John Morris

VA Loans (Expensive)

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30 posts in this topic

22 minutes ago, John Morris said:

If you look at this form, http://www.benefits.va.gov/homeloans/documents/docs/funding_fee_table.pdf

You'll see that for 100 percent funding, no down payment, the fee is 3.3 percent. The fees go down if you come to the table with a down payment, or in the case of refi, you have equity in your home. We have no equity, we have no down payment, and we are using our VA loan for the second time, so we fit in the 3.3 percent category.

Yeah, he had a good down and, was a new loan. He had another VA loan about 10 years or so ago. But, that probably didn't make any difference.

In your case, I guess it is what it is. I'm really sorry. But, sounds like a much better deal, overall. 

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Just now, Gene Howe said:

I guess it is what it is. I'm really sorry. But, sounds like a much better deal, overall. 

It is, but as you say, it's better overall.

My main point was, how the VA sticks it to the vet, but if I look at it on a positive note, the home will be paid off for retirement, the kids will have a home free and clear when we part this earth, they can do as they wish with it, and I do understand that the fees go to help offset the costs of other loans that go into default.

It's all good, just sticker shock is all.

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John, are you ok with your current lender?  OK meaning would do business with them again and stuff like that?

Can you make additional payments or change your payment schedule with them?

If so, I might suggest a couple alternatives for you.  Simply making 1/2 your payment bi-weekly would cut your loan down into the 22-23 year range IIRC.

If you have the ability and a copy of your current amortization schedule, you can cut one month off the end of the loan by paying next month's principal payment with this months payment.  Doing that can reduce the term to 15 years but does get expensive the further into the term you get.  Doing this for 5 years would chop your current loan down to a 20 year mortgage and may allow you to refi with a 15 year loan.  A roll of the dice there, as you don't know what the interest rate might be in 5 years.

If any of this is confusing, feel free to shoot me a PM.  I will be away from the computer for most of the rest of the day, but will get back with you.

Cal

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18 hours ago, clhyer said:

John, are you ok with your current lender?  

Not really Cal, I am really glad to get out from under them, I have had to deal with them for some time now and they have been very unreasonable over the course of the years.

And yes, we are going to make additional payments to get it down to 15 years or less. But overall, that 6.6% rate we are in now, will be nice to shed.

Thanks Cal!

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That is a very high fee (seems to me) but I see most of the initiating/closing costs of a loan a real screwing. They went up substantially after the last crisis, and all we mere mortals can do is grin and bear it. Reminds me of the "doc fees" car dealers charge....only a lot worse. But it sounds like you got a handle on things and a good plan!

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Here is a site with an early payoff calculator that you can play around with.  If you can calculate the extra amount needed to meet your early payoff goal, and can afford the additional extra amount each month, it is a better plan than hoping to make extra payments.  This may be what you meant, but when I think of "extra payments" - a lot of people mean they will try to send in a full "extra" payment now and again at a later date.  Additional principal payments are any amount over and above the full payment.

 

http://www.interest.com/mortgage/calculators/accelerated-mortgage-payoff/

 

Good luck with it.  It is good to have a financial plan, and you have a good one when it is feasible and meets your goals.

Cal

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I cannot speak for the VA Loan issues, but I can throw something in on the VA Appraisal. I ran my own Residential Real Estate Appraisal Business for 11 years from 1999-2011. After the 2008 crash my last 3 years I did appraisals mostly for foreclosures working with attorneys. To do a VA appraisal there are a number of different things involved and specific education and training requirements that the appraiser has to meet. I looked into it to add another tool to my appraiser's toolbox, but it was a real pain in the bee-hind with the various hoops to jump through with little return on my investment. So since the VA loans require a special type of appraisal to meet the VA guidelines, the appraisers who do the VA appraisals charge more for having to do a fair amount of more work than a standard appraisal for a Single Family Residence. So today a standard appraisal in my neck of the woods runs from $400-$500 for a typical Single Family Residence while a typical VA appraisal will runs from $500-$700 depending on the specific appraiser. You may be able to get your own VA Appraiser, but your specific person that you are dealing with the VA Loan may require that you used a VA Appraiser that they already have a relationship with.

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I obviously haven't done the math, but, the shortened term and lower interest rate will ultimately produce a significant savings over the term of the loan. When I was discharged, I didn't have a nickle to put down for a home purchase, but the VA loan, I believe it was 3 % then ,enabled me be to purchase my home with no down payment. I would otherwise have had to wait years to save for the down payment. The VA appraiser required that the home be painted and the roof newly shingled at no additional cost.The seller had the required work done.

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It's a huge savings to us @It Was Al B. Most definitely. It just hurts a little. But we'll get over it in just 5 years when we see this mortgage getting smaller quickly!

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