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VA Loan / Veteran Mortgage News
SPONSOR:
Pioneer Military Loans offers responsible military lending solutions that can help
service members avoid or break the debt cycle. Pioneer serves active-duty and career-retired military service members,
as well as Department of Defense employees.
APRIL 2003
The VA Home Loan Ranks #1 as Best Deal for Veterans
As we approach the main home buying season, VALoans.com wanted to do a vast search and
truly find out what the best type of home mortgage loan there is out there for veterans and
active duty military personnel. As you know, Congress authorized the GI Bill which provided
veterans with a federally guaranteed home loan with no down payment. This feature was designed
to provide housing and assistance for veterans and their families, and the dream of home
ownership became a reality for millions of veterans.
But is it the best deal out there? We at VALoans.com decided to put the VA loan program to
the test. There are many different loan products available to veterans, yet we narrowed it
down to the 3 most popular, ranging from $0 down to 3% down. Here is what we found.
The loan types are as follows:
- 30 Year 97% Loan to Value Conventional Fixed Rate Loan
- 30 Year FHA Fixed Rate Loan
- 30 Year VA Fixed Rate Loan
The following is a chart which breaks out the estimated closing costs for each loan type.
The information presented below is based on a $100,000 home purchase price as of March 27th,
2003, and the subject property being located in Virginia with the appropriate
costs being applied to the borrower.
| |
CONV. 97% FIXED |
FHA |
VA |
| Appraisal Fee |
$375 |
$450 |
$300 |
| Credit Report |
$15 |
$20 |
$20 |
| Processing Fee |
$425 |
$0 |
$0 |
| Flood Certificate |
$19.50 |
$19.50 |
$19.50 |
| Tax Service Fees |
$85 |
$0 |
$85 |
| Borrower's Total |
$919.50 |
$489.50 |
$819.50 |
| PAID IN ADVANCE (Pre-paids and Escrows) |
| Per Diem Interest |
$215.80 |
$226.85 |
$228.29 |
| FHA/MIP Premium |
$0 |
$1,455 |
$0 |
| Hazard Insurance |
$384 |
$384 |
$384 |
| Tax Pro-ration (Seller) |
($644.14) |
($644.14) |
($644.14) |
| County Taxes at Closing |
$421.20 |
$421.20 |
$421.20 |
| Hazard Ins. Escrow |
$96 |
$96 |
$96 |
| Mortgage Ins. Escrow |
$0 |
$80.84 |
$0 |
| City Tax Escrow |
$225.86 |
$225.86 |
$225.86 |
| County Tax Escrow |
$140.40 |
$140.40 |
$140.40 |
| Aggregate Escrow Adj. |
($32) |
($112.84) |
($32) |
| Borrower's Total |
$807.12 |
$2,273.17 |
$829.61 |
| TITLE CHARGES, GOVERNMENT FEES AND ADDITIONAL FEES |
| Settlement / Closing Fee |
$455 |
$455 |
$455 |
| Title Exam Fee |
$150 |
$125 |
$125 |
| Title Insurance Binder |
$50 |
$30 |
$0 |
| Buyers Attorney Fee |
$350 |
$400 |
$400 |
| Lender's Title Ins. |
$50 |
$50 |
$50 |
| Owner's Title Ins. |
$380 |
$380 |
$380 |
| Recording Fee |
$36 |
$30 |
$30 |
| City/County Tax Stamps |
$50 |
$50 |
$50 |
| State Tax Stamps |
$150 |
$150 |
$150 |
| Mortgage/Intangible Tax |
$196 |
$194 |
$200 |
| Survey Fee |
$200 |
$225 |
$225 |
| Pest Inspection |
$0 |
$75 |
$0 |
| Borrower's Total |
$2,067 |
$2,164 |
$2,065 |
| Total Est. Closing Costs |
$3,793.62 |
$4,926.67 |
$3,714.11 |
| Downpayment |
$3,000 |
$3,000 |
$0 |
| Total Needed at Closing |
$6,793.62 |
$7,926.67 |
$3,714.11 |
| Loan Amount |
$97,000 |
$98,455 |
$102,000 |
| Interest Rate |
6.16% |
6.47% |
6.47% |
| Monthly House Payments |
$884.38 |
$875.91 |
$857.83 |
| Principal & Interest |
$591.58 |
$620.36 |
$642.70 |
| Mortgage Insurance |
$77.61 |
$40.42 |
$0 |
| Real Estate Taxes |
$183.13 |
$183.13 |
$183.13 |
| Hazard Insurance |
$32 |
$32 |
$32 |
| Monthly House Payments |
$884.32 |
$875.91 |
$857.83 |
The results of our analysis clearly show that the VA loan requires the least amount of
downpayment ($0) and has the lowest monthly payment. Different lenders may have fluctuating
closing costs, yet they cannot change the parameters of the programs examined and their
results will show that the VA loan is the clear winner in this comparison. The key factor
that allowed the VA loan to have the lowest payment was that both the Conventional Loan and
FHA Loan require Monthly Mortgage Insurance. The FHA Loan also has a one-time MIP payment
of $1,455. The VA loan does not. The VA funding fee of 2% is rolled into the loan amount.
We want veteran borrowers
to be aware of these facts and to be informed when purchasing a new home. Each veteran has
different personal situations and they should compare each program available to them
and the costs associated with each loan type.
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Great Rates Help Us Buy Homes
Recently 30-year mortgage rates were more than 1.3 percent lower than they were a year ago.
Low mortgage rates mean your home payments are more affordable. Today's great rates make it
easier to purchase a home, or to reduce your current payments by refinancing. Yet simply
looking for the lowest rate won't insure you'll choose a mortgage that's right for your situation.
That's because additional fees are charged when you obtain a home loan, in order to pay for
services - including an appraisal and inspections to make sure the house is in good shape
and free of pests. A loan promising low rates may have higher fees than other mortgages.
Some borrowers prefer loans that have a slightly higher rate, but don't carry any fees. In
that way they can obtain financing without paying anything out-of-pocket. Every mortgage is
unique, and it's important to make sure the one you pick works well for you - both now and
in the future. You can rely on us to explain different loan types to you.
We'll answer all your questions, and show you how various mortgages would change your monthly
payments. We'll then be able to choose one that lets you purchase the home you want.
Buying Pays Off
America's homeowners saw their properties grow in value by an average of 6.6 percent last year,
notes a national study. A house bought for $150,000 at the end of 2001 tended to be worth almost
$10,000 more just twelve months later.
Rising prices give owners ever-increasing household wealth. You can borrow against these funds
to put children through college, or use them to allow you to move up to a bigger home. Paying
off your home loan over time also means you can retire debt-free. You'll still be able to enjoy
living in your home, but will no longer be making payments.
If you've thought about selling your home, you'll probably be surprised at how much your
property is worth now. Homeowners typically keep becoming wealthier and more secure.
Over the past 50 years U.S. homes on average have gone up in value by 4.8 percent
annually, according to a recent national study.
Additionally, many owners now are financing needed improvements by tapping into their
built-up home equity. We can show you ways of increasing your property's value, while
adding to your enjoyment of living there.
Contact us if you know someone who is ready to take the important step of buying a home.
We'll make sure the process goes smoothly for them, so they can move in quickly.
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