Home Prices Continue to Sizzle

CoreLogic Home Price Insights (HPI) reported today that home prices did heat up this year.  Across the country prices rose by 7% from September 2016 to September 2017.  The numbers also showed an increase from August to September of this year by .09%.  These figures include distressed sales.

An interesting tidbit about the CoreLogic HPI is the data incorporates more than 40 years of repeat-sales transactions for analyzing home price trends.  The CoreLogic HPI forecast for the coming year shows an anticipated increase in home prices by 4.7%.

Frank_NothaftFrank Nothaft, acquaintance and former Freddie Mac Chief Economist, now Chief Economist for CoreLogic says, “heading into the fall, home price growth continues to grow at a brisk pace.  This appreciation reflects the low for-sale inventory that is holding back sales and pushing up prices.  The CoreLogic Single-Family Rent Index rose about 3 percent over the last year, less than half the rise in the national Home Price Index.”  Smh, Nothaft does not live in North Texas.  Still, he is an incredibly smart guy and this is the national number afterall.

So…what does Texas look like?  Home prices are up 5.64% from September 2016 to this September.  The forecast is for continued growth, but moderating over the next year with 2.42% expected, Sept to Sept.

Black Knight also released some interesting data today which may seem a bit counterintuitive.  Black Knight reports home affordability improved in September.  The average homeowner needs 21.4% of their median income to purchase a home.  This is less than the post-recession peak of 21.7%.  It much lower than the years prior to the housing boom, from 2000 to 2003, when affordability was at 26.2%.

So, despite the increase in home prices, home affordability is looking sunny.

Finally, the last piece of housing news for today from The National Association of Realtors (NAR).  This year has fallen short on availability of homes on the market NAR predicts that sales of existing homes will grow by 3.7% in 2018 to a target of 5.67 million homes.  This is greater than the estimated 5.47 million homes projected for 2017.

There you have it.  Home prices continue to rise.  Surprisingly, affordability is still in the game.  And next year we shall have more homes available for buyers.  Perhaps that is the reason the forecast for price appreciation is moderating.

 

How to Restore VA Entitlement for Your Home Loan

VA entitlement is a guarantee to the lender by the U.S. Department of Veterans Affairs.  It guarantees to repay your home loan in the event of default.  The entitlement is a specific dollar amount available to veterans and active military members.  It can be found in your Certificate of Eligibility.

As a first time user of the VA benefit, you have full entitlement available.   You can read more about your VA entitlement in this post.  If you have obtained a VA home loan before, your entitlement is reusable depending on the circumstances.

Restoration Basics

Homeowners are able to apply to restore VA entitlement for a new home loan.  But only after the first loan has been paid in full and the property has been sold. Sound tough?  If you are simultaneously selling and purchasing a new home with a VA loan, it can be done simultaneously.  It is possible to sell your home, restore VA entitlement and close on the new home purchase all in the same day.  As your lender, we can take care of this for you.  It’s easy to do.

Restore VA EntitlementThe good news is there is no specific waiting period between the time you first use your VA entitlement and its subsequent use.   You can buy your first home one year, then if you’ve outgrown it a year later, sell and buy another home.  This can be done using your VA entitlement (assuming you have restoration or enough left over).

There are a few scenarios when your entitlement will not be restored.  If you have paid off your VA home loan yet still own the property, your entitlement is not restored.  In addition, if you refinance your VA home loan into a conventional loan, your entitlement is not restored. And in a divorce, if the non-veteran is keeping the home, the entitlement will remain tied up unless the home is refinanced or sold.

The only way to have it fully restored is to pay the loan in full and dispose of the property, with one exception…

On a one-time only basis, you may have your VA entitlement restored.   This can be done if your prior VA loan has been paid in full but you still own the propertyBe very cautious in exercising this.  Once you do, you cannot do it again.

VA Assumptions

What happens if you sell your home on an assumption?  If your home carries a VA loan, your eligibility can be restored only if the qualified assumer is also an eligible veteran.  The eligible veteran must be willing to substitute his or her available entitlement for the original veteran. Otherwise, you cannot have entitlement restored until the one assuming has paid off the VA loan.

Restore VA Entitlement

To restore VA entitlement, you will need to complete some paperwork.  Submit VA form 26-1880 along with a copy of the final HUD-1 or Closing Disclosure to your Regional Loan Center.  Once your application has been processed and your entitlement restored, you can move forward with a new VA home loan.

NOTE:  If you have already used a portion of your entitlement and it cannot yet be restored, any partial remaining entitlement would be available for use.  If this is the case, contact me to discuss whether the remaining balance would be sufficient for the loan amount sought and if any down payment would be required.

 

 

How to Get Your Certificate of Eligibility for Your VA Home Loan

To obtain a VA home loan, you must document your eligibility which is detailed in your Certificate of Eligibility (COE).  VA home loans are available to active service members, veterans, and in some cases, surviving family members.

VA COE Elizabeth RoseBorrowers must be eligible to use their VA benefits.  The COE spells out the entitlement of the service member or veteran.  You can check here for more information on entitlement.

Get Your Certificate of Eligibility

In order to proceed with a VA home loan, you will need to furnish your COE.  In most cases, this is simple to do. If you do not have your COE, it may be faster and easier to have my team request for you through the VA’s automated system.  We are happy to do that and often can do it quicker.  You can get started with us today, just give us a call or Click here to find out more.

Online

To obtain your Certificate of Eligibility (COE), go to the Veterans Information Portal at https://vip.vba.va.gov, sign in and click on the arrow next to your password field.

  • Obtain your COE by double-clicking on the “Click Here” hyperlink found in the box labeled “My Home Loan Benefit Eligibility and Entitlement”
  • You may print and view your COE. In cases where the COE shows zero basic entitlement, VA may have incomplete information about your benefits or you may need to request restoration of your entitlement.  In this event,

Note:  You will be required to upload a DD214 or a points statement to verify an active duty or Reserve/National Guard tour of service at a later stage in the process. 

Apply by Mail

Use VA Form 26-1880.  Return it to the address shown on the form.  If you can’t print the form, call 1-888-244-6711 and follow the prompts for Eligibility.  VA will mail the form to you.

If you need to obtain proof of military service, use Standard Form 180, Request Pertaining to Military Records.  This request form is NOT processed by VA, but completed and mailed to the appropriate custodian of military service records.  Instructions are provided on the back of the form.

COE Basics

If a lender tells you that you are pre-qualified for a VA home loan without obtaining your COE, run the other way.  You do not want to work with a lender who makes this mistake.  A lender cannot determine your VA loan eligibility without the COE.  Therefore, they cannot offer you a VA home loan without it.

The COE will state if you are eligible for a VA home loan based on your service history.  The COE does not guarantee that you qualify for a VA home loan.  There is a big difference!  You will still need to qualify for the loan based on VA mortgage guidelines.

The COE will also provide details including:

  • The amount of VA home loan entitlement available
  • Any exemptions for certain VA loan fees
  • Outstanding VA loans and the status
  • Your disability rating, if any

If your COE shows zero basic entitlement, the best course of action is to notify me and my team so we can assist you.  It is possible to have your eligibility restored. However, it is very important that it is done correctly.

If you are considering a home purchase using your VA entitlement, take the first step today…give us a call or Click here to find out more.

What does Your VA Entitlement Mean?

Buying a home with your VA entitlement is a well-deserved benefit of having served our country.

VA home loans are guaranteed by the U.S. Department of Veterans Affairs and are a great way for Veterans and active military members to purchase a home.  The VA entitlement is established by the Veterans Administration.  Entitlement is the dollar amount the VA would be willing to guarantee a lender on behalf of a qualified VA-eligible borrower.   This guarantee protects lenders in the event of a default which tends to encourage lenders to make VA loans.VA Entitlement

What is Your VA Entitlement Amount?

There are two components to entitlement – basic and bonus. Let’s break it down.

Your basic entitlement is $36,000.  This covers home purchases up to $144,000.  For home loans more than $144,000 (which is most home loans), bonus entitlement is available and would kick in.

Bonus entitlement varies across the country.  It is based on the county loan limits established each year by FHFA.  The loan limits are the amount a qualified veteran with full entitlement (basic and bonus) may be able to borrow without making a down payment.

The county loan limits can change yearly. Locate your county loan limits here.  In Texas, the 2017 loan limit is $424,100.

Calculating Bonus VA Entitlement

To calculate bonus entitlement, take 25% of the loan limit for your area. Then subtract the basic entitlement from that figure.  The remainder is your bonus entitlement.  Here’s the math:

$424,100  loan limit in DFW
*25%
$106,025  total basic and bonus entitlement
-$36,000 basic entitlement
$70,025  bonus entitlement

The intent of entitlement is not to cover the entire purchase price of your home.  So if you are wanting to buy a $400,000 home and you have full entitlement (basic and bonus) of $106,025, no worries!  It is designed for a 25% guarantee.

If you have used some of your entitlement and it has not been restored, and will not be restored, then you can still use the remaining entitlement.  If the remaining entitlement does not cover 25% of your new home purchase price, then you will need to make a down payment.

Your entitlement details are spelled out on your Certificate of Eligibility.  For assistance in determining how much you can borrow and what your entitlement will cover, please don’t hesitate to reach out to me.

With great honor, I am here to serve our military with their home financing needs!

 

Your Earnest Money Deposit Explained

The earnest money deposit is an important part of the home buying process.  One that seems to create some confusion, especially for a first time homebuyer.

When buying a home, be prepared to write a few checks up front prior to of closing.

Earnest-money-depositThe first check that is typically written is the earnest money deposit.  The deposit demonstrates to the seller you are a serious buyer and are committed to moving forward with the transaction.  Sellers seldom accept offers without earnest money.   Once your offer is accepted, the seller is essentially taking his home off the market.  And you are protected from the home being sold to another individual.

The amount you put down as earnest money will depend on the area and market conditions.  On average, earnest money deposits range from 1% to 2%.  With the current sellers market, a higher earnest money deposit may help you win a bidding war.

The earnest money deposit is held by the title company in its escrow account.

 

Although the earnest money deposit is for the seller it is made payable to the title company handling your transaction.  So, once your offer is accepted and the Residential Contract executed, you will be expected to give your earnest money to the title company.  You can make this payment by cashier’s check, personal check, or wire transfer.

The earnest money deposit is acknowledged in the contract by the title company.  This is on page 9 of the Residential Contract (state of Texas).  Your earnest money will be held by the title company until your closing day.

You will need to document your earnest money funds during your mortgage loan process.  Be prepared to provide proof of where the funds came from as well as a copy of the cancelled check.

Your earnest money will show on your closing settlement statement as a credit.  It will be applied towards your down payment, thereby reducing the amount of funds you need on closing day.  If it happens to exceed your required down payment, then it would be applied to your closing costs.

Note: Sometimes you may hear your transaction referred to as “the close of escrow”.  Don’t confuse this use of the word “escrow”.  The word escrow is also used when referencing your impound account.  An impound account is for  your taxes and insurance.

Happy Independence Day America!

Happy Birthday America!  While today marks our Independence Day, it really could be celebrated for a month.  Here’s some interesting facts about our Independence in case you’ve forgotten your history lessons.

In July 1775, after another failed attempt for a peaceful reconciliation with Britain, Congress approved “The Olive Branch Petition”.  The petition pleaded for a full review of the unlawful policies that had been imposed on America.  It was just a year earlier that America had formed a national Congress.  This was the result of a call for “harmonizing of measures” in 1774.

By November, word returned (remember they didn’t have phone, fax, or email, lol),  that the King and Parliament refused to give any hearing to America’s request and responded with a complete embargo against all the colonies.

As you might imagine, anger heightened which brought action both at the state level and national level.

In March of 1774, John Hancock, who must have had great faith, vision, or a crystal ball, proclaimed, “I have the most animating confidence that the present noble struggle for liberty will terminate gloriously for America.”

With the Olive Branch rejected, the embargo in place, and all attempts of reconciliation exhausted, Congress approved in principal a separation from Great Britain on July 2, 1776.

On July 4, 1776, Congress approved the Declaration of Independence which was signed by by two signers, John Hancock and Charles Thomson.

The preamble states: “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are Life, Liberty, and the Pursuit of Happiness.”

JohnHancock

The Declaration of Independence was a dual declaration – a declaration of Independence from Britain and a Declaration of Dependence on God.

July 5th, John Adams writes in a letter to Abigail, “this day will be the most memorable epocha (an instant in time that marks a new period or era)  in the history of America.  I am apt to believe that it will be celebrated by succeeding generations as the great anniversary festival.”

On July 8, 1776, the Declaration had its first public reading on the steps outside Independence Hall.  Then the Liberty Bell was rung, fulfilling the Bible inscription on its side:

“Proclaim liberty throughout the land unto all the inhabitants thereof.” Leviticus 25:10

On July 19th, Congress ordered that the Declaration of Independence be engrossed on parchment in beautiful script so that it could be signed by the entire Congress.

One month later, on August 2nd, the members of Congress placed their hands on the document and signed it in the form we are so familiar with.

May John Hancock’s words always ring true for America, that our struggle to become a free and independent nation always finish in glory.

 

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