Idaho VA Loan Pre-Approval Letter
May 11, 2011 by Michelle Guth · Leave a Comment
An Idaho VA loan pre-approval letter is a document granted by an Idaho VA mortgage lender that states that based on preliminary information such as the potential borrower’s credit, assets, and income, that they qualify for a Veterans Administration loan of a specified amount.
It is different from a pre-qualification in that some or all of the submitted information is reviewed for accuracy before the letter is issued.
Having a pre-approval letter from your Idaho VA lender will show home sellers that you are a qualified buyer and may lead to your offer being more seriously considered.
Once you have obtained your Veterans Administration loan pre-approval letter, you will then be able to begin making offers on homes you are interested in purchasing.
In order to get your VA loan pre-approval letter, your lender may require the following:
- At least one months pay stubs or LES (if still active duty).
- W-2′s and Tax Returns for the past two years.
- Two months bank statements for any/all assets.
- Your DD 214 form (if no longer on active duty).
- Statement of Service from S1 (if still active duty)
Your pay stub is needed to show that you are currently employed, as well as your current income. W-2 statements (for the past two years) then show how much you normally earn in a year.
If you are currently still on active duty, your Statement of Service must show a minimum of 12 months remaining on your contract.
Finally, your DD 214 form will enable your Idaho VA mortgage lender to decrease the amount of time necessary for processing your certificate of eligibility. Once again, this is not required, but it is generally a smart idea.
The reason why this is a smart idea is that the majority of direct lenders with the Veterans Administration can put in an order for your certificate of eligibility, which determines whether or not you are eligible for a VA loan.
The process can be very quick as long as you turn in all these documents as soon as possible to your loan officer.
After your Idaho VA loan officer or lender has the described documents, he or she can submit your information in the VA loan analysis software to determine your eligibility. The calculation that will determine your eligibility is:
(Monthly Income) – (Proposed Mortgage Payment + Insurance + Taxes + Utilities for the house + Monthly Credit Card Payments Due) = Residual Income
Residual income is the amount of money that you have after you have paid the sum of your monthly bills. The VA will use their judgment after they have calculated your residual income to decide if you will have a satisfactory amount of money left over after you have paid your bills.
The VA has established various requirements for what your minimum residual income will have to be, such as what part of the country you live in, the size of your family, how old your children are, and various other factors.
When obtaining VA pre-approval letter, be aware that simply getting the letter does not commit the lender to giving you a loan. It just means the initial information has been reviewed. In order for the mortgage application to be approved additional information and documentation about both the borrower(s) and the property must be reviewed to be sure that all of the guidelines are met.
If you have any questions about a VA home loan feel free to contact me.
Michelle Guth
Diversified Mortgage Group
Mortgage Consultant
Direct: 208-853-7878
Michelle@dmgloans.com
ID MBL-5696 / NMLS # 36853 / 36852 / 1850
www.idahohomegroup.com
10 Advantages Of Getting a FHA Mortgage in Boise Idaho
September 8, 2010 by Michelle Guth · Leave a Comment
10 Advantages Of Getting a FHA Mortgage in Boise Idaho
1. Only 3.5% down payment which may include closing cost
2. Down payment and closing costs may be gifted from relative or employer
3. Higher qualifying ratios
4. Higher loan to value ratio
5. Cash out refinance up to 85% LTV
6. Can have a non-occupant co-borrower ( immediate family or established relationship)
7. Upfront MIP(mortgage insurance premium) can be financed
8. No pre-payment penalties
9. If interest rates drop you can do an FHA Streamline Refinance without an Appraisal.
10. Seller may pay up to 3% of Borrowers closing costs if stated in Sales Contract
If you have any questions about FHA Mortgages feel free to contact me.
Michelle Guth
Diversified Mortgage Group
Mortgage Consultant
Direct: 208-853-7878
Michelle@dmgloans.com
ID MBL-5696 / NMLS # 36853 / 36852 / 1850
www.idahohomegroup.com
Top 10 Boise Idaho Mortgage Links/Articles/Questions
1. FHA Streamline Refinance in Boise, Idaho
2. Idaho FHA Reverse Mortgage
3. Changes Are Coming For Boise, Idaho FHA Mortgages
4. 3 Great Idaho First-Time Home Buyer Mortgage Loans
5. Idaho FHA and VA Manufactured Loan Programs for Refinancing and Purchasing Homes
6. Jumbo Mortgage Financing for Boise, Idaho Properties
7. Conventional Home Loans For Boise Idaho Borrowers
8. VA Mortgage Loans in Boise Idaho
9. Boise Idaho Reverse Mortgage Senior Loans
10. FHA Mortgage Loans in Boise Idaho
Understanding the FHA Mortgage Insurance Premium (MIP)
March 28, 2010 by Michelle Guth · Leave a Comment
* Disclaimer – all information in this article is accurate as of the date this article was written *
The FHA Mortgage Insurance Premium is an important part of every FHA loan.
There are actually two types of Mortgage Insurance Premiums associated with FHA loans:
1. Up Front Mortgage Insurance Premium (UFMIP) – financed into the total loan amount at the initial time of funding
2. Monthly Mortgage Insurance Premium – paid monthly along with Principal, Interest, Taxes and Insurance
Conventional loans that are higher than 80% Loan-to-Value also require mortgage insurance, but at a relatively higher rate than FHA Mortgage Insurance Premiums.
Mortgage Insurance is a very important part of every FHA loan since a loan that only requires a 3.5% down payment is generally viewed by lenders as a risky proposition.
Without FHA around to insure the lender against a loss if a default occurs, high LTV loan programs such as FHA would not exist.
Calculating FHA Mortgage Insurance Premiums:
Up Front Mortgage Insurance Premium (UFMIP)
UFMIP varies based on the term of the loan and Loan-to-Value.
For most FHA loans, the UFMIP is equal to 2.25% of the Base FHA Loan amount (effective April 5, 2010).
For Example:
>> If John purchases a home for $100,000 with 3.5% down, his base FHA loan amount would be $96,500
>> The UFMIP of 2.25% is multiplied by $96,500, equaling $2,171
>> This amount is added to the base loan, for a total FHA loan of $98,671
Monthly Mortgage Insurance (MMI):
- Equal to .55% of the loan amount divided by 12 – when the Loan-to-Value is greater than 95% and the term is greater than 15 years
- Equal to .50% of the loan amount divided by 12 – when the Loan-to-Value is less than or equal to 95%, and the term is greater than 15 years
- Equal to .25% of the loan amount divided by 12 – when the Loan-to-Value is between 80% – 90%, and the term is greater than 15 years
- No MMI when the loan to value is less than 90% on a 15 year term
The Monthly Mortgage Insurance Premium is not a permanent part of the loan, and it will drop off over time.
For mortgages with terms greater than 15 years, the MMI will be canceled when the Loan-to-Value reaches 78%, as long as the borrower has been making payments for at least 5 years.
For mortgages with terms 15 years or less and a Loan -to-Value loan to value ratios 90% or greater, the MMI will be canceled when the loan to value reaches 78%. *There is not a 5 year requirement like there is for longer term loans.
Michelle Guth
Diversified Mortgage Group
Mortgage Consultant
Direct: 208-853-7878
Michelle@dmgloans.com
ID MBL-5696 / NMLS # 36853 / 36852 / 1850
www.idahohomegroup.com
_________________________________
Related Articles – Mortgage Approval Process:
- Basic Mortgage Terms
- How Much Can I Afford?
- Common Documents Required For A Mortgage Pre-Approval
- Top 8 Questions To Ask Your Lender During Application Process
- What’s The Difference Between An Investment Property, Second Home and Primary Residence?
- Seven Items Real Estate Agents Need To Know About Your Mortgage Approval
Top 10 Boise Idaho Mortgage Links/Articles/Questions
1. FHA Streamline Refinance in Boise, Idaho
2. Idaho FHA Reverse Mortgage
3. Changes Are Coming For Boise, Idaho FHA Mortgages
4. 3 Great Idaho First-Time Home Buyer Mortgage Loans
5. Idaho FHA and VA Manufactured Loan Programs for Refinancing and Purchasing Homes
6. Jumbo Mortgage Financing for Boise, Idaho Properties
7. Conventional Home Loans For Boise Idaho Borrowers
8. VA Mortgage Loans in Boise Idaho
9. Boise Idaho Reverse Mortgage Senior Loans
10. FHA Mortgage Loans in Boise Idaho
Why Do I Need To Pay A VA Funding Fee?
March 28, 2010 by Michelle Guth · Leave a Comment
The VA Funding Fee is an essential component of the VA home loan program, and is a requirement of any Veteran taking advantage of this zero down payment government loan program.
This fee ranges from 1.25% to 3.3% of the loan amount, depending upon the circumstances.
On a $150,000 loan that’s an additional $1,875 to almost $5,000 in cost just for the benefit of using the VA home loan.
The good news is that the VA allows borrowers to finance this cost into the home loan without having to include it as part of the closing costs.
For buyers using their VA loan guarantee for the first time on a zero down loan, the Funding Fee would be 2.15%.
For example, on a $150,000 loan amount, the VA Funding Fee could total $3,225, which would increase the monthly mortgage payment by $18 if it were financed into the new loan.
So basically, the incremental increase to a monthly payment is not very much if you choose to finance the Funding Fee.
Historical Trivia:
Under VA’s founding law in 1944 there was no Funding Fee; the guaranty VA offered lenders was limited to 50 percent of the loan, not to exceed $2,000; loans were limited to a maximum 20 years, and the interest rate was capped at 4 percent.
The VA loan was originally designed to be readjustment aid to returning veterans from WWII and they had 2 years from the war’s official end before their eligibility expired. The program was meant to help them catch up for the lost years they sacrificed.
However, the program has obviously evolved to a long term housing benefit for veterans.
The first Funding Fee was ½% and was enacted in 1966 for the sole purpose of building a reserve fund for defaults. This remained in place only until 1970. The Funding Fee of ½% was re-instituted in 1982 and has been in place ever since.
The Amount Of Funding Fee A Borrower Pays Depends On:
- The type of transaction (refinance versus purchase)
- Amount of equity
- Whether this is the first use or subsequent use of the borrower’s VA loan benefit
- Whether you are/were regular military or Reserve or National Guard
*Disabled veterans are exempt from paying a Funding Fee
The table of Funding Fees can be accessed via VA’s website – CLICK HERE
The main reason for a Veteran to select the VA home loan instead of another program is due to the zero down payment feature.
However, if the Veteran plans on making a 20% or more down payment, the VA loan might not be the best choice because a conventional loan would have a similar interest rate, but without the Funding Fee expense.
The best way to view the VA Funding Fee is that it is a small cost to pay for the benefit of not needing to part with thousands of dollars in down payment.
Michelle Guth
Diversified Mortgage Group
Mortgage Consultant
Direct: 208-853-7878
Michelle@dmgloans.com
ID MBL-5696 / NMLS # 36853 / 36852 / 1850
www.idahohomegroup.com
* Disclaimer – all information is accurate as of the time this article was written *
_________________________________
Related Articles – Mortgage Approval Process:
- Basic Mortgage Terms
- How Much Can I Afford?
- Common Documents Required For A Mortgage Pre-Approval
- Top 8 Questions To Ask Your Lender During Application Process
- What’s The Difference Between An Investment Property, Second Home and Primary Residence?
- Seven Items Real Estate Agents Need To Know About Your Mortgage Approval
