Read below for reduced VA Funding Fee!

VA loan in Niceville Florida

VA loans in Niceville Florida

Have you served our country by serving in the military, reserve, or National Guard?  If so, your benefits are about to get better, and I think that’s great!  The VA mortgage loan is a fantastic tool for financing a home.  In fact, if a home buyer doesn’t want to make a down payment, their options are limited to a Veterans Administration (VA) loan (if they’re eligible), a Rural Housing Loan (only available in some parts of the country), or some niche types of loans with limited availability in some localities.

While VA loans are excellent they aren’t free, and cost a little more if you’re using it for a subsequent home purchase.  In fact, if you close on a subsequent VA mortgage this month, your VA Funding Fee will be 3.3% of the loan amount if you don’t make a down payment!  Fear not, it gets better!!

If you close your VA loan on the 1st of October 2011 (or more realistically the 3rd since the 1st is a Saturday) or after, your Funding Fee will reduce from 3.3% to 2.8%!  That’s a savings of .5% of the loan amount, ($1,250 on a $250,000 purchase!!).  If, after reading this, you decide to delay your closing a couple of days to save .5%, I’d be happy to let you take me to lunch!  🙂

Here is an abbreviated table for the VA Funding Fee:

VA Guaranteed Loans – Loan Fee Structure

loans closed on or after October 1, 2011

(abbreviated table)

First Time Use
Down Payment:  Less than 5%  Between 5% and 10%  At least 10%




Second and Subsequent Use
Down Payment:   Less than 5%  Between 5% and 10%  At least 10%




To see the full table, and the release from the Veterans Administration, click here.

For the past 6 years over 60% of my customers have used VA loans. Consider me your VA lending expert!

How can I help you or your friends?


Rural Housing Loan Changes Are Upon Us!

Rural housing loans in Florida
Rural Housing loans in Florida

I hope you’ve got your Rural Housing loan ready to close by the end of September 2011.  The cost of financing a RH loan will go up for any loans approved by Rural Housing on or after the 1st of October.  It’s not a huge increase, but you may want to know about it.

The Guaranteed Rural Housing Loan is already similar to the FHA loan, but it offers financing at 0% down, whereas the FHA loan requires at least 3.5% down.  The FHA loan has an upfront fee that is rolled into the loan, and an annual fee spread across the 12 payments.  A Rural Housing loan has historically only had an upfront fee.  Beginning with approvals on or after Oct 1 the RH loans will have a reduced upfront fee but will be adding an annual fee.  The difference in payment for loans approved after October 1 will be about $17/month higher per one hundred thousand financed.

It’s interesting to note that the annual fee is calculated every year based on the average unpaid balance for that year.  In other words, the calculation is pretty complex, but makes a little bit more sense than the typical mortgage insurance model.  The new RH model only charges mortgage insurance (they call it “Annual Fee”) on the unpaid principal each year, so it reduces over time.  Typical mortgage insurance is a flat fee calculated upfront and doesn’t reduce regardless of how much you pay down your loan.  So while the RH fee is more complicated, it’s fairer, at least in my humble opinion.

Remember the RH loan has household income limits you can access here, and is only available in some areas.  To find eligible areas, click here.  My primary area of business is Okaloosa County, Florida.  The income limit in Okaloosa county is $102,500/year for a household of 5-8 and $77,650 for a household with 4 or less people.  If your household earns more money than the household limit (kids included), you can’t get a Rural Housing loan.

The Rural Housing loan is an excellent program if you and your property are eligible!

How can I help you or your friends?

Aren’t you glad you earned V.A. eligibility?

For those of you with V.A. eligibility, let me say thank you.  There is no way to get V.A. eligibility without serving our country, and for that I am grateful to you!  If you have that eligibility you are fortunate indeed.  I came across a situation the other day that highlighted the benefit of a V.A. loan that I think everyone should hear.

“Gerald” called the other day.  He makes a lot of money, near $12,000 a month with his military retirement income, and his current defense contractor income.  However, his credit score isn’t very good.  In fact, it’s about 635, well below the national average. 

If Gerald wanted to buy a home using “conventional” financing he would have to put at least 20% down because no mortgage insurance company would approve him for mortgage insurance with his credit score.  And in addition because of the Loan Level Price Adjustments associated with conventional financing his interest rate would be nearly 5.625% for a 30 year fixed rate.  Ah, but Gerald has V.A. eligibility!!

Gerald can buy the same house with absolutely no down payment, and no mortgage insurance.  Even his V.A. “Funding Fee” is waived because he has a slight service connected disability.   And his interest rate is only about 5.125% on a V.A. loan!

So let’s review his situation:   $400,000 purchase price.
Conventional: $80,000 down payment, 5.625%  and a principal and interest payment of $1,842  -or-
V.A.: $0 down,  5.125% and a principal and interest payment of $2,177. That’s just over $200 more per month to finance $80,000 more!  Gerald, aren’t you glad you earned your V.A. eligibility?

For more on V.A. underwriting and my ideas to fix lending see my post entitled: “Mortgage Solutions using V.A. lending as our guide” by clicking here.

Mortgage Solutions using V.A. lending as our guide

V.A. Loans, those guaranteed by the Veterans Administration, work.  That’s the short of it. See the graph of seriously delinquent mortgages by loan type:

Note the blue line for VA loans.  See how those have been the best performing loans in the industry at least since 2005 through the 3rd quarter of 2010?  Guess what?  V.A. loans do not require any down payment whatsoever!  In fact, V.A. loans are a lot like the sub-prime loans of 2004-2007!

You see, V.A. loans do not require a down payment.  V.A. loans do not have a minimum credit score in order to be financed.  V.A. borrowers can have a bankruptcy discharged within the past 2 years.  In fact, sellers can even pay down a veterans debt in order to help the veteran qualify.  These are very flexible loans.   Perhaps the move to require larger down payments and higher credit scores isn’t the answer.  Maybe improving our loan performance has more to do with underwriting practices.  You see, a VA underwrite is different from the others.  Let me explain how I would fix the nation’s lending problems by detailing some of how a VA loan is underwritten.

1) Let’s consider why a person’s credit score is low instead of only looking at the numerical score.  If the story makes sense and/or if reasons for negative credit can be proven to be beyond the borrower’s control, let’s proceed to an approval.

2) Let’s consider how much money the borrower will have to spend after his or her home maintenance, social security, and state and federal taxes are paid.  And then, let’s consider how many people are in the household.  If they have residual income of a certain amount after the above is considered, let’s move forward with an approval.

3) Let’s have all appraisers selected by one single entity just like V.A. appraisers are selected.  Let’s not farm out our appraisals to the lowest bidder.  Let’s not use appraiser’s who are outside of the subject property market area.  And let’s make all appraisals also include an assessment of the property condition.  If the local appraiser being paid a fair wage, selected via a random process, gives a satisfactory condition report and a substantiated opinion of value that supports our purchase price, let’s move forward with an approval.

I have closed hundreds of V.A. loans, and the experience has taught me a lot.  In fact, I consider myself to be somewhat of a V.A. expert, and I’ve always thought V.A. underwriting just made more sense than conventional or FHA underwriting.  I don’t suppose I have all the answers, but when I see data like that in the chart above it makes me think that perhaps we should learn from the data and then make decisions instead of the other way around.

If you, or someone you know needs a V.A. loan, contact me via the link above my picture.  I’d love to put my experience to work for you!

A very happy new year indeed!

“You’re generally better off sticking with what you know” This time, I’ll agree with Donald Trump! 
In July while managing a branch for a locally owned mortgage lender the company I was working for was suddenly unable to fund mortgage loans.  Faced with a decision, I decided to pursue a career as a Realtor.  What was I thinking??  That is hard (and often thankless) work!  I never appreciated the effort a Realtor must put forth until I attempted the same.  Needless to say, I have a new respect for successful Realtors.
While is was a struggling Realtor, a management position became available with a large mortgage lender and I will happily return to mortgage lending beginning January 3rd.  My primary objective is to provide mortgage loans for people who want to purchase or refinance a home; but I will also be managing other Mortgage Loan Officers in Niceville and Destin, Florida.
Since late 2008 I have been publishing my own newsletter and maintaining a website with resources, links, tools, and a blog.  This is my first experience working for a large company with it’s associated compliance requirements.  In order to continue to provide timely information and resources without worrying about compliance I have decided to avoid any direct references to my employer on this website or in my newsletters moving forward.  
I encourage you to peruse this website viewing the tools, links, or former newsletters!  You may also call me using my phone number in the picture above.
I hope you too, have a very happy new year!

Celebrate our Veterans on November 11

Here is a memory of my Dad’s service to our country: On Sept. 17, 1972 when I, Bart was only 1 year old, my Dad (Dave Swan) performed a risky rescue attempt of two downed F105G pilots in the seas just south of Haiphong harbor.  His story is detailed in Leave No Man Behind: The Saga of Combat Search and Rescue by Galdorisi and Phillips, 2008.  The following paragraph is an excerpt from the book and reflections by my Dad.

The Air Force were hitting targets in the hills north of the Haiphong area when Lt. Swan in Big Mother 70 (another name for the H3 helicopter) and Lt Lockett in Big Mother 61 received word of an F-105G Wild Weasel in trouble and making for the water.  Lt. Swan reached the downed pilot within 45 seconds of impact and released the rescue swimmer who fought unsuccessfully to free the motionless pilot face down in a seated position 15 feet under the water.  Big Mother 61 reached the other motionless pilot and Lt. Lockett released his rescue swimmer who was picked up once Lt. Lockett decided the place was to hot.  Shore batteries had opened fire, with surprising and immediate accuracy.  Lt. Swan followed Lt. Lockett and released his swimmer for a rescue attempt of the same downed pilot.  The swimmer attempted the 50 yard swim in rough seas to the downed motionless pilot without success. The swimmer was picked up but had to be released due to the hoist jamming.  Lt. Swan considered landing in the water [the H3 had this capability] but the high seas rendered the option very poor indeed.  Lt. Swan held his position as the shrapnel rapped into the helicopter.  Lt. Lockett flew into the bursting shells to complete the rescue of the swimmer but the swimmer’s position was lost.  The aircraft set up a racetrack pattern in and out of the impact area searching for the swimmer.  Several passes were made through the forest of splashes and finally after 15-30 minutes the swimmer was located.  Lt. Swan lowered Big Mother 70 to within a foot of the wave tops, and with the tail wheel submerged in the sea, the swimmer slipped in to the horse collar and was taken out of the area and brought on board. 

For our country’s selfless heroes, and especially my Dad, I am very proud.  Thank you!

Mortgage Rates to fall further?

Fed to buy hundreds of billions more in bonds

The Federal Reserve is making a bold effort to invigorate the economy by announcing it will buy hundreds of billions more in Treasury bonds.

The Fed says it will buy $600 billion of long-term government bonds by the middle of 2011 to further drive down rates on mortgages and other debt. This will be in addition to an expected $250 billion to $300 billion in purchases over the same period from reinvesting proceeds from its mortgage portfolio.

The idea is for cheaper loans to get people to spend more and stimulate hiring. The Fed says it will review whether adjustments are needed depending on how the economy is performing.

Some worry the Fed action will do little to boost the economy because interest rates are already historically low. Others fear the bond purchases could drive inflation too high over the long term and unleash speculative buying in assets like stocks.

Spending money in this fashion is like building a larger campfire on a cold night by throwing shreds of your clothing into it.  Sure, the fire and your smile grow larger while you begin to feel good about your decision, but eventually all of your clothes are reduced to ashes and the fire dies down.  Spending money we don’t have in order to boost the stock market, drive down unemployment, and jump start the economy is a very dangerous thing.  I believe the long term effect of this decision will be dramatic increases in interest rates over the next couple of years.  From an interest rate and home price perspective, there has never been a better time to buy a home.  If you’re on the fence, it’s time to jump off!

Let me know if I can help you find a home to buy.  Click the “Search the MLS” link to the right to find the home of your dreams, then we’ll go look at whatever piques your interest!  Call me at 850-678-HOME (4663).