Purchasing a home with a Phoenix VA loan may seem like a daunting task at first glance, but it is actually pretty simple.

The basic process is as follows:

Find a home in Phoenix you would like to buy and arrange the purchase with the seller.  You’ll then sign a purchase contract conditional upon approval of a Phoenix VA guaranteed loan.

Contact a reputable Phoenix VA home loan lender, present your Certificate of Eligibility, and begin the loan application. Your lender will determine your credit and submit a request to the VA to request a licensed appraiser to appraise the property.

If the determined value is acceptable to all involved parties, and the lender determines that your loan application meets the VA loan requirements, your mortgage can be approved.

You (and co-borrower, if applicable) will then attend the loan closing and sign the related papers. The closing escrow agent will explain all of the documents, along with loan terms, requirements and monthly payment details.

After these steps are completed, you will own your own Phoenix home with a low-interest VA purchase mortgage, with no private monthly mortgage insurance required.

Please note that when the VA receives report of the loan, the Certificate of Eligibility (COE) is adjusted to reflect use of entitlement and is then returned to the veteran. No further actions are required to get your COE back, which just makes the overall process easier for veterans.

A common question from many first time VA applicants is, “How long does the VA loan approval process actually take?” The overall period of time it takes for a Phoenix VA mortgage approval varies depending on the amount of volume the lender has at that moment. It also depends on how quickly the VA borrower is able to respond to documentation requests. Traditionally, getting full approval and closing a Phoenix VA purchase mortgage has been taking between 3 weeks to 45 days. This time-frame is more or less the same as that for conventional loans.

There are some things you can do to ensure your loan process is as quick as possible, such as sending requested documents as soon as possible, working with a knowledgeable VA loan specialist, and making your hours of availability as flexible as you can.

For further advice on how to make sure your loan process goes as fast and smoothly as possible, please read our article titled VA Mortgage Approval – How Long Does It Take?

After signing your closing documents, the title company will send the signed documents back to AmeriFirst.  If our funding department receives the closing documents before noon, AmeriFirst will fund your loan and send the title company the wire the following day.  If the documents are received after 12 pm, then your loan will fund two days after receiving documents.  Example – closing documents received on Monday at 4pm will follow with funds sent on Wednesday morning to the title company. 

Once the title company receives the funds, they will record your deed with Maricopa County and you will receive the keys.  Typically, the deed is recorded around 4:30 in the afternoon.

 * This scenario is barring any unforeseen delays and only applicable with loans originated with David Krushinsky.  Certain transactions may require more time.

Phoenix VA mortgage loans can be used towards purchasing a home, building a home, or refinancing an existing mortgage.

This article goes into detail about a VA guaranteed mortgage, the benefits of a VA home loan, who is eligible for a VA loan, and the documentation needed to present to your lender in order to apply for a Phoenix VA Home Loan.

Did you know that more than 27 million veterans and service personnel are eligible for VA financing, yet many aren’t aware it may be possible for them to buy homes again with VA financing using remaining or restored loan entitlement?

VA Does Not Offer Loans Directly and Does Not Guaranty You Will Qualify.

The VA does not actually lend the money to the borrower directly. They offer a guaranty to a lender that if the borrower should default on the loan, the VA will pay the lender a percentage of the loan balance.

*The word GUARANTY does not actually guarantee the veteran will qualify for a VA home loan.

Primary Benefits of a VA Mortgage:

• 100% financing
• No monthly private mortgage insurance is required
• There is a limitation on buyers’ closing costs the veteran can pay
• The loan is assumable, subject to VA approval of the assumer’s credit
• 30 year fixed loan
• Seller can pay up to 4% of the veterans closing costs and even pay down they buyer’s debt to help lower their debt-to-income ratio
• Interest rates are similar to FHA rates
• You don’t need perfect credit

Frequently Asked Questions:

Q: My parent is a veteran. Can I obtain a VA loan if I have not served in the military myself?

No, the VA loan benefit does not extend to a veteran’s children.

Q: What is required to prove my record of military service?

You will be required to us Standard Form 180, Request Pertaining to Military Records, to apply for proof of military service.

Q: My spouse  passed away and was an eligible veteran. Am I eligible for the home loan benefit myself?

A surviving spouse is eligible if they have not remarried, and the eligible veteran died during active duty service or as a result of a service-related disability.

Q: Is a VA loan better than a conventional mortgage?

In many cases, yes. VA guaranteed loans often offer a lower interest rate than conventional mortgages, they do not require monthly private mortgage insurance when borrowing more than 80% of a home’s value, and they can be easier to get approved for.

Q: How long does it take to get approved for a VA loan?

It varies depending on the current workload of your lender, but it is typically the same as for conventional mortgages – 3 weeks to 45 days.

As consumers, we’ve all been taught that shopping around for a mortgage to get the best deal is critical. When shopping for your Phoenix home mortgage, it’s fairly easy to check online or make some phone calls to determine rates.

Once you have had an opportunity to narrow down your search for the right lender, it will also be important to ask some essential questions to make sure they’re educated regarding mortgage rates. With Phoenix mortgage interest rates changing quite frequently, sometimes several times during the day, it’s important to make sure your lender can answer basic questions. The following questions and answers will allow you to determine if your lender can provide you with an affordable loan and, most importantly, have the expertise to get you the lowest rate.

•1. Who determines mortgage rates and what are they tied to?

Mortgage interest rates are determined by the pricing of Mortgage Backed Securities or Mortgage Bonds. The media often implies mortgage rates are based off the 10-year Treasury Note, which is incorrect. While the 10-year Treasury Note typically trends in the same direction as Mortgage Bonds, it is not unusual to see them move in completely opposite directions.

•2. How often do mortgage rates change?

Mortgage rates constantly change throughout the day; however, since mortgage rates are based on Mortgage Bond prices, they only change on days when the Bond markets are trading securities. Think of a Mortgage Bond’s sales price similar to that of a Stock. It trades up and down during the course of a day. For example, the FNMA 30-Year 4.50% coupon is selling for $100.50. The price is 50 basis points lower from the previous day’s closing price of $101.00. In simple terms, the consumer would have to pay an additional .50% of their loan amount to have the same rate today that they could have locked in the previous day. Alternatively, the consumer would also have the option of increasing their rate by .125%.

•3. What causes mortgage rates to change?

Mortgage Bonds are largely affected by various economic forces that influence the ever changing demand for bonds within the market. Each week various economic reports are released that influence the movement within the bond markets. Some of the key economic factors that have the greatest impact are unemployment percentages, inflationary fears, economic strength and the overall movement of money in and out of the markets. Like stocks, most fluctuation is caused by consumer and investor emotions.

•4. What do you use to monitor mortgage rates?

There are several great subscription based services available to monitor Mortgage Bond pricing. The key is to make sure the lender is aware they should be monitoring Mortgage Bond pricing, such as the Fannie Mae 30-Year 4.50% coupon, and not the 10-Year Treasury Note.

•5. When the Fed changes rates, why do mortgage rates move in the opposite direction?

It is a common misconception that when the Federal Reserve implements a rate cut that it is immediately correlated to a reduction in mortgage rates. The Federal Reserve policy influences short term rates known as the Fed Funds Rate (“FFR”). Lowering the FFR helps to stimulate the economy and increasing the FFR helps to slow the economy down. Effectively, cutting interest rates (FFR specifically) will cause the stock market to rally, driving money out of bonds and creating potential for inflation. Mortgage Bond holders need to obtain a higher rate of return on their money if inflation is increasing, thus driving up mortgage rates. With the Federal Reserve Board meeting every six weeks, this is an important question to ask. If your lender does not have a firm understanding of this relationship, they may leave your rate unprotected costing you thousands of dollars over the life of your mortgage.

•6. Do different programs have different interest rates?

Conventional, FHA and VA loans can all carry different rates on a 30-Year fixed mortgage. FHA and VA loans are insured by the Federal Government in the event of defaults. Conventional mortgages are insured by private mortgage insurance companies, if insurance is required. Typically, FHA and VA loans carry a lower rate because the investor views the government backing as less of a risk. While rates are usually different for each program, it may be more important to compare the monthly and overall cost during the life of the loan to determine which program best suits your needs.

•7. Why is an Adjustable Rate Mortgage (ARM) rate lower than a fixed rate mortgage?

An Adjustable Rate Mortgage (ARM) is usually fixed for a specific period of time. The period is typically 6 months, 1 year, 3 years, 5 years or 7 years. The shorter time period the rate is fixed, the lower the interest rate tends to be initially. This is due to the borrower taking the future risk of increasing interest rates. The only instance where this would not be true is when there is an inverted yield curve where short-term rates are higher than long-term rates.

•8. Why are rates higher for different factors such as investment property?

Mortgage interest rates are based on risk-based pricing. Risk-based pricing allows adjustments to par pricing for risk factors such as; FICO scores, loan-to-value percentages, property type(SFR, Condo, 2-4 Units), occupancy (Primary, Vacation or Investment) and mortgage type (Interest Only, Adjustable Rate etc). This allows the investors who lend their money for mortgages to receive additional compensation for taking additional risk. An example is if the borrower encounters a financial hardship, are they more likely to make the payment on the home they live in or the one they rent?

Purchasing a foreclosure or bank-owned home in Phoenix may, arguably, allow you to buy the best home for the cheapest price.  Many lenders currently require a 20% down payment, however, it is still possible to buy a home in Phoenix with low down payment, even if the home can’t be financed with a FHA home mortgage.    

With HomePath Financing, it is possible to take advantage of today’s low interest rates and affordable home prices in Phoenix, while still benefiting from a reasonable down payment.  You can purchase a home, which is owned by mortgage giant Fannie Mae, for as little as 3% down.  Fannie Mae currently owns many homes taken over through the foreclosure process in Arizona.  These homes can be financed through a new HomePath^® program, specifically for Fannie Mae REO properties.  This program is exclusively offered through David Krushinsky of AmeriFirst Financial, Inc.  Listed below are some of the highlights of the HomePath Mortgage.  

HomePath^® Financing Highlights

If you haven’t began your search for a new home, you can get started searching for Fannie Mae REO’s in Arizona by clicking here.  Fannie Mae is also offering a 3.5% incentive* for buyers who purchase and close on a Fannie Mae-owned home on or before December 31, 2010 and within 60 days of offer acceptance.  A $1,500 bonus is also awarded to the selling agents on HomePath properties in Phoenix.  This incentive applies only to owner occupants purchasing a HomePath approved property, but a home buyer may still negotiate seller paid costs at the time of purchase for second homes and investment properties.    

Our mortgage team works with many local Phoenix Real Estate Professionals that specialize in locating these homes for our borrowers.  Please feel free to contact us for a referral of someone who is qualified to assist you in writing a contract, negotiating terms and obtaining the best long-term strategy for you and your family.  Purchasing a home involves many other aspects than just negotiating a sales price.  It’s very important to know, upfront, how to properly structure your real estate offer upon submitting your contract to Fannie Mae.  Contact us today to begin the process.

USDA Home Loans - 100% Financing

If you’re interested in purchasing a home in Arizona but don’t have the available resources for a down payment, look no further than the U.S. Department of Agriculture (USDA) Home Loan.  The USDA has a guaranteed home loan program available to help individuals and families purchase a home in Arizona located in certain qualified rural areas.

How do you qualify for a USDA loan? As with most mortgage loans, you must demonstrate your ability and willingness to repay the loan in monthly installments. Your credit history and other monthly obligations will be analyzed to determine if you have the reasonable ability to meet repayment obligations on your current debts and the new mortgage payment. Additionally, you must show that you have steady and sufficient income that is enough to meet mortgage payments, as well as discretionary income remaining each month.

Credit Eligibility

If you know you have made all past credit payments on time and have a good credit history, you should be a good candidate for a USDA home loan.  If you have some “spotty” or derogatory credit, you may still be eligible for a loan, as the USDA mortgage guarantee home loans do not have a minimum credit score.  However, most banks have an overlay of a 620 FICO requirement. 

When the mortgage loan underwriter reviews your credit, they’re analyzing your willingness to repay the loan. If your credit history currently shows late payments or even previous bankruptcy, you may still be able to increase your credit score over time.  It may take some effort but don’t get discouraged.  Your first step is to find out what your credit rating currently is.

Most late payments should usually be at least one year in the past, and your current history must show that you have met your credit obligations on-time and diligently for at least 12 months. If you have filed for previous bankruptcy, the discharge date will usually need to be at least two years prior to applying for the loan. You must show that you’ve re-established credit and been diligent with debt payments after your bankruptcy.

Typically, if you currently own a home, you would not be eligible to finance a new home with the USDA home loan.  There are exceptions to this rule such as; a borrower relocating from a different state as a result of a job transfer.  If you currently own a home, you should contact a mortgage professional to find out if your specific situation will allow you to purchase another home. 

Income Eligibility

The USDA home loan guarantee program is designed to help low to moderate income families. There are income restrictions depending on the area you wish to purchase a home. Your loan underwriter will look at your gross income, income from any co-applicants, as well as any other adults who plan to live in the household. If your income exceeds the maximum limit, you may still receive certain adjustments to your gross income that will help you qualify.

In order to give a loan underwriter a clear picture of your income, you will need to submit copies of at least two years of W-2 or 1099 tax filings. If you are self-employed, two years of full tax returns may be necessary to determine a good average income. If you currently work for an employer, you should provide copies of at least one months of pay stubs. You may also click here for a checklist of items you may need for the processing of your home loan.

There are specific debt-to-income tolerances allowed with manually underwritten loan files.  USDA also uses an automated underwriting engine to make a final decision, which may allow those tolerances to be exceeded.  It’s important to have your scenario approved through the correct automated underwriting engine and you should contact a mortgage professional to proceed with this process.

SOME Eligible Areas in Arizona:

Metro Areas:

• Buckeye, AZ
• Anthem, AZ
• Queen Creek, AZ
• Casa Grande, AZ
• Sierra Vista, AZ
• Tucson, AZ
• Yuma City, AZ

County Areas:

• Cochise County, AZ
• Pima County, AZ
• Pinal County, AZ
• Santa Cruz County, AZ
• Yuma, County, AZ

You can click here to determine if the property your thinking of purchasing can be financed with this program.

* Because of the complexity with financing homes with swimming pools under the USDA home loan guidelines, we strongly recommend that you avoid submitting offers on homes with swimming pools.  USDA has historically declined financing almost 100% of these homes.

Let’s take a trip back in time and describe why the availability to finance a home with the $100 Down Payment HUD Home Program arose.  During the housing boom, many of the homes in Phoenix were financed with Conventional loans.  Prior to the run-up in home prices, many first-time homebuyers used FHA loans to purchase housing.  Once home prices started rising at unsustainable levels; homeowners began to refinance their FHA loans into Conventional loans to pull cash out, remove mortgage insurance, and lower their monthly obligations.  Once these homes, now with Conventional financing, went into foreclosure, the banks began to sell their inventory at a discounted price.  At the beginning of 2007, many of the new homebuyers were forced to use a FHA loan due to inability to finance their purchases with Conventional mortgages in Phoenix.  These homebuyers were unknowingly still buying homes at inflated home prices.  Sadly, many of these homes purchased in 2007 and 2008 with FHA loans are currently going into foreclosure.  In most cases, the current values of these homes are significantly less than what is owed.  The $100 Down Payment HUD Home Program is a result of a FHA borrower foreclosing and HUD repossessing the home that is now for sale.    

So Who Qualifies? 

 Now that you’ve been able to determine you may be able to qualify, here is an outline of the next steps you need to take.

Step 1 — Get pre-qualified for the $100 downpayment HUD Homes Program

Step 2 – Choose search area and type of home (i.e. North Phoenix - 3 bedroom, 2 bath with 1,500 square feet or more)

Step 3 – Create a login and password at our customized database to search homes

Step 4 – Contact us to match you with one of our Realtor partners that can assist you with viewing the homes you are intrested in.  Please note, not all Realtors are trained and educated for HUD homes.  It’s very important to work with one of our preferred partners that has experience with HUD homes.

Step 5 — Submit an offer, get acceptance and go through the loan process.

Step 6 — Close on your purchase using an FHA-insured loan.

It can be a very simple process but the first step is to get pre-qualified.

Let’s start off with the basic mechanics of fixed mortgage interest rates.  Interest rates are primarily based upon the pricing of Mortgage Backed Securities (“MBS” or “Bonds”) issued from Fannie Mae (“FNMA”), Freddie Mac (“FHMLC”) and Ginnie Mae (“GNMA”).  Think of a Bonds’ sales price similar to that of a Stock, it trades up and down during the course of a day.  At the time of writing this article, the FNMA coupon we are tracking is selling for $101.03.  This is down 22 basis points from the previous day’s closing price of $100.81.  In simple terms, the consumer would have to pay an additional .22% of their loan amount to have the same rate today that they could have locked in the previous day.

“So… what does all this mean?”

In our example, the client’s interest rate could vary from 4.50% – 5.25%.  The mortgage interest rate will depend on how the customer would like to set up their mortgage loan with regard to paying either higher or lower upfront fees.  Clients locking in a rate should consider how long they intend to have this mortgage loan before considering the fees associated with obtaining any rate.  The shorter amount of time you will have the loan, the more it makes sense to pay lower fees and have a higher interest rate.  The longer your time horizon for keeping the loan, the more it makes sense to pay higher upfront fees, also known as buying down the interest rate.

A client locking in a rate of 4.50% (5.597% APR) today on a 30-year fixed FHA loan should plan on paying all the customary fees with two discount points.  Customary fees would include appraisal, credit report, processing fee, underwriting fee, origination fee, title fees, and recording fees.  That same client could lock in 4.75% (5.747% APR) with 1 discount point, 5.00% (5.896% APR) with no discount points and 5.25% (6.044% APR) without any discount points or origination fee.  An origination and/or discount point is typically 1% of your loan amount.

With so many rates available on a 30-year fixed mortgage, how can a borrower get the best rate?

First, ask the lender to provide you with a total overall cost analysis. This should illustrate the proposed savings you will have on the loan options available to you both on a monthly and long-term basis. This analysis should also include total payments, total interest paid, total closing costs and points and balance remaining at a given point in time.  One of the most important metrics to consider is how long you plan on keeping this loan on the home you purchase or refinance when selecting the right mortgage plan.

Second, we recommend working with a professional who watches, articulates and understands the interest rate markets. If you’re a consumer, it’s important to understand that interest rates can change daily, even hourly.  So, if you are comparing lender rates and fees – this is a moving target on an hourly basis.  If you are comparing two quotes from different lenders, you may be comparing apples to oranges.  The only way to get a truly accurate comparison is to have the quotes prepared on the exact same day, at the exact same time, with the exact same terms and conditions.  You also must know the length of the lock term (i.e. 15 day, 30 day, 45 day etc.) you are looking to secure, since longer rate locks typically carry slightly higher interest rates.

In conclusion, we feel that having access to valuable information regarding the total overall long-term cost, along with mortgage options that best fit their needs, coupled with market knowledge will allow you to obtain the overall lowest cost mortgage with the best loan rate available.

 • Do I have two years of steady employment, preferably with the same employer?  In most cases, school may be considered part of your employment history. 

• Can I document my last two years’ income with tax returns, W-2′s, or 1099′s?

• Does my credit report have less than two thirty day late payments in last two years? Also, do I have a credit score?

• If you had a Chapter 7 Bankruptcy, has it been discharged for at least two years and has good credit been re-established?

• If you have had a foreclosure or short sale, has it been finalized for at least three years and has good credit been re-established?

• Will my new mortgage payment not exceed 45% of my gross income and debts combined.

If you have answered “yes” to all of the above qualifications, than you are probably a good candidate for an FHA home loan.  Below is a helpful list detailing some important FHA Guidelines and steps to getting prequalified.

Documents Needed - Please click here for a list of items we will need in order to submit your loan.

Income - When you are qualifying for a loan, we will use your gross income.  That means all the money you earn before taxes, including overtime, commissions, dividends and any other sources –as long as you can show a steady two year history for these sources.  You can calculate your monthly housing payment by clicking here.

Credit - If you are unaware of your credit score, you can contact us today to pull your credit history. Most lenders require FHA borrowers to have at least a 620 or better mid-FICO score in order to be approved.  FHA will also allow some minor past credit issues, as long as the borrower can provide a “reasonable” letter of explanation for the situation.  If you have a Federal Tax Lien, which currently has a repayment agreement, you do not have to pay it off in full provided you are able to qualify with the monthly payment stated within the repayment agreement.  State Tax Liens typically must be paid in full prior to closing your FHA loan.

Bank Accounts - FHA will allow for a homebuyer to receive the down payment for the purchase of a home as a “Gift” (meaning you do not have to pay it back), from a close family relative or a non-profit organization. When receiving a “Gift”, you must provide the complete paper trail of the funds being gifted to you.  Such as the donors bank statements, withdrawal slips and deposit information.

These are not all of the requirements, but a good starting point.  We highly recommend getting prequalified for an FHA mortgage through a qualified mortgage professional.