All Forum Posts by: Mark F.

@Brandt Tingen Sure, 95% LTV conventional refinance is perfectly doable as long as you have reasonably strong credit and good qualifications. Of course, it will have mortgage insurance on it. However, if you're not planning on being in the loan that long (maybe 5 to 7 years max), see if the lender offers lender paid mortgage insurance. The interest rate will be slightly higher, but you won't have the monthly PMI premium. Depending on your goals and how the numbers crunch out, it could be a good option.

@Seth Larson I don't know of any stated requirement to live in the home for a certain period of time. In the VA guidelines, I can only find the following verbiage:

A basic requirement of the law governing the VA home loan program is that the veteran has a bona fide intention of occupying his or her property as a home. Home loan entitlement is not being used properly if the veteran arranges to sell or convey the property to a third party prior to closing the loan.

http://www.benefits.va.gov/WARMS/docs/admin26/pamp...

The lender can't technically prevent you from turning the home into a rental a few months after closing, but it could be considered "misuse" of the program if you did so because it would appear your intent was to buy a rental all along (unless there was an extenuating circumstance you could document, like a transfer or reassignment). That could cause you some issues in the future if you try to use your VA benefits again and the VA felt you had abused them.

Having said all that, you're probably fine as long as you truly are using the benefits to buy a home to live in. The lender isn't going to send around the occupancy police. I wouldn't spend too much energy worrying over this. 

@Richard Cook I agree with @Elizabeth Colegrove, VA loans are absolutely awesome. They can be a phenomenal deal. That said, it doesn't hurt to shop a few lenders to get comparisons, but you also want to work with a lender that can get it done. If you save a tiny percentage on the rate, but the lender is a nightmare to work with, it may not be worth it. There's probably a bunch of people on BP who can give good recommendations for lenders to work with.

Also, if you're likely to be in the new home for only a few years, go with a VA loan that has a slightly higher rate and have the lender cover more of the closing costs. If it's likely you'll be in the home for quite a few years (7 years or more, for instance), a lower rate and higher closing costs might pencil out a little better over the long term.

Have your lender of choice run a few different rate scenarios (for example 3.625%, 3.875%, 4.125%, etc.) along with the closing costs for that rate. Sometimes you can take just a 0.125% bump in the rate and get a substantial jump in lender credit that the lender can use to cover thousands in closing costs. You're looking for that "sweet spot" between rate and costs where you get the most bang for your buck. 

@Julie Marquez PMI was created so that lenders could offer loan programs with less than a 20% down payment. Banks historically wouldn't lend more than 80% of the value of the home, but as home values rose, it became tougher for many borrowers to come up with enough cash to do 20% down. PMI was created so that lenders could offer higher LTVs (which means lower down payments) while still keeping their risk in the deal at tolerable levels.

Note that PMI only applies to conventional financing (non govt backed, like FHA). If a borrower comes in with less than 20% down, then pays down the loan to 80% LTV, they can have the PMI dropped.

For FHA, the ongoing mortgage insurance is called annual mortgage insurance. Depending on how large the down payment is, the annual mortgage insurance could be dropped at 78% LTV or it may stay for the life of the loan.

@Seth Larson When taking out a VA loan, you have to intend to live in the home, but it's OK if you move out down the line and turn it into a rental. In fact, if rates drop from here (not sure how likely that will be, mind you), you could even streamline refinance the VA loan even if it's a rental. As a mortgage professional, I've done VA streamlines on rental properties in the past - the only requirement is that you prove you used to live in the home. 

VA isn't as strict as FHA is about the owner-occupied requirement, but your intent must be to live in the home when you initially take out the VA loan.

For more great information about VA loans (this is one of the better sites I'm aware of) go here:

http://themortgagereports.com/va-loans/

*** Note that I'm not affiliated with this site in any way, it's just a good resource I'm aware of. 

I agree with @Michael Seeker. There's no way you're not going to make mistakes when you're brand new to real estate, so it's important to invest in something where the damage will be limited if you do make a mistake. Maybe start off with a small SFR or duplex and post the numbers on BP when you've found a property you're ready to make an offer on. The people on this site can offer some really great feedback that will probably limit some mistakes when you're trying to get into a property. Good luck! :)

@Ned Carey I absolutely agree about The One Thing. Great read! That book really helped me get more out of my day. 

I'm currently reading Successful Networking by Frances Kay and came across a great quote she used in the book:

It seems to me that people have vast potential. Most people can do extraordinary things if they have the confidence or take the risks. Yet most people don't. They sit in front of the TV and treat life as if it goes on forever. -Philip Adams

I have no clue who Philip Adams is, but this was very convicting! There's nothing wrong with vegging out, watching a good movie, or checking in on Facebook from time to time, but it's far too easy to fall into the trap of wasting too much valuable time on things that have no long term worth. 

Time is one thing we never get back, right? I think it's always worth being reminded to invest our time accordingly. Unless we take deliberate action to build our businesses and work toward success every day, we soon find ourselves ten years down the line a decade older and no closer to our goals. 

Are you treating your life as if it will go on forever? Are you spending too much time on things that have no long term worth?

@Rich Harris @Robert Bowles

I completely agree with you on this. Yes, I think it's good to shop around and make sure you're getting a good deal for rates and fees, but you also want to make sure the person you're working with is up front, honest, knowledgeable, and can get the deal done without creating headaches for you. Service is definitely part of the equation when trying to figure out if you're getting a good deal.  I'd be more than happy to take slightly higher rate or fees for better service. Getting loans done is tough enough without working with somebody who doesn't know what they're doing.