Today's New Comment

It seems as many people have questions as to the differences of these two loan programs. I spent the last 4 years just originating VA loans and they are not hard once you know what you are doing. 

Conventional Loans are not guaranteed or insured by the Federal Government. All U.S. citizens, resident aliens, or non-resident aliens working under acceptable work visa are eligible for these loans.

VA Loans are guaranteed by the Department of Veteran Affairs. Typically, the maximum loan amount that is offered under these loans is lower than conventional loans. However, VA loans do not require any down payment.  There are certain VA Eligibility guidelines laid down by the government. Generally, all active and discharged veterans are eligible for this loan.

These loans frequently offer lower interest rates than ordinarily available with other kinds of loans. Aside from the veteran's certificate of eligibility and the VA-assigned appraisal, the application process is not much different than any other type of mortgage loan. And if the lender is approved for automatic processing, as more and more lenders are now, a buyer's loan can be processed and closed by the lender without waiting for VA's approval of the credit application.

To better understand what loan is best for you, here is a comparison of both types of loans.

• As stated earlier, conventional loans would typically require a down payment, unless you have extremely high credit rating. VA loans do not have this condition.

• The Closing costs involved in a conventional loan are much higher compared to VA loans. The reason for this is that the government regulates these costs and passes the benefits on to the borrower. Pre-paid costs are however the same.

• It is easier to include a co-signer for the conventional loan. All income of the co-signer is considered towards the approval process. VA loans, however, require that the co-signer is also a veteran or spouse of another veteran.

• The credit score required to obtain a conventional loan is generally higher than that for a VA loan.

• VA provides higher flexibility of negotiating interest rates with the lender compared to conventional loans.

• Unlike conventional loans, VA loans do not require the borrower to pay a monthly mortgage insurance premium.

VA Loans are certainly a better option provided you are eligible. They offer a range of benefits to veterans. If you are eligible and already have a conventional loan, it may be possible to refinance with VA financing.

Buying real estate can be extremely demanding. It requires a whole lot of diligence on part of the buyer, more so, when drafting the terms and conditions of the purchase offer. You may hire an attorney or another real estate agent to create a contract. Nevertheless, you should always ensure that you completely understand every term of the contract. Here are a few blunders that you are better off avoiding.

1. I overlooked the fine print!

This is probably the most common mistake buyers make. Many residential purchase contracts include standard real estate boilerplate text. Many firms, in fact, use preprinted forms. While preprinted or computerized forms have improved efficiency, they sometimes do so at the expense of the buyer.

It is recommended that you get a copy of the form well in advance and carefully study it. Highlight every term you are not comfortable with and would like to modify. This is a neat tactic to clearly mark buyer unfriendly fine print.

2. Were basic elements included?

Buyers often ignore cross-checking the contract for basic elements. These are certain terms that should be included in every real estate contract. Some of the absolute necessary points to be included are the address of the property, valuation and condition of the property, amenities provided, contingencies, finance terms, purchase price, and closing date.

The contract should also include the time you offer the seller to decide on your offer. Include passing clear title to the property, maintaining the property in its present condition until closing, making any agreed-upon repairs and delivering the property clean and free of personal possessions and debris.  

3. My contract has improper withdrawal and problem solving terms

Clearly delineate the conditions that would allow you from withdrawing the agreement. Also list all responsibilities of the seller before you take possession of the house. The contract should also include terms that allow for smooth resolution of problems. This will help you deal better with any inconsistencies in the house.

4. The contract doesn't deal with sellers' contingencies

Many contracts rely heavily on seller conditions. For instance, some sellers may include a clause that allows them to only sell a house provided they purchase another house. You should always look to minimize such contingencies by either excluding these conditions or looking for sellers who are already obligated to buy another house.

5. But I already have a verbal contract!

This is the gravest of mistakes you could possibly make. No matter how unimportant a condition is, always make sure that you have it in writing. Verbal agreements are not binding. The seller may be your best buddy, but hey in that case he shouldn't have a problem with written agreements.

1.  Not doing your homework.

Knowledge is power. Tremendous information is available on the Internet. There is no excuse for entering the market unprepared.

2.  Choosing a lender just because they have the lowest rate.

While the rate is important, consider the total cost of your loan including, loan fees, discount and origination points. When receiving a quote from a lender or broker, insist that the discount points (charged by the lender to reduce the interest rate) be distinguished from origination points (charged for services rendered in originating the loan).

3.  Making verbal agreements.

If you're asked to sign a document containing instructions contrary to your verbal agreements--don't! For example, the seller verbally agrees to include the washing machine in the sale, but the written purchase contract excludes it. The written contract will override the verbal contract. More importantly, your state may require that contracts for the sale of real property be in writing. Do not expect oral agreements to be enforceable.

4.  Not getting two important contingency clauses in the contract.

When making an offer, a wise home buyer asks for two important clauses -- a mortgage financing contingency and a professional inspection contingency. These could save a lot of money and grief.

The mortgage financing contingency clause saves you if the home doesn't appraise for the offered price. You can cancel the sale and renegotiate the price or get back your deposit.

The second clause hinges the deal on a professional inspector OKing the house. If the inspector discovers hidden flaws, structural damage or faulty systems, the wise home buyer may want to renegotiate or back out of the deal. An even wiser home buyer goes through the house with the inspector to learn any concerns the inspector has.

5.  Falling in love with a particular property

If you think a house is ideal, don't let the seller or any of the seller's agents know. If the seller finds out you're in love with the house, the seller could hold out for a higher price.

A wise home buyer knows there are lots of houses -- and there's one out there that's the right house at the right price. It's not a dream house if the payments are a nightmare. If you can't afford it, move on and keep looking.

6.  Buying a house that is tough to resell.

Many home buyers stay focused on finding a home sweet home where their families will be happy and safe. You should also remember this is also a big financial investment. Take a moment to look ahead to the day you'll sell the house. Knowing the neighborhood and paying attention to marketable details of the house will go a long way toward preventing a buying mistake.

7.  Trying to make a shrewd investment.

People need to buy based on what fits their family. Don't try to guess what will happen to the market.

8.  Overlooking an inferior floor plan for an attractive exterior.

It may have gorgeous curb appeal, but you don't live on the lawn. No matter how attractive the exterior, you need a livable home.

9.  Choosing a poor location.

Even within a neighborhood, location matters. Is it on the busiest street? Is there a shopping center out the back window?

10.  Not buying at all.

If you can afford a home and you don't make that purchase, you'll lose the benefit of tax deductions, building home equity and the appreciation in value.

1.  Be sure to shop around.

The insurer you select should offer both a fair price and excellent service. Quality service may cost a bit more, but it provides added conveniences, so talk to a number of insurers to get a feeling for the type of service they give. Ask them what they would do to lower your costs. Check the financial ratings of the companies, too. Then, when you have narrowed the field to three insurers, get price quotes.

2.  Raise your deductible.

Deductibles are the amount of money you have to pay toward a loss before your insurance company starts to pay according to the terms of your policy. Deductibles on homeowner's policies typically start at $250. By increasing your deductible to $500, you could save up to 12 percent; $1,000, up to 24 percent; $2,500, up to 30 percent; and $5,000, up to 37 percent, depending, of course, on your insurance company.

3.  Buy your home and auto policies from the same insurer.

Some companies that sell homeowners, auto and liability coverage will take 5 to 15 percent off your premium if you buy two or more policies from them.

4.  Beef up your home security.

You can usually get discounts of at least 5 percent for a smoke detector, burglar alarm, or dead-bolt locks. Some companies offer to cut your premium by as much as 15 or 20 percent if you install a sophisticated sprinkler system and a fire and burglar alarm that rings at the police station or other monitoring facility. These systems are not cheap and not every system qualifies for the discount. Before you buy such a system, find out what kind your insurer recommends and how much the device would cost and how much you would save on premiums.

5.  Stay loyal to your insurer.

If you have kept your coverage with a company for several years, you may receive special consideration. Several insurers will reduce their premiums by 5 percent if you stay with them for three to five years and by 10 percent if you remain a policyholder for six years or more.

6.  Compare the limits in your policy and the value of your possessions at least once a year.

You want your policy to cover any major purchases or additions to your home. But, you do not want to spend money for coverage you do not need. If your five-year-old fur coat is no longer worth the $20,000 you paid for it, you will want to reduce your floater and pocket the difference.

The most common mistake home buyers make is to believe that all realtors actually work for them. If you do not ensure that you have chosen the right realtor, you may easily lose thousands on your deal.

Here are some proven tips for hiring a good realtor

• Look for successful real estate agents. Often you would find that every neighborhood has a couple of real estate agents who have assisted in many more real estate deals compared to others. These realtors may charge higher but it is recommended that you approach them. Successful realtors generally have full page ads in local magazines showing numerous listings.

• Communication with your realtor is the key to buying great houses. Often realtors lose interest and accuse prospective buyers of un-professional behavior. If you feel that you need to look at more than a dozen homes before you can make up your mind, let the realtor know upfront. Some realtors are more patient than others.

• Make sure they have an accurate list house criteria you are looking for, and don't spring any surprises on them after you have seen 10 houses.  Give them a written list of all your house buying criteria. Make sure your real estate agent knows every last detail of what type of house you are looking for.

• Look for realtor ads that are professional. Some realtors advertise themselves rather than their home listings. Avoid ads that have more than 25% allocated to unnecessary information such as the agent's photo.

• Ask the agent if his/her license is updated. Also inquire whether the realtor works part time or full time. It is highly recommended that you chose a full time realtor.

• A good practice to follow is to inquire about the training methods of realtors. Every realtor needs to stay updated with the real estate market. Also, try and analyze how good the realtor is with using the Internet. Since many consumers now use the Internet to locate homes, you better have an Internet savvy real estate agent. 

• Home buyers should always ask their realtor if they will get them a printout of all the recent selling prices AND the original listing prices of homes in their targeted area, showing what the owners paid for them, how much they sold for, and full details on the homes. Realtors that refuse to disclose such information, or worst still, do not have access to this information are not professional.

1. PAY PAST DUE ACCOUNTS.

Of course this sounds obvious, but understand that credit scoring software severely penalizes you for having accounts with a past due balance.

2. TRY TO "GET RID" OF YOUR LATE PAYMENTS.

Contact all creditors that have reported late payments on your credit and request a good faith adjustment that actually removes the record of late payments reported on your account. Be persistent, if they refuse to remove the late payments at first, remind them that you have been a good customer that would deeply appreciate their help.

3. REQUEST TO HAVE YOUR CREDIT LIMITS INCREASED.

Contrary to popular belief, having low credit limits on a credit card can actually hurt your credit score. Having low available credit limits affects your "actual debt to available credit ratio". For example, if you owe a total card debt of $10,000 and your total credit available is $20,000, you are only using 50% of your total credit available. But if you have card debt of $10,000 and your total credit available is $15,000, you change your ratio to 66% of your available credit being used. The lower the percentage of debt to available credit the better, as it shows you are able to handle having credit available without running it up to the max.

4. BECOME AN "AUTHORIZED USER".

If you have a short and limited credit history, you can ask someone to add you to their credit card account as a joint account holder or an authorized user. When added, the primary account holder's credit card will appear on your credit report. Credit scoring software will treat the added account as though it is your account and you will benefit from the low balance and the long payment history for that account. It is important to remember that being an authorized user is helpful for your credit score only if (1) the person is carrying debt below 10% of the credit limit on that card and (2) has had good payment history on the card for seven years or longer...and the longer the history, the better. Being an authorized user is potentially detrimental to your credit score if the person giving you the card either maxes out the credit or pays late, since this would report on your credit report too.

5. DO NOT CLOSE YOUR OLD CREDIT CARDS, KEEP THEM ACTIVE.

15% of your credit score is determined by the age of the credit file. Therefore, even if your old credit cards have horrible interest rates, closing those cards will decrease the average length of time you've had credit...as well as increase your "debt to available credit ratio" as discussed in point 3. Use the old card at least once every six months to avoid the account rating to change to "Inactive". Keeping the card active is as simple as pumping gas or purchasing groceries every few months, then paying the balance down. An inactive account is ignored by Fair Isaac's credit scoring software, so you will not get the benefit of the positive payment history and low balance that card may have had in the past.

I have seen scores increasing up to 100 Points by taking these steps. For you loan officers out there, just think by giving some pointers to your clients if there credit is not that great, how may more loans could you get through if the score went up by 100 points?

Thanks for reading.

Moving can be a stressful time for everyone involved, especially children.  They may feel like all that they know is aboutto change.  Your child may become impulsive or have problems sleeping.  They may seem unable to concentrateor appear nervous.  If you are noticing some of these behaviors in your child, you will want to help alleviate some of their stress.

Leaving behind friends and school may cause children to exhibit behaviors such as lying, bulling, or defying authority.  They may begin bed wetting or seem withdrawn from social situations.  The most important things that you can do to help your child is to talk to them, make them a part of moving, and help them to prepare for moving day.

Communication

Talking with your child about moving is an integral part of a child understanding why they are moving.  Children are often scared of the unknown.  You can alleviate many of their fears by letting them know of the moving date, their last day at school, etc...  Make sure to share your positive experiences with moving. Encourage them to ask questions and share their worries about moving.

Preparing for Moving Day

If possible, let the children go house shopping with you.  This will allow them to see their new home early on.  Take pictures throughout the home if the owner will allow you to.  Let your child carry them around and show them to friends.  The more they are able to talk about moving, the more comfortable they will become with the idea.  Take pictures of your "old" home so that the child can keep them in a memory book.

Have your child pack up their special toys.  That way they will know that they are not going to be thrown away, but will be a part of their new bedroom.  If possible, let your child have a say in how their new room will look.  You want to build as much ownership in your child's living space as you can.

You may also want your child to pack a moving day bag.  This bag might include a few books for your child to look at or a few toys to play with.  It may also include their favorite stuffed animal or toy.

Make sure that your child has an opportunity to say goodbye to friends and neighbors.  Give your child an address book so that they can write down addresses of friends to keep in touch with.  Make up cards with your new contact information on it so that your child can give it out to others.

Contact your child's new school prior to your child's first day.  Talk with teachers about your child's normal school behavior and let them know the best times to contact you if that behavior changes.  Walk your child around the school and make sure that they are able to meet their teacher prior to attending their first day.  This will ease some of the fear that your child may be feeling on entering a new situation. 

Make Your Child a Part of Moving

Moving day is finally here!  While your child may not be able to move many things, they can help to make sure that everything is removed from each room.  They can also be responsible for their special toy box and make sure that it is put in a car or spot where they are comfortable with it traveling. Your child can spend time with their moving day bag and eating a snack when they are done.

As you begin to unpack in your new home, your child may still have feelings of apprehension.  Getting back into your normal routine as quick as possible will help your child to make the adjustment to their new home.  They may be living in a new space, but things at home are the same and soon your new home will be as comfortable as your old one!

Here are some good links on this topic.

http://www.century21.com/smoothmoves/the_plan.aspx

http://www.moversdirectory.com/moving_with_kids.html

http://www.usps.com/moversnet/kids2.html

Okay, so you've ordered your credit report. You eagerly await its arrival. When you see the envelope marked Experian, you rip it open only to find what looks to be a bunch of numbers. How do you understand the information provided?

Each of the Credit Reporting Agencies (CRA) will have a report that looks slightly different. The basic information is the same however. Each report will have subject information that will list your name, social security number, current address, previous address, current employment, previous employment, date of birth and spouse's name (if applicable). Your job is to make sure all the information is correct. This is important because if you have been on your job for ten years you want creditors to know. This shows stability. If information is missing or incorrect make sure you follow the CRA's procedure for disputing incorrect information.

The next section will be a summary of your file. It will tell if you declared bankruptcy or have public records or collection items. It will also show what date your file was established and the latest reporting date of trade. It will also break down the amount of high credit you have in your revolving and installment accounts and how much you owe on these. Installment loans are loans with a fixed payment and ending date, such as a car loan or bank loan. Revolving debts are debts that usually have no fixed ending dates, such as credit cards. You can usually add more debt to these accounts as you pay them down. High credit is the amount of money that you can borrow. The owed amount is the amount that you have actually borrowed. For instance, you might have a $5000 credit limit (high credit) on your Visa, but you may have only borrowed $1500. Creditors like to see few revolving debts. Installment debts are better in the long run because you pay lower interest over the long haul. We will discuss why this is so in a later article.

Another area of your credit report is your inquiry history. Believe it or not, this area is important to creditors. They look to see if you have applied anywhere else in the last few days. Most creditors will then call the companies that made those inquiries and ask if you opened a loan with them. Also, they will be looking to see if you are an indiscriminate borrower. Let's say that you have 10 new inquiries on your credit report and six are from department stores and credit cards. To a creditor it looks as if you are going wild, borrowing from everyone in sight. This is not good! You might be able to pay your existing bills fine, but how does the creditor know that you can handle all of this new debt? They can't and most likely you will be denied.