Future Military Homeowners
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For months, VA mortgage rates have bounced around near historic lows, a reality which raises a question: Is it ever possible for interest levels to reach zero or below?
In fact, loans rates can touch zero and sometimes there can even be negative interest. The idea of “negative interest” seems to defy logic. Why would a lender make a loan when there is no return? In fact, how can there be a loan where the lender expects to get back less principal?
Government rules which have long made it difficult for many military spouses to get credit cards are now changing under new guidelines just announced by the Consumer Financial Protection Bureau.
It’s not uncommon in many vet and military households to have one spouse or partner who is the major breadwinner and a second spouse or partner with a smaller income or no income. As far as the world is concerned this is a perfectly-acceptable financial arrangement as long as the bills are being paid – except when it comes to credit cards.
Usually when we think of mortgage rates they have a certain order: the interest level for fixed rate loans is higher than the interest level for adjustable-rate mortgages.
While this is a general rule there are exceptions, including the rates seen last week. According to Freddie Mac, home loan rates looked like this:
Whether you’re financing or refinancing a house or just want a new car or boat there’s always the question of credit: Will your credit score be good enough to get you through the application process?
A credit score is not a measure that can be quickly changed: if you want good credit in the future the time to take a new approach to money is now. Here are three ways that are sure to increase your credit standing and not cost a dollar extra: Scheduling, consolidation and tax planning.
More than 1,000 VA and military households will receive at least $125,000 each under still-another mortgage settlement.
The latest settlement between the mortgage industry and the government is a $9.3 billion deal between major servicers, the Federal Reserve and the OCC, the Office of the Comptroller of the Currency, a part of the Treasury.
Most of the settlement is in the form of $5.7 billion in “other assistance” to borrowers, however there is also $3.6 billion in cash, with checks going out to some borrowers as early as this month.
Not long ago Congress passed the Middle Class Tax Relief and Job Creation Act of 2011. Under this legislation payroll taxes were reduced by 2 percent for a short time but the mortgage guarantee fees (g-fees) charged by Fannie Mae and Freddie Mac to lenders were increased by .1 percent.
While the payroll tax provision has ended and paychecks are now smaller, that “little” .1 percent g-fee increase continues and — by the way — it’s not so little: It’s expected to raise $35.7 billion for Uncle Sam over ten years.
There might be some justification for a higher g-fee if the money went to make mortgages cheaper, reduced foreclosure levels or helped Fannie Mae and Freddie Mac, but that’s not the case. Instead, the money is simply a tax which takes money from loan borrowers — including VA borrowers — and sends it directly to the US Treasury.
How did this happen?
Anyone with any eye on the mortgage marketplace knows that rates have risen since the start of the year, a trend which is hardly surprising given that interest levels hit historic lows in 2012. The bigger question is this: how can VA loan borrowers grab the rates we see today?
Every borrower wants the best possible rate at the time of application, but mortgage levels are a moving target. It’s easy to get some idea of where rates are generally, but because they are constantly in motion, it’s tough to know the exact moment of mortgage rate perfection, assuming there is such a thing.
A large number of servicemembers, perhaps far more than once suspected, have been wrongfully foreclosed according to the New York Times.
Relying on “people with direct knowledge of the findings” the paper reports that “the nation’s biggest banks wrongfully foreclosed on more than 700 military members during the housing crisis and seized homes from roughly two dozen other borrowers who were current on their mortgage payments, findings that eclipse earlier estimates of the improper evictions.” (See: Banks Find More Wrongful Foreclosures Among Military Members, March 3, 2013)
Allegations against two lenders claiming that they had unfairly foreclosed 175 servicemembers were resolved with a $22 million settlement in 2011. In 2012 the $25 billion robo-signing settlement between major servicers, the Justice Department and most states set aside as much as $116,785 plus lost equity and interest for each servicemember who had been improperly foreclosed.
If you’ve been looking at VA loans lately, you may have noticed that mortgage rates are still low compared to recent years.
What you’re seeing is not the marketplace at work, if by “marketplace,” we mean loan rates which are the result of freely-moving supply and demand. Instead, rates are low today in some part because of the Federal Reserve’s intervention.
We know this intervention is important because last week the Fed released notes from its January meeting and the stock market instantly took a tumble. The reason: The notes suggested that the Fed would not be active in the mortgage marketplace forever.
There’s little doubt that credit and credit scores are critically important for any type of loan, whether it’s for a car, boat or house. It’s a big deal when credit data is wrong and it turns out that errors are found in one of every four credit reports, errors that could cost you money or even lead to a loan rejection.
A new study from the Federal Trade Commission shows that a quarter of all credit reports include errors. When a credit report is wrong, the result can be a lower credit score, but the good news is that when consumers ask for a correction, they get relief about 80 percent of the time.
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