VA Home Loan - Heads Up!

[akzinger]

I just want to give fellow Marines a heads up on VA home loans. Watch out for mortgage brokers and loan agents who will try to switch you off of a VA Loan. You earned the right to purchase a home through the VA's program. This program essentially guarantees the lender 25% of the loan on your new home. The VA has stipulations that make it very hard for a lender to take your home if you ever have difficulty in making payments. It also limits the fees a lender can charge you and does not allow them to "mark-up" appraisals and other charges. With this guarantee from the VA, it is similar to having a 25% down payment and you are not required to pay mortgage insurance and should recieve the best rate available. Be careful of brokers who will mark up the interest rate for a bigger commission and/or switch you to a non-VA mortgage telling you you don't qualify. If you don't qualify with a 25% guarantee from the government something stinks! Ask to see the denial from the VA. I personally had a broker tell me the VA wouldn't approve me (even though they had approved me before) and I got switched to an ARM (adjustable rate mortgage) with a much higher cost to me. I later learned that the broker had never sent the loan application to the VA and had flat out lied to me. Be careful out there Marines! There are people who don't possess the honor and integrity that you do! Semper Fi !

[thewookie]

Good post. I'll add,, avoid mortgage brokers if at all possible, unless you want to deal with a middleman. Not saying that there aren't some honest ones out there but why take a chance and pay for them if you can deal directly with the source; a traditional brick and mortar bank. A traditional bank pays their loan officers salary. They're not doing their job for an up-front fee or commission. This is because they keep most the loans they write in-house, and this allows the bank to earn a very good return on the money they loan people. It also means a banker, is not looking out for himself when he does your business. A good banker wants to write good loans that will be in the bank, and over the years earn steady revenue for the bank. A mortgage broker, however, earns their pay by charging an up-front fee (usually payable at closing), receiving indirect compensation from the lender for up-selling the rate, or a combination of the two. Brokers don't hold the loans they write, they only arrange them so they have no source of revenue once the loan is closed, and sold to a lender/servicer. So they have to get you upfront, and/or behind your back.

Most brokers do not like to work with the VA or any federal loan program because they're restricted in what they can charge.

So go to a bank, and cut the middleman out.

[nightstalker2]

curious I have a arm and when it adjust the paperwork states no higher than one percentage point, and will flacuated off and on for one year and then whatever rate at the end of the year becomes fixed. since the fed has cut rates at least seven times what are mine chances of have it adjust lower than 6%, feedback anyone.

[ecfree]

Hey nightstalker2....I did not see your PROFILE...
Did you forget ?

[akzinger]

curious I have a arm and when it adjust the paperwork states no higher than one percentage point, and will flacuated off and on for one year and then whatever rate at the end of the year becomes fixed. since the fed has cut rates at least seven times what are mine chances of have it adjust lower than 6%, feedback anyone.

You may want to Refi and I would suggest VA fixed. The ARM sounds funky, I have never heard of that type of ARM. I am not a financial advisor but I think you can get a fixed right now around 5.5%. There will be some expenses to refi and there are factors that determine if it is beneficial like how long you plan to stay in the house etc...Getting out of an ARM may reduce your exposure in the future. I really think it may be worth you spending $50-$100 for an hour of a Certified Public Accountants time to look over your paperwork and help you make a sound decision based on your personal and financial circumstances. I'm sorry I couldn't answer your question more directly but I think you really need to seek professional advice so you get the best results. Also, I would not seek that advice from the person selling you the loan. Seek a third party with no financial interest in your loan. Good Luck Marine!