are still encouraged to apply for a VA home loan. Most veteran borrowers, in fact 80% of them, would not have been able to secure a home loan had it not been for the VA home loan program. To initially meet eligibility requirements for a VA home loan, borrowers must:
Have served 181 days on active duty or 3 months during war time
Or have served 6 years in the National Guard or Reserves
Or be the spouse of a service member who was killed during active duty

Although there are limited eligibility requirements for a VA home loan, VA-approved lenders will require a Certificate of Eligibility and a credit score of at least 620 to secure financing. All veterans seeking home ownership are still encouraged to apply as even those with a history of bankruptcy or foreclosure have been approved in the past.

This article was provided by Brandon Fischer

The downward mortgage rates won’t last forever, but the question is when will they start going up? For people like me who are unable to refinance right now, but who will be able to next year, will interest rates still be this low in 2011? No one knows for sure, but here is what the experts are predicting. Take it with a grain of salt, because we all know their past predictions haven’t exactly been accurate.

In March, the Mortgage Bankers Association projected that rates on 30-year fixed-rate mortgages would rise to 5.8 percent during the final quarter of 2010, and average 6.2 percent in 2011 and 6.4 percent in 2012.

The MBA’s most recent mortgage finance forecast, issued on Aug. 17, projects that 30-year fixed-rate loans will rise to an average of 4.8 percent during the fourth quarter of this year, and stay around 5 percent most of next year.

MBA economists don’t foresee mortgage rates ticking up at a more rapid pace until 2012, when they expect 30-year fixed-rate mortgages to climb to an average of 5.8 percent during the final three months of the year.

via Mortgage rates plumb new depths | Inman News.

So in short, now is probably the best time EVER to refinance, but it looks like Utah Real Estate interest rates will still be incredibly low for the next few years.

Record-low mortgage rates have sparked another refinancing boom but aren’t doing much to spur homebuyers into action, according to the results of the Mortgage Bankers Association’s latest Weekly Mortgage Applications Survey. Demand for refinancings was up nearly 6 percent during the week ending Aug. 20 when compared to the previous week, and down 26 percent from four weeks ago, reaching the highest level since May 2009. Demand for purchase loans was essentially flat, rising 0.6 percent on a seasonally adjusted basis from the previous week, and down 1.1 percent on an unadjusted basis. Looking back a year, demand for purchase loans was down nearly 39 percent. Requests for refinancings accounted for 82.4 percent of all mortgage loan applications — the highest share observed since January 2009.

via Low rates spur refi boom | Inman News.

Rates on fixed-rate mortgages tracked by Freddie Mac hit new lows this week, with 30-year fixed-rate loans averaging 4.42 percent with an average of 0.7 point.That’s down from 4.44 percent last week and 5.12 percent at the same time a year ago, and is a new low in records dating to 1971.It was the ninth straight week that 30-year-fixed mortgage rates met or set a new record low in Freddie Mac’s Primary Mortgage Market Survey.

via Mortgage rates go lower | Inman News.

Even today, private capital has not yet fully returned to this market,” Jeffrey Goldstein, the Treasury Department’s undersecretary for domestic finance, wrote recently. “Fannie Mae, Freddie Mac and other government entities guarantee more than 90% of newly originated mortgages. They are practically the only game in town.” (In 2005, they accounted for just a third of the market.)

via Feds rethink policies that encourage home ownership – USATODAY.com.

Freddie Mac’s weekly rate survey showed 30-year fixed-rate mortgages hitting 4.44 percent for the week ending Aug. 12, a new low in records dating back to 1971.

At 3.92 percent, 15-year fixed-rate mortgages were also at a low in records dating to 1991, while 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans averaged 3.56 percent — the lowest surveyed in records dating to 2005.

But low rates haven’t translated into demand for loans, another survey by the Mortgage Bankers Association showed. Many borrowers who might benefit by refinancing have already done so, and housing sales slowed after the expiration of the federal homebuyer tax credits.

Demand for purchase loans was down 34.1 percent from a year ago during the week ending Aug. 6, and requests to refinance accounted for 78.1 percent of all loan applications, the MBA survey found.

via Mortgage rates fall, but so does demand | Inman News.

Upfront premiums for FHA mortgage insurance would be rolled back from 2.25 percent to 1 percent on Sept. 7, while annual premiums would nearly double.

FHA had raised upfront premiums from 1.75 percent to 2.25 percent in April, to cope with rising losses on FHA-guaranteed loans. The Obama administration promised to reduce upfront premiums if Congress gave it the authority to raise annual premiums beyond their statutory limit of 0.55 percent.

Legislation raising the statutory limit on annual premiums to 1.55 percent was approved by lawmakers on Aug. 4 and has been presented to President Obama for his signature.

The day after the Senate’s unanimous passage of HR 5981, Stevens said FHA would roll back upfront premiums to 1 percent on Sept. 7, simultaneously increasing annual premiums to 0.85 percent for borrowers with loan-to-value ratios of up to 95 percent and to 0.9 percent for borrowers with higher LTVs.

via FHA premium changes pushed to Oct. 4 | Inman News.

Mortgage applications to purchase homes rose 0.3 percent on an adjusted basis last week, virtually unchanged from the previous week, according to the Mortgage Bankers Association weekly survey.

On an unadjusted basis, purchases decreased 0.3 percent compared with the previous week and were 34.1 percent lower than they were the same week a year ago.

This trough in purchases comes despite the fact that 30-year fixed rate mortgages are at the lowest level they’ve been since the MBA began keeping track:

* 30-year fixed-rate mortgages decreased to 4.57 percent from 4.60 percent.

* 15-year fixed-rate mortgages decreased to 3.95 percent from 4.03 percent.

via REALTOR® Magazine-Daily News-Mortgage Volume Is Nearly Flat.

Fannie Mae posted a $1.2 billion net loss for the second quarter, the smallest loss in three years, amid signs that the massive wave of souring loans that brought down the mortgage-finance giant may be easing. But Fannie still asked the U.S. government for an additional $1.5 billion.

The quarterly loss reflects the lingering weaknesses in the housing market, but was an improvement from the $14.8 billion loss for the year-ago quarter. It marked the 12th consecutive loss for the Washington-based firm.

via Fannie Posts Smallest Quarterly Loss in Three Years – WSJ.com.

There is a new program where FHA will give loans to people with negative equity, who are current on their payments, IF the principal lender will “write off” at least 10% of the loan balance. In essence, this is like a “short sale” for refinancing, instead of just for selling a home. Here are some details provided by Inman News:

The Federal Housing Administration will launch a program on Sept. 7 that will allow underwater homeowners who are current on a non-FHA loan to refinance into an FHA-backed loan when their lender agrees to write off at least 10 percent of their principal.

The FHA Short Refinance program, originally announced in March, is designed to help homeowners in markets that have seen large declines in home values refinance into “a safer, more secure” mortgage, FHA Commissioner David Stevens said in a statement.The FHA today published a letter providing guidance to lenders on implementing the program, which is voluntary and requires the consent of all lien holders.The borrower’s existing first lien holder must agree to a “short payoff,” writing off at least 10 percent of their unpaid principal balance. The refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75 percent.If the borrower has a second mortgage, their combined loan-to-value ratio must be no greater than 115 percent.

The Treasury Department will provide incentives to second lien holders who agree to full or partial extinguishment of their liens. To be eligible, servicers must execute a servicer participation agreement SPA with Fannie Mae on or before Oct. 3. Some homeowners who have negotiated a loan modification will also be eligible for the FHA Short Refinance program. Borrowers who have a permanent loan modification under the Making Home Affordable Modification Program HAMP can participate in the FHA Short Refinance program, and homeowners with non-HAMP modifications are eligible if they have made three monthly payments on time.

via FHA will refi underwater borrowers | Inman News.

While the legalities of this program allow FHA to give these great new loans, the existing mortgage holders are the ones taking a hit. Why would they want to simply lose a minimum of 10% of their loan investment, unless the house was in danger of foreclosing, and they were going to lose more than that anyways?

From an economic standpoint, it just doesn’t make sense. There is no logical reason why a lender would be willing to do this when the current borrowers are making their payments in full as agreed upon in the original mortgage term.

Am I missing something here? It says that there will be “incentives” for second lien holders who will lose out, but it doesn’t say anything about what the primary lender gets for giving up 10% of the loan amount.

I find it a little bit hypocritical that the only “non FHA” loans will qualify for this great refinance opportunity. If the program is such a great idea, then why won’t they permit people who already have FHA loans to refinance under these great terms?

Like most of the government housing relief programs, I don’t think it is going to really work. It sounds like a great deal for underwater borrowers with negative equity, but the realities of it just don’t make sense. It seems more like a political move for politicians to prove that they are doing something to try and turn around the housing market. If I’m wrong, and this program does actually work, it could be really valuable for areas like Orange County California Real Estate, Jacksonville Florida Real Estate, Phoenix Arizona Real Estate, and Real Estate in Henderson Nevada where home values have really taken a hit.

via Refinance Option for Underwater Borrowers | Short Sales.