Jeremy Turner

Did you know that if you are a Guardsman, Reservist, or on Active Duty you are eligible for VA Mortgage Benefits? That's right! You don't have to wait until you have Veteran status to be eligible. It just sounds like you do, since the mortgage is backed by the Veterans Administration.

VA mortgages are one of the few loan programs that still offer up to 100% financing, depending on circumstances. What circumstances are there you ask?

100%, or Zero Down, VA Financing is available as long as the purchase price of the property you are looking at is $417,000 or lower.

Does that mean that in order to use VA Financing you have to buy a property at $417,000 or lower? NOT AT ALL!! However, it does mean that 100% financing is not available for purchase amounts over $417,000.

Here are a couple of examples:

You find a beautiful home that is selling for $300,000, and you have your full VA entitlement available. With the basic entitlement and the additional entitlement available up to a purchase price of $417,000, you would qualify for a 100% down payment loan.

But let's say that you find a home that is more your style, but it is selling for $500,000. You know that 100% financing is available for purchases up to $417,000. So how much will you have to bring in for as down payment? Here is where the math comes in. Your required down payment is 25% of the difference of the sales price ($500,000) and the maximum entitlement ($417,000). This equates to a down payment of $20,750, or 4%.

$500,000 - $417,000 = $83,000

$83,000 x 25% = $20,750

$20,750 = 4% Down Payment

Two things to remember when discussing VA financing with your mortgage broker is the Funding Fee, and the county limit. The Funding Fee is based on a couple different parameters, I will not go into them in this blog. But you will want to discuss this in detail with your broker so you understand the VA program entirely. Depending on the county the property is in, may qualify it for a higher guarantee.

As with any mortgage program, you will want to compare the VA option against other options, such as FHA and conventional financing, and choose the one that is right for you.

Just remember that VA financing is not only for those with Veteran status. You may qualify for the VA program as a Guardsman, a Reservist, or an Active Duty member of the Services.

And a special THANK YOU to all of our Active Duty, Guard, Reserve, and Retired members for your service!

When you are out searching for home to purchase, you will probably hear the term "Seller Paid Closing Costs". But, what are seller paid closing costs, and why would a seller want to pay them?

The term "Seller Paid Closing Costs" is somewhat misleading. They are called this because when you look at the Final HUD-1 at closing, these costs are listed on the Seller's side of the transaction. However, the seller isn't really paying for them. A better way to think of them is "Buyer Financed Fees". Let's take a look at how this works.

First we will take a look if you paid your own closing costs. Say you want to buy a $200,000 house and you are getting a conventional loan with 5% down payment. Just to keep everything in round numbers, we will say that your closing costs were $6000 and your pre-paid items are $4000. (Keep in mind that these are example numbers. You will want to consult a mortgage professional for a more accurate quote.) Your closing costs, pre-paids, and down payment would mean that you would have to bring a check for $20,000 to the closing table.

Now we will take the same transaction and have the seller pay the closing costs. The seller has an existing mortgage they need to payoff in the amount of $125,000. When they sell the house at $200,000 they are expecting to receive a check for $75,000, less their Realtor, Title, Escrow, and other such fees. But if the seller had agreed to pay the buyers closing costs, their gross return would only be $69,000. I don't know about you, but I don't know too many sellers willing to give up that amount of money.

So now we will take a look at how it really happens. Let's say you find that great house selling for $200,000 and you want to ask the seller to pay for your $6000 is closing costs. Because the seller still wants to make his gross amount of $75,000, your Realtor will write the offer with a purchase price of $206,000 with the seller paying for $6000 in closing costs.

See what just happened? $206,000 sales price less $6000 of buyers closing costs equals the seller's gross expected return of $75,000. As long as the appraisal value comes in at the new sales price of $206,000 there shouldn't be too much of an issue after that.

What this nifty little trick lets you do is to put your closing costs into the purchase price of the home, thus reducing the amount of money that you have to come to the closing table with. In this example, you would now only have to come to the table with $14,000. One thing to remember with this though, is that with a higher sales prices, comes a higher loan amount. You will want to talk to your mortgage broker to be sure that you understand your financing structure completely.

It is my goal as a mortgage broker to be sure that you, as a buyer, understand completely how your mortgage loan amount is determined, and how you and your Realtor come up with your offer price.

Back in July, FHA put out new regulations regarding property flipping requiring the seller to be on title for ninety (90) days prior to the sale. "Flipping" is the sale of property that was recently acquired, normally for a high mark-up. For example: You buy a fixer-upper for $150,000. You then upgrade the house putting in new appliances, a new roof, maybe add a deck, new cabinets in the kitchen and turn a master bedroom into a master suite. Then you sell the property two months later for $200,000. That is a property "flip". It is a short term investment for high gains.

Over the past couple of months one thing I have noticed is that buyers need to start asking their real estate agents, prior to putting in an offer on the property, "How long has the current owner been on title?" and "Is this a property flip?"

Asking these little questions prior to putting in an offer can save you, as a buyer, a big headache, especially if you are using FHA financing. Because the property cannot sell (with limited exceptions) prior to the 90^th day the seller has been on title, you will want to know if you will have to wait to get the house you want to buy.

Because of this new rule, you will not be able to sign and date a Purchase Agreement, or make mortgage loan application for the property until the 90^th day. This is why it is important to ask this question. As Realtors, developers, and sellers may not be aware of this rule, it is important to you, as a buyer, to have a heads up.

The last thing you want is to be in the middle of the transaction, when the title report comes back, to find out it is a property flip with your FHA financing, and all of a sudden your purchase comes to a halt.

So be sure to ask "How long has the seller been on title?" to your Realtor. You'll be glad you did.

Have you been looking for something a little out of the ordinary to do in the Portland area this weekend? Well, why not check out the The Corn Maize at The Pumpkin Patch.

This great family activity is located up on Sauvie Island and has five acres of maze's to check out.

The Maize is open seven days a week until October 31, 2009. You can see an arial view of the maze at their website, www.portlandmaze.com.

Have fun! And don't get lost!

If you have been reading the news papers , or watching the financial news since the downturn of the real estate market, then you have probably heard of the term "Yield Spread Premium". You have also probably heard the rumor that Yield Spread Premium, also called YSP, has been one of the major factors in the decline of the market. The reasoning of this goes that unscrupulous mortgage brokers have sold high rate loans with long term pre-payment penalty terms to increase the amount of YSP that they are paid from the banks they write the loans for. Then the amount of the YSP was not disclosed properly to the borrowers and the broker walks away with a nice fat fee for the loan on top of the Origination Fee that was charged.

Now, I will acknowledge that at the height of the mortgage bubble, there were brokers working who, in fact, did what I mentioned above. However, this is not a reason to permanently take away the tool of Yield Spread Premium for all future loans as some on Capitol Hill think is the best way to solve what they call a broker compensation problem. For those of us who have always worked on behalf of our client's best interest, YSP is in invaluable tool to make sure that closing costs are kept in check.

So what is Yield Spread Premium? The YSP is a fee paid by a lender to a broker for selling a higher rate. YSP was originally put in place to help borrowers offset the amount of out-of-pocket fees that showed up on the Good Faith Estimate. This was done by crediting the borrower the amount of the YSP received to the out-of-pocket fees. Thus, reducing the amount a borrower had to come to the closing table with. Using it this way, Yield Spread Premium is a great thing to have.

However, with some brokers, this practice got skewed. Instead of using YSP to offset fees, brokers were charging higher rates, and then pocketing the YSP on top of the Origination Fee. It is important for you, as a borrower, to carefully review your Good Faith Estimate to see how much Yield Spread Premium your broker is expecting, and why it is being charged.

You do need to know that some brokers do use the Yield Spread Premium to receive compensation rather than charging an Origination Fee. Other brokers will split up their compensation by using both the Origination Fee and YSP. As brokers are entitled to proper compensation for the work that went into closing your transaction it is important for you to know how your broker is getting paid, and how your closing costs are going to be covered. Some borrowers want a higher rate to save on closing costs, while others will either bring a higher dollar amount to closing, or wrap the fees into a larger loan amount. But don't be shy in asking the compensation question.

Your bottom line is the one that's at stake. Whatever is decided, remember that it should be YOUR decision. Though a broker will give you his or her opinion on which way they think is best suited for your needs, the ultimate decision is yours.