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Veterans please excuse us from our usual posts on VA mortgage loans for just a moment while we shout out to Minnesota residents carrying Jumbo mortgages (over $417,000). Minnesota jumbo mortgage rates have plunged! Really, we’re seeing in Minnesota the same that’s happening nationwide. Our Jumbo mortgage rates are the lowest they’ve been in 7 years. In many cases you can refinance to below 6%. While we’ve been refinancing and doing purchase mortgages for Minnesota Veterans using their VA benefits we just couldn’t stand by and not say something to all Minnesota residents who are sitting on higher interest jumbo loans.

So what does this mean to a homeowner? It means saving hundreds of dollars a month on your mortgage payment. A homeowner with a $600,000 mortgage at 7.5% has a payment of about $4195. If the homeowner refinances that jumbo mortgage down to 5.5% the payment would be about $3407. That means saving about $788 every month or almost $9500 a year in mortgage payments. You can see why we’re very excited about this prospect for the jumbo mortgage holders in Minnesota!

Now here’s the rub; many homeowners who just purchased their large luxury homes may not have sufficient equity. The upper end of the real estate market has really taken a hit in recent years and in some areas of Minnesota luxury home prices have fallen 40%. Nationally the news is improving with prices starting to recover somewhat. Sales of multi-million dollar homes are up over 30% from the previous year. Some of this increase is due to the availability of jumbo mortgages. There are other factors on your ability to refinance or get a purchase money jumbo mortgage. Chief among them is the amount of other debt you’re carrying and your credit score.

Before you decide you can’t save yourself hundreds of dollars a month by refinancing your Minnesota jumbo mortgage you should let us take a look at your possibilities. While we love working with our Veterans who have served us so well, we also want to reach out to all Minnesota residents who deserve a break in these tough economic times. Don’t let these historic low mortgage rates (Jumbo or not) pass you by!

Here's something those of us in the VA Mortgage business deal with all too often: having to tell a client they don't qualify for a loan. Case in point: a Minnesota National Guard member wants  to buy his first home using  his VA Loan benefits. This guy is  great, he's  saved  several thousand dollars, his credit score is  in the upper 700's, yet he's turned down because his debt to income ratio is too high. Never mind that he is handling the debt to such a degree that his FICO is in the clouds. The ever tightening underwriting guidelines exclude him from a first time home purchase. Never mind that he works a regular  job, goes  to school and serves his state in the National Guard. The rules are the rules and lenders can't see outside this box. We've worked with him  for  weeks as he paid off one debt and then another. Finally he's willing to pull more savings and refinance student loans. All in an effort to get his debt to income ratio down to please the rules.

Why have lenders tightened the rules? It doesn't take much effort  to see the answer. The mortgage community made loans available to people who couldn't afford them. Or the loans were made  to people ill-prepared for adverse situations such as losing a job or medical emergencies. The mortgage loan still had to be paid. Character didn't count.  Because of these tough times our client, the one with the great credit score, work ethic and ability to save, was denied. He is paying the price for  bad decisions made by others. And who made these bad decisions? I point to two major  players in the  mortgage meltdown who are thus far excused from any responsibility. People who made more money last year than you and your family will make in a lifetime. 

We can make a very strong case that our housing and mortgage problems  of recent years were brought about not just by consumers making bad choices, but by policy makers who were convinced that everyone should have a home of their own whether or not they could afford it. Thus was born the so-called sub prime mortgage, loans made  to people who  had never before been able to qualify for much of anything. Buy a house with bad credit or no credit? Sure. Buy a  house with no provable income? Sure,why not? What's the  risk to a bank that lends the money? Not much. Here comes Fannie and Freddie ready to buy these loans from the banks, bundle them and then sell them as securities. This leads me to my point about major players in the  mortgage  melt-down being  paid despite their  leading us to the situation we're in today.

The CEO of  Freddie Mac made almost $6,700,000 last year!  Not bad, eh? Kind of makes one feel sorry for the other major player, the  CEO of Fannie  Mae. He only made about$2,100,000 for his efforts. So while  all the policy makers  on Capitol  Hill are dragging overpaid  CEO's in front of committees, while they are blaming the banks and trading houses, we wonder; why aren't they also willing  to look at the  roll these CEOs from Fannie and Freddie had in the housing mess we're in today? For that matter, why is Fannie and Freddie exempted from the financial market overhaul?

We think had all of this not happened our stellar client, the working, going to school, saving guy who can't qualify for his VA home loan, would be moving into his  own place today and all of us in the mortgage business would be a lot better off serving those who deserve homes  of their own.

Minnesota and North Dakota Veterans your house may be increasing in value. For those of you still  sitting on  the sidelines and waiting to use your VA Home Loan benefits to buy that house, you may want to make  a move soon. We at VALoansAmerica (formerly VALoansMN) have some  interesting statistics for you if you live in Nevada, California or certainly Minnesota. Let's talk about what your VA Loan will buy in Minnesota first.

 We have Minnesota clients  using 100% VA financing and buying a 4 bedroom, 2 bath home with 5 acres of land for  under $200,000. And  that may be a real  buy. According  to the latest housing  price report coming from S&P/Case-Shiller the Minneapolis  area is one  of the leading  markets  in the nation. According  to their report the Metro Area of Minnesota has seen housing prices increase over 6% in the past year. Granted, we've not recovered the loss received in the past 3 years, but things are improving.

Now about  California:  holy cow, look at that price recovery!  The Case-Shiller index shows prices in San  Francisco up over 16%, San Diego up almost 11% and Los Angeles up 6%. Hey Vets, did you get your VA Loan  in California and take advantage of this in the past year? If not, perhaps Nevada may be on your radar. We've not seen a recovery there, yet. The report shows Nevada housing prices still slumping.

According  to the S&P/Case-Shiller report Las  Vegas home prices are down another 12% this past year. Is anyone  else tempted to take advantage of  100% VA financing, lowest mortgage rates we've witnessed in decades and these depressed home prices and move to Nevada?  This is the reason our business expanded from Minnesota and North Dakota and started serving veterans nationwide including  Nevada.

We think there's still a real opportunity for  Veterans to get a great home buying deal in Minnesota, North Dakota, Nevada and California! You see, even though the housing market may have been  torn apart in recent years, we at VALoansAmerica are optimists. Maybe it's our Midwestern  roots. We still take time at our offices to sit around and talk to each other and our clients about  the good things that can happen in this nation.  We are still believers in this  country, this economy and most of  all the change that will inevitably come.

We have been urging our Minnesota and North Dakota Veterans to make a decision soon about buying or refinancing a home with a VA Loan. For severa l weeks we've been writing about the probability of VA loan and other mortgage rate increases: here they come. The headline screams Debt Fears Send Rates Up. What's happening in Washington will make VA loan rate increases impossible to avoid. The reason is the spending spree our federal government has taken on. Add to that the unfunded Medicare and Social Security entitlements of over 100-trillion dollars and you start to get the picture of why international investors are having serious second thoughts about this nation's economy and our ability to ever pay down debt.

This week foreign investors turned their backs on a treasury auction which resulted in bond prices  going down and rates moving up (remember anytime bond prices move down rates go up). This could spell serious trouble for the US housing market as mortgage rates have also started going up. This, coupled with the ending of the Federal Reserve's program of buying mortgage backed securities, will likely continue pushing VA and other loan rates upward.

We at VALoansND and VALoansMN have begun a serious campaign urging our clients to reach out to other Veterans, their families and friends, advising them that a mortgage refinance, a chance to buy a home, at these historic low rates is passing. Yes, we want the business but even moreso, we want any qualifed person to not miss this fading opportunity to save tens of thousands of dollars.

Excuse me home builders, but your bad news may be good news for Minnesota homeowners and VA loan seekers. This week the Fed held their meeting to discuss inflation and rates and the outcome was good for consumers, for now. The Fed left their Federal Funds Rate unchanged (we discussed this rate in greater detail at www.myfhablog.com ). It is likely that investors in mortgage backed securities (MBS) will read the language from the Fed as indicating that inflation is not a problem and there’s no reason for mortgage rates to rise. This even though the year old program of the Fed buying these MBS and keeping rates down comes to an end this month. So, rates are apparently going to stay somewhere in the 5% range for a VA loan, but what’s good about the bad news for builders?

The U.S. Commerce Department reported that new housing starts fell .6% from a month earlier. Apartment construction also fell to its lowest level since the mid 1990’s. That means our construction workers are hurting. But the benefits of this bad news may be homeowners. As the supply of homes for sale decreases there is more of a chance of prices for existing homes to stabilize from their 4 year slide. The supply of homes for sale is bloated way out of proportion and it may even get worse. We’re advising our clients that now is a great time to get a VA loan in Minnesota and buy a house. We at VALoansMN believe this bloated supply of homes for sale and our historic low VA loan rates is presenting an opportunity that could be characterized as “once in a lifetime”.

We fully expect this opportunity to remain for the short term. There are over 3 million existing homes for sale nationwide. There are another 5 million properties estimated to be in mortgage delinquency or foreclosure. We see the homes for sale number to consistently rise through much of this year keeping home prices down. So when we hear housing starts are sliding, we’re not surprised. What is not known is what may happen to mortgage rates. We still believe there could be considerable upward pressure in the not too distant future.

          Active duty military are not only qualifying for the benefits of a VA Loan to buy a home in Minnesota, they may be qualifying for a special exception to the $8,000 tax credit rules. As we’ve reported before, first time home buyers can qualify for a tax credit by completing a home purchase on or before April 30^th of this year. But, if you are a qualified service member on extended duty you have another full year to buy a home and get the tax credit.  At VALoansMN we generally dislike mumbo jumbo and mortgage talk preferring instead to just talk to ‘the folks’ in plain language. So forgive us for the following formal definitions. We just want you to have a thorough understanding of how this works for you.

Into the Weeds

      First Time Buyer:  a person who has not owned a principal residence for the three year period prior to the purchase. This means, if you’ve owned a home before but let’s say you’ve been renting or living with family for the last three years, you are a first time home buyer and can qualify for the tax credit.

      Qualified Service Member:  a member of the uniformed services of the U.S. military, a member of the foreign service of the U.S., or an employee of the intelligence community.

      Extended Duty:  duty outside the United States for at least 90 days between the first day of this New Year and the first of May, 2010. 

Here’s the Deal

        If you meet these three definitions you can buy your home and still get the $8,000 tax credit until 2011.  Just enter into a home buying contract by April 30, 2011 and complete that purchase by the end of June. We also encourage you to look into your VA loan benefits to help with that purchase. A VA loan still allows you to borrow the entire purchase price and it does not come with monthly mortgage insurance payments. No money down, no mortgage insurance payments and an $8,000 tax credit is a very attractive home buying package for Minnesota veterans and active duty military.

Minnesota Veteran’s have earned the right to buy a home with a VA home loan and buy that home with extra benefits which now include a tax credit. My worst nightmare is Veterans missing out on the great home buying opportunity that exists right now. Granted, many people think this is not a good time of year to buy a home but that is not the case. Here’s why; mortgage interest rates are still historically low, housing prices have dropped (and may still be dropping) and a VA (DVA) home loan is assumable.

Minnesota VA home loan interest rates are still very low. At VALoansMN we have 100% financing in the 5% range. I’ve written before about remembering mortgage rates in the high teens and there are some economists who think we might be headed there again. Also, home prices in Minnesota have dropped by 40% to 50% in some areas. Yet one of the most compelling reasons to buy using a Minnesota VA home loan: it is an assumable loan (more on that later). Finally, the President just signed into law a bill that extends the home buyer tax credit. First time buyers, those who have not been on a title for 3 or more years, qualify for up to $8,000 in tax credit. That is not $8,000 subtracted from your income that is $8,000 subtracted from the tax you owe. This means if you owe nothing the Feds will send you a check for $8,000. Under the new bill even move up buyers get a credit of $6,500. There are some qualifying factors so give me a call or drop me a note at www.VALoansMN.com for details.

I mentioned earlier the assumable nature of a VA home loan in Minnesota (and all other states). Let me give an example of how this works. Let’s say you take out a home loan for 100% of the value of a house to make a $200,000 purchase. Let’s say that note rate is 5.5%. Ten years later you decide to sell your home and move up to a nicer home. Let’s also assume that the housing market is not good and there are many homes for sale and only a few buyers (such is the case now). Also we’ve seen inflation kick mortgage rates up to 10%. Making regular payments on your 5.5% mortgage you would have paid off about $35,000 of that $200,000 loan. You still owe about $165,000. You put your house on the market and remember: you have an assumable VA home loan of $165,000. A qualified Minnesota Veteran can assume your 5.5% loan of $165,000 while everyone else in the market is getting loans for 10%. Do you think this makes your house more attractive in the slow market? I do!

Please, if you’ve thought about buying a home and you are a Veteran, give these benefits very serious thought. If you know anyone who might qualify for these benefits call them now. Urge others to take advantage of this great Veteran home buying opportunity. This window may be closing soon and I want as many Minnesota Veterans as possible to benefit from what may be once in a lifetime opportunity.

The best Realtors or lenders are those who do less talking and more listening. Some of my clients at VALoansMN.com tell me of their discouragement while shopping for a house. The Realtor, they say, seemed more interested in showing them houses that she wanted them to buy rather than homes the client might want. In many cases, they say, Realtors are selling house features not necessarily what women might really want. So what is it women want? Is it the beautiful updated kitchen? Is it the open floor plan? In fact, it may be none of these things.

When you begin shopping for a home (and after you’ve called me to be pre-approved for your loan J) talk to your Realtor. Ask her about her experience working with other women. Ask her what women want. This might be very revealing. A Realtor friend of mine thought women wanted above all other features the updated kitchen, the nice family room, the open floor plan. He made assumptions that perhaps it was the school district that drove the deal. Then he discovered something else. He discovered perhaps he had been talking and not listening. He discovered some recent surveys that changed the way he does business with women.

In March of 2009 a Canadian pollster surveyed 1,000 women age 18 and older who have independently purchased a home. I’ll leave it to you to decide whether or not there might be significant differences between Canadian and American women. See how your answers might compare to the poll results.

The TD Canada Trust Women and Home Ownership Poll found the number one factor when choosing a home is cost (98%) followed by neighborhood (97%) then security and safety (96%). The survey, released just a few months ago, found that the surveyed women considered being close to family and work less important than cost, neighborhood or safety. Nowhere in the top of this list of values were features of the house itself.

The least attractive issues of home ownership according to this survey are cost of maintenance, the chore of doing the maintenance, yard work and snow removal.

This leads me to some conclusions I’ve written about before. Mortgage rates are still incredibly low and housing prices have declined in recent years. Since cost is the number one factor driving women to purchase a home it’s understandable why, in my opinion, women are driving the housing market today.

The word “homemaker” may be taking on new meaning. Traditionally, it stood for a woman who spent time in the home raising children, cooking and cleaning. Today it may be coming to mean the person who makes the home possible. Women are becoming a powerful force in housing. Strike that, women are becoming the most powerful force in our economy, period.

Women buy 90% of the food, 55% of consumer electronics and most of the new cars according to consultancy firm Bain & Company. Companies now trying to recover from the recession are focusing their marketing to women. SheSpeaks is a marketing consultant firm and has tripled the number of its clients. SheSpeaks clients reach for women to help them in recession recovery. The firm’s client list includes Citibank and Phillips. In another sign of women's economic power a recent New York Times article suggests women are becoming the majority workforce.

What about housing? According to research from the National Association of Realtors single women buy one-fifth of all homes sold. That’s more than double the number purchased by single men. In an article in USA Today author Noelle Knox says “this is striking, because in 1981, the number of single women and single men home buyers was virtually the same. Since then, the percentage of buyers who are single women has almost doubled, while the percentage of single men buyers slipped by 1 percentage point to 9%”. A Realtor I have worked with says that figure doesn’t expose the whole truth. According to his experience when couples search for homes it is the woman who makes the final decision. His observation is backed by market researcher Marti Barletta. Ms Barletta, in her book Marketing To Women says women make the purchasing decision on 91 per cent of the houses.

The research is further backed by my own experience and the resulting traffic on www.VALoansMN.com where we experience increasing numbers of women Veterans seeking VA Loans to buy homes in Minnesota. I have been asked to present benefits of VA Loans in Minnesota to a group of women Veterans in October in Bloomington, MN. More information on that conference for women Veterans is available soon at www.mdva.state.mn.us.I would be most interested to hear the experiences of other FHA and VA Lenders nationwide. Are you also seeing the surge in women home buyers?