Why VA Termite Inspections Are Vital

The VA understands the significant impact termites can have on homeowners. In the United States alone, termites cause damage to over 600,000 homes each year, costing homeowners approximately $5 billion annually. As part of their commitment to veterans, the VA aims to protect those utilizing VA loan benefits from falling victim to termite-related issues prevalent in certain regions.

Understanding When VA Termite Inspections Are Required

Termites thrive in specific locations across the country; however, some areas more than others can become infested. Over 30 states mandate termite inspections before finalizing a home loan, while others grant discretion to the parties involved. In some states, individual counties enforce their own specific termite inspection requirements. To keep up with the growing termite infestation, the VA implemented changes in June 2022, making termite inspections mandatory for properties in areas classified as "Moderate to Heavy" or "Very Heavy" infestation zones.

Who Pays for VA Termite Inspections?

The cost of a termite inspection can vary, with an average range of $100-$200. Negotiations between buyers and sellers often lead to sellers covering this fee so be sure to ask your realtor about including a provision in the contract regarding who is responsible for the cost of the inspection. In the interest of ensuring a termite-free home, sellers may recognize the benefit of the inspection, and facilitating a smooth VA loan process.

VA Termite Inspection Requirements by State

After embarking on your VA home loan journey, the primary question is whether you need a termite inspection. For the following states, the answer is an unequivocal yes:

Alabama, Arkansas, Arizona, California, Connecticut, Delaware, Florida, Georgia, Hawaii, Iowa, Illinois, Indiana, Kansas, Kentucky, Louisiana, Massachusetts, Maryland, Mississippi, Missouri, North Carolina, Nebraska, New Jersey, New Mexico, Nevada, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Virginia, West Virginia, Washington, D.C.

In other states, a termite inspection is only required if an independent VA appraiser identifies possible termite related damage during the appraisal process. The need for termite inspections in these states remains discretionary:

Alaska, Colorado, Idaho, Maine, Michigan (required in counties: Allegan, Barry, Berrien, Branch, Calhoun, Cass, Hillsdale, Ionia, Jackson, Kalamazoo, Kent, Lenawee, Livingston, Macomb, Mason, Monroe, Muskegon, Oakland, Oceana, Ottawa, St. Clair, St. Joseph, VanBuren, Washtenaw, and Wayne), Minnesota, Montana, New Hampshire (required in counties: Cheshire, Sullivan, Merrimack, Rockingham, Belknap, Hillsborough, and Strafford), New York (required in counties: Bronx, Broome, Columbia, Delaware, Dutchess, Greene, Kings, Nassau, New York, Orange, Putnam, Queens, Richmond, Rockland, Suffolk, Sullivan, Ulster, and Westchester), North Dakota, Oregon, South Dakota, Vermont (required in counties: Bennington and Windham), Washington, Wisconsin (required in counties: Columbia, Crawford, Dane, Dodge, Grant, Green, Iowa, Jefferson, Kenosha, Lafayette, Milwaukee, Ozaukee, Racine, Richland, Rock, Sauk, Vernon, Walworth, Washington, and Waukesha), and Wyoming.

The Importance of Professional Termite Inspections

To identify any signs of termite infestation, professional inspectors will diligently examine possible entry points, both inside and outside the home. While damaged wood serves as an obvious indicator, other telltale signs may warrant additional attention. Addressing any identified issues becomes imperative before finalizing your VA home loan.

VA Loan Termite Inspection Costs

In the past, VA loan borrowers were not permitted to pay for termite inspections during the home loan process. Previously, termite inspections were typically excluded from the expenses borne by VA loan borrowers during home purchases. Yet, in June 2022, the VA revised its regulations, permitting all borrowers the option to bear the cost associated with termite inspection reports, particularly when the inspection is mandatory. Additionally, VA borrowers can handle the costs of necessary repairs to meet the VA's minimum property requirements.

Here are the Current VA funding Fees and the new VA Fees for Loans closing on or after April 7, 2023.

Want to see how this can help you? Find out how this change could affect your ability to qualify for a VA loan! Talk with one of our experienced loan originators, who will help you every step of the way!

The premium will be reduced from 0.85 percent to 0.55 percent for most FHA borrowers, which could benefit up to 850,000 borrowers over the coming year, saving these families an average of $800 annually. “...today, we are building on the steps we’ve taken to make homeownership more affordable, and HUD is acting to ensure people feel comfortable purchasing a home as they build toward their future. As we reduce housing costs for people with FHA mortgages, we continue our work to address longstanding disparities in homeownership,” says Secretary Fudge.

Details from HUD Release:

“The 30 basis point annual MIP reduction will apply to almost all Single Family Title II forward mortgages insured by FHA. Further, the reduction applies to all eligible property types, including single family homes, condominiums, and manufactured homes, all eligible loan-to-value ratios, and all eligible base loan amounts.

The average FHA borrower purchasing a one-unit single family home with a $265,000 mortgage will save approximately $800 this year as a result of FHA’s premium reduction. For the same borrower with a mortgage of $467,700 – the national median home price as of December 2022 – FHA’s annual MIP reduction will save them more than $1,400 in the first year of their mortgage. In addition to providing overall savings to borrowers, a lower annual MIP can also help more people qualify for a mortgage.”

The annual mortgage insurance premium reductions are noted in the table below and are effective for mortgages endorsed for insurance by FHA on or after March 20, 2023.

Why this is important:

Lowering the monthly payment for MIP can help you afford a larger home or it could mean the difference between qualifying for a mortgage or not!

Get started with one of our experienced loan originators now to take advantage!

View the HUD announcement

What is a buydown? 

A buydown is a mortgage option where the payment is reduced temporarily as if the rate was "bought" down for the first 1-3 years of the loan, depending on the type of buydown. With a buydown, homebuyers are able to purchase their homes with lower monthly mortgage payments to start.  

There are several reasons why one would use a buydown.  Sellers trying to attract potential homebuyers in this market, or a buyer expecting their annual income to increase or rates to go down, in the next few years, being the most common.

How does it work?

Let’s use the example of a 350,000 loan with a 6% rate and a 3-2-1 buydown.  The principal and interest payment for the loan will be 1798.00/mo.  Now, in the first year of the 3-2-1 buydown, the interest rate will be 3%, with a monthly payment of 1265.00/mo, while the remaining 533.00/mo will come out of the “temporary buydown” escrow account that is seller-funded at the time of closing.  This will continue into year 2 and year 3 with the amount coming from the buyer increasing and the amount coming from the escrow account decreasing. Then from year 4 to year 30, the borrower will pay the full principal and interest payment.  There is no additional charge to the buyer to take advantage of this program.

Click the link below to see what your payments could look like for the buydown period and beyond, as well as the amount that will be funded to the “temporary buydown” escrow account.  

In simplest terms, when you close your loan, funds are placed in a separate account and used to pay a portion of your monthly payment for the first 3 years of the loan.  This means you can take advantage of the savings to fix up the house you just bought, and if rates improve in the future, you are encouraged to refinance to fix a lower rate and payment.  

Is it right for me?

As with any mortgage product, it is important to understand how it works, the risks involved and if it will benefit you.  Being an informed buyer ensures that you are making the right choices for yourself.  Reach out today to find out if this or other programs we offer cab help you on your way to becoming a homeowner!

Section 203(k) insurance enables homebuyers and homeowners to finance both the purchase (or refinancing) of a house and the cost of its rehabilitation through a single mortgage or to finance the rehabilitation of their existing home.  

Simply put, you can purchase or refinance a house that needs some help! Certain repairs are allowed through the program to modernize and improve your home and it is all contained within one FHA mortgage!

What kind of repairs and improvements are allowed?

• structural alterations and reconstruction 
• modernization and improvements to the home's function
• elimination of health and safety hazards
• changes that improve appearance and eliminate obsolescence
• reconditioning or replacing plumbing; installing a well and/or septic system
• adding or replacing roofing, gutters, and downspouts
• adding or replacing floors and/or floor treatments
• major landscape work and site improvements
• enhancing accessibility for a disabled person
• making energy conservation improvements

Need just a small renovation without any structural changes?  Check out the Limited 203(k) loan!

This program permits homebuyers and homeowners to finance up to $35,000 into their mortgage to repair, improve, or upgrade their home. Quickly and easily tap into cash to pay for property repairs or improvements, like remodeling the kitchen, painting the interior or purchasing new carpet. Homeowners using this program to refinance can make property repairs, improvements, or prepare their home for sale.  

Pros and cons of an FHA 203(K) loan

Cons

• You’ll pay higher mortgage insurance premiums and fees than a standard mortgage
• You must finance a home you intend to live in
• You may have to pay out of pocket for reserves to cover unexpected expenses
• Your loan amount will be restricted by FHA loan limits

How to get approved

To get a 203(k) loan, you must meet the requirements for a standard FHA loan.

Credit score, credit history and down payment. If you’re making the minimum 3.5% down payment, you’ll need a 580 credit score. If your score is between 500 and 579, you must put down at least 10%. At least three years must have passed since any foreclosures.

Mortgage insurance premiums. You’ll pay upfront and annual mortgage insurance premiums. The upfront insurance is 1.75% of your loan amount and the annual insurance ranges from 0.45% to 1.05% of your loan amount.

Loan limits. Keep your total loan amount below the FHA loan limit in your area. The 2022 loan limit for one-unit properties in most of the country is $420,680.

Contingency reserves. Depending on the size of your project, your lender may require that you set aside up to 20% of the cost of the improvements for unexpected costs that may arise. If you don’t have enough equity to roll them into your 203(k)loan, the lender may require proof you have the cash to cover them out of pocket.

Home value. One unique feature of renovation loans is you borrow money based on your “after-improved” value, which gives you more borrowing power than other types of home improvements loans that only consider your current “as-is” value. An approved FHA appraiser inspects your home, and considers the work plan and cost estimate to determine how much the home will be worth with the completed renovations.

Is a 203(K) loan right for you?

Exploring your options before you make a decision is always the best choice. Talk today with one of our expert loan officers who can guide you through the process toward your new home purchase!

What are the four C’s of credit?

1. Credit: Do you have a track record of consistently making payments on time?
2. Capacity: Are you able to pay back the loan?
3. Capital: Do you have assets, cash reserves, or other funds?
4. Collateral: What property or possessions can you pledge as security against the loan?

While different lenders may have their own specific qualifications for securing a home loan, there are four main factors that they’ll review and analyze during the mortgage underwriting process. These main factors are credit, capacity, capital, and collateral. 

Let’s dive deeper into each of the four C’s of credit.

1) Credit

When applying for a mortgage, lenders will review your credit history and credit score to analyze your record of paying bills. They want to understand your overall history as a borrower and see how you manage your other debts and monthly payments.

Your credit score can be a make or break factor for a mortgage loan approval. Oftentimes, there will be minimum credit score requirements for a mortgage, and your credit score may determine the size of the loan amount you’re qualified for in addition to the interest rate on the loan. 

2) Capacity

Capacity refers to a potential borrower’s ability to repay the loan. A lender will look at your income, savings, employment status and history, and any other financial obligations (such as a car loan, student loans, etc.) to assess your debt-to-income ratio (DTI) and determine if you qualify for the mortgage loan. Typically, a loan applicant with a lower DTI is viewed as lower risk, so the lower DTI, the better.

When it comes to the four C's of credit, capacity is arguably the most important and confusing areas of loan qualification. "Many borrowers get confused when it comes to the different types and sources of income a lender uses to determine their ability to repay," says Vatche Saatdjian​, President and CEO of Valley West Mortgage. “These include hourly, salary, bonuses, commissioned, and self-employed. All sources of income are calculated differently with regard to qualification and depending on your current situation, can be much more or a lot less than what you might think they are. Discussing your income situation with a licensed mortgage professional is the best way to ensure success in getting approved for a home loan.”

To verify your income, lenders will review your past W2s, income tax returns, and current income statements. You can expect your income to be evaluated based on:

• The type and source of income
• The amount of time the income has been received
• The future expectancy and stability of the income

Then, lenders will review your monthly recurring debt payments, such as:

• Auto loans
• Student loans
• Personal loans
• Credit card payments or line of credit payments
• Child or spousal support payments
• Other debts and obligations, such as medical bills

This is particularly important these days with surging inflation increasing the cost of just about everything, from a dozen eggs to that new furniture set you’ve been eyeing. “Before you sign on the dotted line, think about your total budget,” Behm says. “Always leave room for increased costs such as real estate taxes, utility bills, and credit card and car payments.”

Behm says new homebuyers often don’t consider unexpected costs that can quickly blow up their budget. For instance, more space likely means higher heating and cooling costs or the home you purchased could be re-assessed by the local municipality, triggering an increase in real estate taxes. “The best approach is to go with a mortgage payment you would feel comfortable with if all your other payments were to increase,” says Behm.

3) Capital 

In addition to your income, lenders look to see how much money you have in savings and in investment accounts that can be converted to cash, such as stocks, 401(k) account(s), or Individual Retirement Accounts (known as IRAs) - which are referred to as cash reserves. Lenders want to see that you have funds beyond your gross monthly income for your mortgage payment as well as for your down payment and closing costs.

Beyond cash reserves, here are a few other sources of capital lenders may take into consideration:

• Down payment assistance programs
• Gifts from a relative
• Grants

“When going through the mortgage underwriting process, it’s important to keep in mind that liquidity is king. Having cash reserves in readily available accounts and limiting the movement of that money will help to ensure the most efficient experience,” says Nate Condon from Walkner Condon Financial Advisors.

“For example, balances in bank or credit union accounts can be easily verified and tracked using basic monthly statements. Bear in mind that any movement of money during the timeframe of the underwriting process, including a couple of months prior to it, will likely involve significant tracking. More moves mean more tracking, which can mean a lengthier process,” continues Condon.

4) Collateral

Collateral refers to the borrower's assets that can be used as security against the loan. When you're applying for a mortgage, the collateral is the home. If a borrower defaults on their mortgage loan, the mortgage company or bank can take possession of the home.

Collateral is often measured by its value and perceived ease of liquidation. When a homebuyer receives financing through a bank or mortgage lender, they will order a home appraisal to determine the value of the home.

Originally published on Redfin

In this era of pandemic(and economic uncertainty), refinancing your mortgage can give you respite by lessening the monthly payments and interest rates, saving you money over time. Refinancing can be tricky, especially if you’re unclear about what to expect.

What is Mortgage Refinancing?

Mortgage refinancing (refi) is when you take out a new loan to substitute your current one. You’ll have a new mortgage with potentially different terms but keep your existing house. You go through similar procedures for getting a new home like applying for a loan, underwriting, home appraisal, and closing. The only difference is you keep your present home(instead of looking for a new one).

Benefits of Mortgage Refinancing

Vatche Saatdjian, President/CEO of Valley West Mortgage (a 2022 ThreeBestRated® award-winning Mortgage company), says," depending on what kind of mortgage you’re paying and what sort you’re refinancing it into, the benefits of refinancing your mortgage might include:

● a lower annual percentage rate(APR)
● a lower monthly payment
● a shorter payoff term
● the ability to cash out your equity for other uses
● Consolidated debt

Once you’re determined to refinance, it’s time to crunch some digits. While refinancing your mortgage sounds great on paper, it may not always put you in a better place. It’s best to consider the pros and cons, considering your financial situation.

Availing the services of a mortgage lender like Valley West Mortgage can help you decide on the best mortgage. With Valley West Mortgage, you can make confident and informed financial decisions.

About Valley West Mortgage

Established in 2004, Valley West Mortgage is a leading mortgage lender from Las Vegas, NV, licensed to operate in 25+ states. They strive to offer the best value, service, and loan products to match your financial goals. Valley West provides Debt Consolidation, VA, Fixed and Adjustable Rate, Conventional, Purchase, Reverse Mortgage & Refinance Loans to people across the nation.

Valley West is a ThreeBestRated® Mortgage company that has helped finance the dreams of thousands of families and individuals for the past 17+ years. They offer a straightforward approach to home purchasing and refinancing mortgage solutions, guaranteeing you transparency throughout the entire process. Valley West offers mortgage solutions with competitive rates and commitment to customers (They always put the customers’ needs first).

On the Award

On winning the 2022 ThreeBestRated® award for one of the best Mortage companies in Las
Vegas, Vatche Saatdjian says,” I am ecstatic to be showcased by ThreeBestRated®. We
work very hard every day to impact people’s lives positively and consider it an honor that
ThreeBestRated® recognizes us for our dedication to the mortgage community.”

Work with Valley West Mortgage – a team of dedicated professionals that always look out for your best interest and get a mortgage loan tailor-made for you.

The post What are the benefits of Mortgage Refinancing? Shares Valley West Mortgage, a 2022 ThreeBestRated® award-winning Mortgage lender company from Las Vegas, Nevada first appeared on PRUnderground.

Getting Answers...Should I delay my mortgage payment...

Homeowners with federal loans won’t have to pay lump sum after pausing payments

Coronavirus related forbearance requests still on the rise…

The housing industries response to the corona virus…

Nearly 10% of FHA and VA borrowers are in forbearance. Total forbearance nearing 7%...

We’re watching the market closely…

If you’re in the market to purchase or refinance give us a call today (888) 931-9444 or (702) 696-9900

FHA Loans provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories.  It is one of the largest insurers of mortgages in the world, insuring more than 46 million mortgages since its inception in 1934 and it's the only government agency that operates from its self-generated income.

Self-generated income which means the Mortgage insurance premiums that is collected from borrowers via lenders are used to operate the program.

FICO scores tells the lender what type of credit risk you are and what your interest rate should be to reflect that risk by utilizing a FICO formula.

The most commonalty used :

Equifax Beacon 5.0

Experian/Fair Isaac Risk Model v2

TransUnion FICO Risk Score 04

We’re seeing what’s “good” for rates can be bad for lenders, and what’s “good” for the market can be bad for home buyers. This tug of war has caused servicers to implement drastic measures to keep up; includes raising the minimum FICO.  If you have questions or concerns please contact your lender right away.

Economist predicting emergency rate cut this week…

Negative Interest Rates Unlikely…

Coronavirus economic package in full...

Trump is considers letting homeowners delay mortgage payments...

We’re watching the market closely…

If you’re in the market to purchase or refinance give us a call today (888) 931-9444 or (702) 696-9900