What Is a VA Mortgage Loan?

In 1944, as a way to assist those returning from military service, a program was created by the U.S government to help veterans buy a home without having to come up with a 20% down payment or having great credit. The program has helped millions of active and veteran members of the military to buy and refinance a home.

A VA mortgage lets you make a 0% down payment and is issued by private lenders, like banks and mortgage brokers. The loans are guaranteed by the United States Department of Veteran Affairs. These loans differ from a traditional mortgage loan in a few ways:

• VA loans require 0% down and traditional loans require 20%
• VA loans don’t require private mortgage insurance; traditional mortgages do if making less than the 20% down payment
• VA loans tend to offer more competitive rates than traditional loans because they are considered less of a risk
• It’s usually much easier to qualify for a VA loan due to the less stringent qualification requirements

Fees and Regulations 

Those who qualify for full VA loan entitlement are able to borrow what a lender offers without having to pay the down payment. There are some limits, however, for those who don’t have full entitlement. This usually occurs when they already have an active VA loan or have lost a loan due to foreclosure.

There is also a funding fee, which gets put back into the VA’s funds to help this program to keep running for generations to come. This fee will vary depending on your circumstances. If you are applying for a VA loan for the first time, you will usually pay a 2.3% funding fee of the home’s purchase price. Those who have applied before will usually pay 3.6%. Those with a disability that is connected to their military service won’t have to pay this fee. The funding fee can be calculated into the mortgage amount.

There is also a limitation to closing costs, with sellers paying all or most of the expenses. This means that, when it comes time to close, you won’t have any money still due to be paid.

Eligibility Requirements for a VA Loan

For you or your spouse to qualify for a VA loan, you need:

• To meet the service requirements set out by the VA
• To have a valid COE (Certificate of Eligibility)
• To satisfy the requirements of the lender

Service Requirements

You need to meet one of the following requirements set out by the VA:

• You have been in active service for 90 consecutive days during wartime
• You have been in active service for 181 days during peacetime
• You have served 6 years in either the Reserves or National Guard
• You are the spouse whose partner has died while serving or has become disabled as a result of their service

COE

The Certificate of Eligibility lets the lender know that you are eligible for a VA loan. Lenders can usually find this out through the VA automated system, which means you don’t need to have it on hand before you submit your application. A CEO can be requested electronically and is an important part of the VA mortgage process. You can obtain a COE by:

• Applying for a mortgage using a VA approved lender
• Applying through the VA eBenefits site online
• Filling out a VA Form 26-1880 and applying by mail

You will also need proof of service to acquire your COE. This can be done using a DD form if you are regular military, NDB Form 22 for National Guard Service, and NGB Form 23 for the Reserves. There are documents that you will need with your application:

Lender Requirements

Lastly, you need to meet the lender’s requirements, such as your credit score, debt level, and income. You also need to have the property checked by an appointed VA appraiser.

If you have questions about applying for a VA loan, give our Tennessee mortgage lender team a call today at (615) 833-0456!

The post Your Guide to Qualify for a VA Loan appeared first on Accurate Mortgage Group.

Know What Documents You Need

The mortgage process requires quite a bit of paperwork. You will need to prove your income, employment, and overall financial health. Knowing what documentation you need and making sure you have gathered it together before you apply for a mortgage will help the process run smoother.

Most mortgage lenders have a standard list of documents they will need, such as three month’s worth of pay stubs, income tax reports, and bank statements. If you are self-employed, you will need to present extra documentation. You will also need documentation that explains large transactions in your bank account, such as funds for a down payment that has been gifted to you. If you aren’t sure about what you will need, the best thing to do is call your lender and ask.

Know What You Can Afford 

Knowing how much you have to work with is also important when buying a home and applying for a mortgage. Lenders will advise you to make sure your monthly mortgage payments are not more than 28% of your monthly gross income. You also need to consider any other debts you are paying, such as personal loans, credit cards, and car loans. Your debt payments should be no more than 36% of your gross monthly income. Some lenders can be flexible with this, whereas others can be stricter, depending on your credit score.

Know the Market

The housing market can affect the type of loan you are able to get. Certain types of properties may be less desirable than others and end up costing you more. For example, in an area where there have been a lot of condo projects that have gone into bankruptcy, lenders will look at the property’s finances, as well as yours. This could lead to them requiring a larger down payment than normal. Always check with a real estate agent to get a better understanding of what is happening in the market. They can help you stay away from any risky properties and save you a lot of money.

Knowing these three things are very helpful, but there are still other things to consider when buying a home. Your credit score is one of these items and it’s important that you get familiar with it several months in advance of applying for a mortgage. This will give you time to clean up your credit report and raise your credit score.

You’ll want to look for any errors to start with and dispute these. Also, look at where your weak points are in your report. For example, you may have a few high-interest rate credit cards that are having an impact on your credit score. Paying these down can help you raise your credit score.

The more you know before you start the mortgage process, the better off you will be. If you have questions about applying for a mortgage, give our Tennessee mortgage lender team a call today at (615) 833-0456!

The post 3 Things You Need to Know Before Applying appeared first on Accurate Mortgage Group.

Are You Ready?

The most important thing that you need to determine is if you are really ready to take the plunge into homeownership. You need to be financially prepared to buy a home. There are costs to consider, such as repairs, utilities, taxes, and insurance. Buying and owning a home is a big financial responsibility, so you need to make sure your financial situation is stable.

What Can You Realistically Afford?

One of the biggest mistakes we’ve seen home buyers make is in not creating a budget to see what they can realistically and comfortably afford. They end up maxing out their budget to buy the home and then have little left for repairs or emergencies. This can cause a struggle when it comes to meeting their monthly mortgage payments.

Our best advice is to keep your monthly mortgage payments below 30% of your gross monthly income. Leave some breathing room in your budget for the unexpected and extra things that can come up, like repairs and fees.

Are Your Finances in Order?

Have you looked over your credit report recently? It’s definitely something that you should do several months to a year before buying a home. It gives you time to not only find and fix any errors on your report that are bringing your credit score down, but it also gives you a chance to see where your weak points may be. Paying down those high-interest rate credit cards can help raise your score quite a bit. The better your credit, the better your chance at qualifying for the loan amount you need. You may want to utilize some of the online mortgage calculators that are available on our website for free. It will give you a starting point to figure out just home much home you can afford.

Tip: To improve your credit score, pay your credit cards down to just about $50, and then, for a couple of months before you apply for your mortgage, just use them for something small, like a tank of gas or dinner one night – for something you can pay off easily while still keeping a low balance each month. In addition, don’t apply for any new lines of credit or make large purchases (car, boat, jewelry, etc.) before or during the mortgage approval process.

Have You Saved for the Down Payment?

Unless you qualify for down-payment assistance or a no-down-payment loan, you will need anywhere between 3.5% to 20% of a home’s purchase price as a down payment. It’s best to start saving for your down payment well in advance. The larger your down payment, the better the mortgage package you available to you. It’s also a good idea to keep your down-payment savings separate from the other expenses you will need to cover, such as closing costs and fees. This way, you won’t have to cut into your down-payment savings.

Tip: Put money aside for a home inspection. This is different from an appraisal and will give you a more detailed look at any potential issues with the house you are looking to buy, saving you money in the long term.

Get Your Paperwork in Order

Having all of your financial paperwork in order and on hand will save you a lot of hassle and time when it comes down to starting the mortgage process. Generally, you will need at least two months’ worth of bank statements, pay stubs, W-2 forms, and proof of income. If you are being gifted money for the down payment, you will need a letter drawn up from the person giving you the money that states it is a gift and not a loan to be paid back. Having everything ready beforehand cuts down on the time of having to gather paperwork, finding you are missing something, then having to wait while that is submitted.

If you are looking to buy a home soon and need some advice on how to get your finances in order, give our Tennessee mortgage lender team a call today at (615) 833-0456.

The post How to Get Your Finances Ready for Your First Home appeared first on Accurate Mortgage Group.

Freedom to Do What You Want 

From painting your room purple to changing the flooring, when you own your home, you don’t have to ask permission from the landlord to make changes. This means you have the freedom to style your home the way you want it and truly make it your space. You can even increase your homes’ value with some home improvements. Need some extra room? You can add an extension to the home, rather than having to move elsewhere to rent a bigger space.

Budget Stability

In most cases, if you have a mortgage with a fixed rate, your monthly payments stay the same. When you rent, there is always the worry of having a rise in the rent payments, which isn’t great if you are on a budget as it is. Of course, homeowners do have things like property taxes each year, which can fluctuate slightly. However, this is usually a tax-deductible fee, as is the interest that you pay on your mortgage.

Appreciation Benefits

When you buy a home, you are investing in your future. Your home appreciates over time, which can increase its value. The money you are paying each month is going toward something substantial, whereas, when you rent, your money isn’t really going anywhere except to your landlord. You also have the benefit of owning a rent-free home once the mortgage has been paid.

You Gain Stability

Renting can feel pretty unstable for many. Any change can mean no longer having a roof over your head. Your landlord may suddenly decide to sell the property for example, which means you now have to look for somewhere else to live. Or the rent could be hiked up, causing you to have to find somewhere cheaper to live. When you own your own home, you get that stability of knowing this won’t happen to you. It makes more sense to pay a mortgage for 10 to 15 years and have something to show for it.

Savings 

Each month, when you make your mortgage repayment, you are putting more equity into your home. The equity is like a savings account that you can tap into should you need to make home repairs or put your child through college. You’re basically investing in your own home, rather than in someone else’s.

For many, buying a home makes more sense financially than renting. If you are ready to move from renting to owning a home, give our Tennessee mortgage lender team a call today at (615) 833-0456!

The post The Benefits of Buying Over Renting appeared first on Accurate Mortgage Group.

Are there different types of mortgages?

Yes, there are often several mortgage options from which a borrower can choose, depending on their individual financial situation.

1. Fixed-rate mortgages
   • With this type of mortgage, the interest rate is fixed (stays the same) for the entirety of the mortgage loan. The benefit of a fixed-rate mortgage is that monthly payments will always be the same. It’s a good option if mortgage rates are low at the time you apply for a mortgage. Just bear in mind that, the amount you pay toward the interest is larger at first, but this will decrease gradually as you make your monthly repayments.

2. Adjustable-rate mortgages
   • With this type of mortgage, the interest rate is adjustable, which means it will fluctuate to match the current interest rate in the market. Your payment amount will change each month because the amount you pay toward the interest will change.

3. Government-insured loans
   • These loans are insured by the government and include VA, FHA, and USDA loans. These are guaranteed by the government for repayment to the lender should the borrower default on their payments. Because of this, it can be easier to qualify for a government loan.

4. Conventional loans
   • This is a traditional mortgage loan with a private lender. These mortgages are not backed by the government and are best for those who have really good credit.

Is it beneficial to pay your mortgage off faster?

Yes. The quicker your mortgage is paid off, the less you will be paying in interest. This can save you several thousand dollars, depending on the loan amount and the interest rate.

Am I able to make larger payments than the lender demands?

This depends on mortgage terms with your lender. In most cases, a lender will let you make extra payments to shorten the term of the loan. You may also have the option to make a lump sum payment once a year that goes toward the principal of the loan payment. However, some lenders charge a fee on early repayments.

How much interest will I pay?

This depends on your credit score, financial history, and the current rates being offered at the time. Higher credit scores will get lower rates, whereas poor credit scores get higher rates.

Can I still get a mortgage if I have a bad credit score?

It depends on how low your credit score is. Normally, a score under 520 is more likely to be denied for a conventional mortgage loan. However, going with a private lender is an option for those with poor credit. The downside is that the interest rates can be quite high.

Can I make a down payment of less than 20%?

Yes. In fact, in some cases, you can make a down payment as low as 3%. However, some lenders may require you to pay for private mortgage insurance (PMI) with a smaller down payment. This protects the lender from risks if you suddenly can’t make your payments and default on the loan. This is a monthly payment that will be included in your mortgage payments.

If you are thinking about applying for a mortgage and want to be sure you get the best rates possible, give our Tennessee mortgage lender team a call today!

The post Mortgage FAQs appeared first on Accurate Mortgage Group.

It is also important to work with the right mortgage lender. The right mortgage professional can offer you great deals and help the process go by quicker. So, to help you get started, your local lender with Accurate Mortgage Group has listed some useful tips for choosing the right mortgage professional.

Tip #1: They Put You First

When you attend your first meeting with a mortgage lender, try to determine whether they have your best interest in mind. Are they willing to go above and beyond to ensure you get the right loan that is catered to your specific needs or are they just trying to make a sale? The right mortgage lender will put you first and do everything they can to get you the best deal out there.

Tip #2: Works Well With Others

Getting approved for a Smyrna home loan does not occur overnight. This means you will be in constant contact with your mortgage lender until your loan has been approved and signed for. Therefore, it is important that the lender you choose works well with others. If you do not get along with each other, that could make for a really long and uncomfortable application process.

Tip #3: Answers All Your Questions Honestly

There are some lenders out there who will be hesitant to tell you the truth. Do not work with those lenders. Instead, find someone who is upfront and honest about any additional fees they may require and be sure and choose someone who will answer any questions you may have.

Tip #4: Shop Around

You do not have to work with the first Smyrna mortgage lender that you speak to. Shop around and schedule multiple meetings with different lenders. Take the time and compare their different products and rate structures so you can confidently choose the best option for your goals as a homeowner.

Contact Us

If you would like to discuss these tips for choosing the right mortgage lender in more detail or if you are ready to begin your mortgage application, please contact Accurate Mortgage Group at 615-833-0456.

The post Tips for Choosing the Right Mortgage Lender appeared first on Accurate Mortgage Group.