The meaning of earnest money is in the name. It’s a deposit of good faith on the pending loan from buyer to seller. This sort of investment sets you apart from other buyers by showing your serious intent to purchase a home. This money doesn’t disappear either, and it serves to protect both buyer and seller financially.
Understandably, many first-time homebuyers are confused when it comes to interest rates.
Complicating the issue further, potential borrowers are bombarded with a lot of information, and it can become difficult for them to know when they are getting the best deal. You want to make sure you’re getting all of the correct information when making one of the biggest purchases of your life. By doing so, you ensure you’re making an informed financial decision and not just picking the company quoting you the lowest number.
The best way to do that is to do your homework about the different types of rates you’ll be quoted.
Across the country, real estate markets are booming. According to the National Association of Realtors existing home prices in April were up 11 percent when compared with a year ago.
Rising home prices are good news in most households. Many borrowers who were once underwater now have equity simply because home prices have risen overall. Not only that, in some cases, those who want to sell can now find a welcoming marketplace, one which includes multiple home offers.
But what about those in the market to buy? Should purchasers who will use VA financing be in the hunt when a single property attracts multiple offers?
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:
The Justice Department has just announced a $39 million settlement to resolve allegations of wrongful foreclosures against vets and military families.
The government says that “under its 2011 settlements with BAC Home Loans Servicing LP, a subsidiary of Bank of America Corporation, and Saxon Mortgage Servicing Inc., a subsidiary of Morgan Stanley, 316 service members whose homes were unlawfully foreclosed upon between 2006 and 2010 are due to receive over $39 million in monetary relief for alleged violations of the Servicemembers Civil Relief Act (SCRA).”
While $39 million is a lot of money, the more interesting element of the settlement concerns the period covered by the agreement: between 2006 and 2010.
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?
When 2012 ended, everyone celebrated 2013 with some joy because a planned government shutdown on Jan. 2 was averted.
Unlike a natural disaster, the looming threat of a sudden decline in government spending was not a surprise. It had actually been worked out by Congress in legislation passed last August to create a process called “sequestration.” Under this plan, there would be huge, automatic and instant spending cuts throughout much of the federal government – what was called the “fiscal cliff” – unless the Congress could meet spending and deficit targets by Jan. 1.
The VA was protected from direct cuts under the sequestration agreement. But if it was possible to dump the August deal, could the promise to protect VA funding and benefits also change?
You can get a VA loan for 30 years, and you can get a VA mortgage for 15 years, but you can’t get VA financing for 40 years. What’s up with that?
Until the past few days, you might have gotten a non-VA mortgage with a 40-year-term, but that’s no longer possible under new rules just issued by the federal government. From this point forward, the longest new home mortgage is effectively limited to 30 years.
It’s not surprising that the entire mortgage system has now adopted still another one of the common-sense rules which have long guided the VA loan program. To understand why, let’s look at some numbers.
After months of debate and political jousting, the fiscal cliff debate has now ended, and the results look like this.
First, from a real estate and mortgage perspective, VA and military families did well. Second, the debates aren’t over.
For millions of people across the country, 2012 was a better year in terms of mortgages and real estate. In general home prices were up, mortgage rates were the lowest in years, and when the final numbers are in it may be that more than 5 million homes were sold.
In terms of mortgages for VA borrowers, there were several highlights.