This video could save some veterans thousands. VA loan applicants pay a funding fee - as of 2014, 2.15% of the total loan amount - which can be thousands of dollars.Some veterans and spouses are eligible for exemption. Broadly speaking, veterans who received disability benefits - current or former and who are NOT currently in debt to the government may be exempt from the funding fee.Some spouses may qualify as well. The key thing to understand is, exemption from the funding fee is NOT automatic! Borrowers must certify their veteran status, government debt, benefits and active service stateon VA Form 26-8937. It is important to tell your mortgage company that they need to submit this form EARLY in your home-buying process - if they just look up your records without submitting the form the VA will not begin the review and approval process and your home purchase could be delayed by weeks.

The COE is the key document that verifies to lenders that someone is eligible for a VA-backed loan. Servicemembers, Veterans and National Guard and Reserve members may apply online or through their lender; most lenders have access to the system and can verify eligibility IF the VA has records on file. The VA also maintains a hotline for assistance. Surviving Spouses can use VA Form 26-1817 to request determination of their eligibility for VA Loan Guarantees. Your lender may be able to assist with processing or contact the VA for information this video did not address.

Some combinations of loan terms — such as a small down payment — may require the buyer to pay mortgage insurance. (See the video on Private Mortgage Insurance here to learn a bit more about it.) PMI can add yearly costs to your mortgage, but you may not be required to continue carrying for the whole term of the loan. If your loan was consummated after July 29, 1999, and your payments are current, you have some options. Your lender must terminate PMI when principal balance is 78% of the original value of the home. Your lender must terminate PMI if you reach the halfway point of hte loan term (e.g. 15 years on a 30-year fixed loan.) You can request cancellation of the PMI policy yourself when principal reaches 80% of original value. Logically, that suggests that the lender didn’t cancel automatically, so if you’ve hit the 78% market, ask them in writing. Consumers have the right to ask for the date that either of these balances will be in force. If your mortgage is relatively new, ask for the date and put a followup note on your calendar or phone to check — even if it’s years in the future. Follow any steps the lender requires, do everything in writing and keep copies.

Heres a short explainer video to help you compare mortgage loan options from different lenders. Most of us arent involved in mortgages every day, so the terminology and decision factors can be intimidating. Creating a simple, structured process to compare your loan options can make it a bit easier. Devise your own "checklist", and keep the same details for each lender and loan program as you shop. Your checklist should include company-level details: How big is the lender? (Offices, personnel, number of loans per year, or something other measurable factor.) Do they have local representation? Who is the key contact, and how can you reach them? For each loan, youll want to track consistent details. Some recommended items: Type of mortgage — fixed (15? 30?), ARM, balloon and so on. Minimum down payment required Current interest rate Points options and terms, if applicable. Closing costs Prepayment terms If the lender provides information on loan-processing timelines, that may be helpful to know. Because interest rates can change rapidly — even daily — accumulating this information gradually may not be effective. If you can arrange to call the lenders on your list on the same day, youll have a better basis for comparison. If you are already working with a real estate agent, they may have a list of lenders to help you get started.

The video puts this in more visual terms, however your individual scenario will figure out the very best sort of loan for you. Lenders can assist you utilize your responses to choose which loan best fits your requirements. Do you expect your finances to change over the next few years? Are you planning to live in this home for a long period of time? Are you comfortable with the idea of a changing mortgage payment amount? Do you wish to be free of mortgage debt as your children approach college age or as you prepare for retirement? Lenders can assist you in using your replies to decide which loan is the best fit for you.

Heres a short article and helpful explainer video, giving you some tips on choosing a lender for your mortgage loan. While applying for a mortgage can be intimidating, remember that lenders want your business! You are the customer, making one of the biggest purchases of your life. Companies you consider should be responsive, professional and helpful as you start sizing up your options. There are many advantages to working with a lender that has a local presence. They will have connections with the other businesses and government organizations involved in the purchase, and will know "how to do this" in your particular state and locality. A local presence also helps the lenders personnel be up-to-date on home values and conditions in the area, which could potentially be a factor in your search. Companies without a local presence should not automatically be rejected. Your communication preferences and record-keeping habits might make a national lender with a robust digital loan-processing system a fit. You should be comfortable with calls and video, rather than face-to-face conversation, if that looks like a fit. Advice from friends and family may be helpful, but keep this in mind. People do not buy homes as often as they buy groceries, or even cars. Verify the advice you receive with your own homework, online research, and feel for the situation.

This video outlines what to expect after youve applied for a mortgage loan. There are 6 required pieces of information for a mortgage loan application, covered in another video here on Video-Genius. Some lenders may request additional information at the time of application, or later. Once you have supplied the 6 required pieces, lenders have to provide a Loan Estimate in 3 business days. Lenders will verify the information you provide, through actions like credit checks, credit history and employment verification. Most lendersmust follow these steps, to assess your ability to repay. (Dont be offended by verification — it is required.) Once information has been verified, and processes like underwriting completed, the lender will make a decision about loan approval. If the loan IS approved, they will deliver a Closing Disclosure detailing all of the costs and terms. If you have a Closing Disclosure already, there are videos here that cover all of the pages and details to help you make sense of it. The Closing Disclosure itself must be delivered to you, 3 business days prior to consummation of the loan. The lender will usually set a date for that loan consummation process; this may also be your closing meeting. For clarity — closing essentially means "transferring ownership", and consummation basically means "committing to the loan." Once you have completed both of these, take a breath and pat yourself on the back! Successfully buying a home is a big milestone. Hopefully you remembered to get the keys so you can start transforming "the property" into your home.

Debt-to-Income (DTI) is one of the key ratios lenders use to assess and approve loan applications. Determining your current financial obligations versus your existing earnings is one part of a lending institutions necessary evaluation of your capability to pay back a loan. Like the video states: financial obligations are existing monetary obligations; a vehicle payment is a financial obligation while a grocery expense is not. To compute your debt-to-income ratio, assemble your month-to-month financial obligation payments and divide them by your GROSS regular monthly earnings. (Gross earnings is the money you make BEFORE taxes and other reductions.) The Federally-established debt-to-income target is currently 43% for Qualified Mortgages, although some experts advise aiming for a more conservative figure — less than 36%. If your DTI is greater than the Federal guidelines, other loans might be available. These may also involve more documentation and data to establish your ability to repay. Rates for these are likely to be different from those offered for Qualified Mortgages. High debt-to-income ratio puts a property owner at higher threat of challenges to making regular monthly payments. Review your scenario and risks thoroughly if DTI is an obstacle.

If financial circumstances arent working, and you are falling behind on mortgage payments, hoping the lender wont notice isnt a solution. Talking with them about loss mitigation options is better. Lenders may be able to arrange a "workout package" to help get things back on track. Mortgage loans are often "sold"; the lender who is servicing the loan — the lender to whom you send checks — has the financial interest in your situation. Talk with that lender, not the original lender. If Fannie Mae or Freddie Mac — both government-sponsored enterprises involved in mortgage lending — have acquired your loan, there are Federal guidelines that they may apply to your situation. They are not there to deal directly with borrowers (you), but they may be able to work with the lender of record to determine the loss-mitigation guidelines that best fit your situation. Be vigilant about companies that "just want to help". Look out for: Financial counseling agencies with high fees; they may be charging for advice you can get for free. Equity Skimming — companies (or individuals) who offer to repay the mortgage or sell the property if you sign over the deed. And do not sign anything related to your home until you understand it thoroughly.

"Prime has dropped (or raised) 0.X%" Youll see some version of that headline all the time, particularly if youre looking for a mortgage. You may even be considering a loan that is based on "Prime". But what is Prime?? In a nutshell, the prime lending rate is the interest banks charge each other for overnight loans. This rate is based in turn on the interest rate the Federal Reserve charges for money it lends to banks. Heres an example from the video. Bank A borrows money from the Federal Reserve, at 1% interest. Bank B borrows from Bank A at 4% interest. (Historically Prime has been about 3% above the Federal rate.) Both Bank A and Bank B recalculate loans "based on Prime" — like Adjustable Rate Mortgages — on that 4% figure. The short-hand term "above Prime" in the world of mortgages is the margin (or spread) added to the Prime rate. An ARM with 2% margin would be 6% (4% + 2%) in the example above. Watch our short video to see this explained visually.