VA Loans Blog

Counting the wrong predictions on mortgage interest rates can be a full time job. As is predicting what’s going to happen with housing prices. Current rumor mill is filled with speculation there is going to be another crash similar to what happened in 2007-8. There’s one huge difference between then and now: government policy.


Back in the earliest years of this century the U.S. Congress, in its wisdom,  thought everyone should be able to buy a home. Affordability didn’t matter. That’s when the mortgage industry obliged and began offering what would become known as “liars loans”. All a home buyer had to do was tell a lender with little verification what their income and assets were and bingo, they’d qualify for almost anything. These loans were then packaged up as sub-prime mortgages and sold in the secondary market. Then the chickens came home to roost and the result was, wait for it, a CRASH of home prices. That is not happening today.


When you apply for a VA Loan with us at VALoansMN Brad is going to ensure you can afford it. He’ll ask about your income and assets. He’ll look at your credit history. Do not fear this inquiry. Brad wants you to qualify but he also wants to know a mortgage payment is not going to put an undue burden on you and your family’s finances. A negative on your credit report doesn’t necessarily disqualify you from getting a mortgage. At VALoansMN we look at the whole picture, not just credit history. Some of us have stumbled financially but that doesn’t mean you can’t walk upright again.


We cannot predict for certain what will happen to home prices just as we cannot predict the future of mortgage rates. We are seeing some home price reductions but it may be sellers are now pricing their homes at the point they should have been in the first place. We have seen a cooling in the market but there is still a great bit of demand. 


Mortgage rates went from under 3% a year ago to 6% or so. That was a shock to home buyers who still viewed current rates through the lens of 2021. But, as we have written on these pages, a rate of 4.5, 5 or even 6 percent is still a bargain. With inflation above 9% (and climbing) you’ll be paying that 5% mortgage back with low cost dollars.  Where are rates headed? We don’t know. No one knows. We predicted 2 years ago the cheap money would come to an end and it has. But we didn’t know when. 


When you hear some prognosticator talk about the future of mortgage rates or, for that matter, the future of home prices, we recommend you take that information with a grain of salt (sorry for the repeated use of cliche’s but they do seem to accurately describe the situation you might be in). 


At VALoansMN we are here to help you travel a road to financial success. We want to HELP you in that journey. It doesn’t cost anything to talk so give Brad a call and let’s see how we might help you achieve your goals.


Posted by Joan Rusco on August 5th, 2022 11:23 AM

   

    Wow! Who pulled the emergency brake on the housing market? It may seem as though the housing market is making a 180-degree turn or coming to a full stop, but, once put in perspective, it’s more normal than you might think. 

    Is it a buyers’ market?  No, however the heat of the last couple of years on the selling side is starting to cool. What does this mean for a VA Mortgage loan? It starts looking even better than before. We at VALoansMN are seeing the VA backed home loans are now a bargain compared to some other mortgages. You may have noticed recently mortgage rates hovering at or slightly above SIX PER CENT. VA loans were substantially better in many cases. What is the current VA mortgage rate? That is a question we at VALoansMN receive most often. Our answer is “it all depends”. It depends on your credit history, your FICO scores, the amount of debt in relation to your income and more. VA mortgage rates are very individual. Please call Brad (612-240-9922) and he’s more than happy to dig a little deeper with you so you have accurate and timely information.  Granted we’ve been focused on home buying and selling but a refinance of a VA loan is still very attractive and easy. 

    If we’re not in a buyers’ market for housing where are we?  Picture this: there are two arm wrestlers.  One represents buyers and the other sellers. For the past 3 years the selling wrestler had the strength pushing the buyers arm back to a 45-degree angle. Now the buyers’ side is showing more strength and pushing toward the starting point (90-degrees from the table). As of this writing the buyers are sellers are not equal with arms at 90-degrees. That might soon come.

    In an equal housing market we see the rapid appreciation of prices slow to a more sustainable pace. When buyers and sellers have equal bargaining strength we will see home prices appreciate at the rate of inflation. Latest data on that is showing an inflation rate of about 8.5%. Might houses depreciate? No one knows for sure but looking at historical data it does not appear likely at this time. Yes, we are seeing some price reductions but it’s most likely those are sellers who thought they could still get a price inflated during the past 18 months of value. Now, they’re facing the current reality and backing off their dream sales price.

    Be aware we are NOT predicting the future of mortgage rates or home prices but we are presenting this opinion based on historical fact. PLEASE call Brad at VALoansMN and let him sort out details which apply to your personal situation whether it be to purchase or refinance your mortgage loan. It’s what we do every day.


    

    

Posted by Joan Rusco on July 2nd, 2022 11:52 AM

Rarely will we at VALoansMN urge readers to rush a decision. That is certainly true today. 

The VA loan market is also changing. One year ago we were offering rates below 3%. Currently rates are running in the 5% range. Will they come down? Given the state of the economy we aren’t holding our breath. Still, even with mortgage rates 2+% higher than a year ago borrowing is still cheap. How can that be?

The most optimistic view of the economy puts the rate of inflation at well over 8%. Don’t you wish the price at the pump had only gone up 8% this year? It’s much more likely the cost of goods and services you consume is up much more than the Consumer Price Index showing inflation in the 8.5% range. This is why we at VALoansMN can say VA loans are still very cost effective. Whenever you can borrow at a rate below the rate of inflation you’re winning the money game. Sitting on the sidelines waiting for VA loan rates or house prices to decline is not a winning strategy. Actually if you’re sitting on the sidelines waiting for what you might consider improving conditions there’s no way to win. You’re not even in the game.

The real estate market is also changing. There are many more houses on the market today than at this time last year. We’re seeing an increase in supply and with that is coming increased demand. Therefore, generally speaking, home prices are not declining. Data shows only that the increase in home prices has slowed somewhat but they are still increasing. We discussed this situation in our previous post.

To summarize our thoughts on mortgage rates and housing costs, both have, and continue, to increase. At VALoansMN we are ready to offer you options which might get you back in the game as a winner. Call Brad (612-240-9922) to get a clearer picture of your own place in this changing economy. We want you to WIN!


Posted by Joan Rusco on June 5th, 2022 11:43 AM

Bubble or No Bubble? That is the question on many home buyers’ and sellers’ minds. Let’s go back to the last “pop” and the bursting of that real estate bubble.

                       2005-08 Bubble Dominated by:

  • Zero down mortgages available to almost anyone-high foreclosure risk
  • Short term loans with interest only payments-high foreclosure risk
  • Adjustable rates-high foreclosure risk
  • Unstable buyers with low credit or no credit-high foreclosure risk
  • No intent to occupy or rent. Investors with easy credit were buying and selling to each other-high foreclosure risk
  • New home development outpaced population growth

                      2022 Appreciation Dominated by:

  • Significant down payment or all cash purchases-low or no risk
  • Principal and interest payments built into home loans-low or no risk
  • Stable buyers with stellar credit, good income or substantial wealth-low or no risk
  • Intent to occupy-even the institutional investors have a longer term strategy and intend to rent-low or no risk
  • New home development is struggling to keep up with population growth

VALoansMN and Brad are not offering this information as a way to predict the future of the housing market but only to provide readers with historical perspective.

Posted by Joan Rusco on May 16th, 2022 7:13 AM

VA Mortgage rates have gone up but let’s cut through all the media noise and add some perspective. Yes, rates are certainly above their lows of a year ago but, looking at a much longer term than a year or two, we see there is still a reason to consider that VALoansMN refinance or purchase. Study this graph:


Given today’s rates you would see the right end of that graph above 4%. In fact, it has approached 5% which is a rate we last saw about 4 years ago. We remember homeowners coming to us to refinance because rates had dropped all the way down to 5%!  

Our crystal ball does not show us the future. No one can accurately predict where rates might be by the end of the year or in coming years so perhaps a decision to purchase or refinance should not be based on recent history. Rates vary almost from hour to hour. When veterans reach out to us at VALoansMN we search lenders from coast to coast to find the best, most affordable rates available. Our number one priority is to help you plan for your financial future. Don’t let the recent mortgage rate past deter you from locking in what we still consider historically low VA loan rates. We are here for you!

Posted by Joan Rusco on April 4th, 2022 7:29 AM

Just because our VALoanMN rates have been stuck in these historically low rates doesn’t mean we are also stuck. There are changes coming to this web site. We believe they will be even more user friendly yet still provide the information you need to take advantage of your earned VA benefits in Minnesota, the Dakotas, Iowa and, for those seeking sunshine and warmth sometimes absent from our midwestern states, we offer superb VA loans in Arizona.


As our regular VALoansMN blog readers may know we’ve been here for years providing home purchase and refinance information and to maintain our leadership in VA lending we are working on a new web platform. We think you’ll find the change almost seamless and in many ways better for you to get the information you need to make a decision on how to finance (or refinance) your VA home loan.


VALoansMN is part of the Luminate Home Loans organization. Using the tools and bargaining power of Luminate we are able to bring Veterans a wide range of loan products. Our focus is of course on VA mortgage loans. We’ve detailed the many benefits of this loan reserved for those who have served or are currently on active duty. Luminate opens doors for other loans that might better fit your needs. When you reach out to us we start comparing many loan products and can give you choices.


We’ve been very pleased so many of you have found these blogs, this web site useful. We look forward to better serving your needs with our upcoming changes. Stay tuned, stay informed and most of all, stay in touch with us at VALoansMN.




Posted by Joan Rusco on March 7th, 2022 6:18 AM

Wow!  We just completed a historic analysis of past mortgage rates and what a surprise. As we’ve reported several times on these pages current mortgage rates are at historic lows. We don’t see that changing much anytime soon. Let us give you some historic perspective we gained in our recent analysis. But first, we have a short customer story to pass on.


A client of ours at VALoansMN is searching for a house to buy. This client (who gave us permission to tell you this story) has had a  rough financial past. Due to some misfortune this client was forced into a short sale and bankruptcy a few years ago. Now our client is ready to re-enter the housing market. This what is termed the “boomerang buyer”. A buyer forced out of the housing market during a housing recession and now able to come back.


Our client is  not unlike hundreds of thousands of other folks who had some hard times but is now recovering and wanting to buy a home. How did  our client recover? Following our advice this client immediately opened a few  lines of credit. One was an auto loan through a local credit union. Another was a credit card available to someone with a recent bankruptcy. The credit card came with a high interest rate so she paid it off each month. Now she comes to us to pre-qualify for an FHA mortgage (yes, we have those in addition to V.A.). Did she get a surprise!  


Just five years after her bankruptcy and three years after the short sale of her home (she’s been a renter all this time) she and her husband easily qualified for an FHA mortgage. This couple has credit scores just under 700. They’re now searching for a house knowing we are able to secure a mortgage. They will once again be homeowners. The loan rate they can get is under four percent!  So what about future mortgage rates?  


As we’ve previously reported) the FED has is starting to worry about the inflation you’ve been experiencing. Yes, we’ve seen mortgage rates increasing from these historically low amounts. What happened to mortgage rates back in those  days of previous rate increases?  We were surprised to lean in our analysis, not much. From 2004 to 2006 the FED raised the short term rate (federal funds rate) by 4%. During that period mortgage rates rose less than 1%!  Just because the FED is raising rates doesn’t mean you’ll see a corresponding increase in your mortgage rate.


A final word:  We are so grateful to you for trusting us with your home mortgage needs. We wish you and yours a very HAPPY NEW YEAR!

Posted by Joan Rusco on January 15th, 2022 6:35 AM

As we delve into what’s happening to the rate you will pay for a mortgage let us first talk a bit about this  holiday season. It is a time of giving and giving thanks. Last month, and we at VALoansMN hope that every month of the year, we express our gratitude for giving us the opportunity to serve. It is a gift we receive from you every day of the year. Again, our most sincere thank you for that. Now we want to give you a piece of advice.

As you have no doubt noticed we have spent some considerable time on these pages talking about the historic VA mortgage rates that have been available for the past couple of years. We believe those days may be numbered so here’s our advice; if you or someone you care for is considering the need for a loan to buy or refinance a house, please, please let us at VALoansMN help you make that move sooner rather than later. We see changes coming, maybe slowly, but they are coming.


The Federal Reserve committee (commonly referred to as The Fed) responsible for much of the interest rate climate in our economy is talking rate increases. Currently the rate the Fed controls is at 0 to 1.75%. Experts expect that rate to rise. What might that do to your monthly payment on a VA mortgage loan?

First, we make an assumption that may or may not be accurate. The assumption we make is if the Fed raises its short term rate, the Federal Funds Rate, by a quarter point we would see a quarter point increase in the mortgage rate. It’s possible we may not see that mortgage rate increase. It is also possible that mortgage rates could increase more than a quarter point. No one, as of this writing, knows for sure what will happen. It is safe to say that as the Fed raises rates VA mortgage rates will increase. Back to our assumption that rates will increase in tandem with the Federal Funds rate and what that means to your mortgage payment.

If you have borrowed $200,000 and your rate is 4% your monthly payment would be about $955. When the Fed hits the target of 3.5% for the Federal Funds rate which is an increase of over 1% that same $200,000 mortgage would require a monthly payment of $1,100 or an increase of about $145!  Need we point out that the VA mortgage is much more affordable at today’s rates than what may be coming?

When will this increase occur? That is a very difficult question. Former members of the Fed are suggesting it will take around 3 years. The Fed meets every six weeks. To increase rates by over 3% in three years means an increase of a quarter percent (point) at every other meeting for the next three years. However, it  is possible the Fed could raise rates by a half a point or more at one meeting. This is considered not likely given the current state of this sluggish economy. Six months from now it could be a different story.

To repeat the advice we give you this holiday season: please, if you are seeing a need for a new mortgage loan either to purchase or refinance an existing loan, please call us soon so we can make this move more affordable than it may be in the future.

Posted by Joan Rusco on December 12th, 2021 6:31 AM

For those sitting on the sidelines waiting for the home buyers’ market to arrive we have two words: good luck. The Twin Cities metro area remains favorable to home sellers as does the entire state. Forecasters see no change in the coming year.

 According to data from area real estate associations home prices escalated about 14% in the Twin Cities area in the past year. Demand is simply outpacing supply. In St. Paul for instance realtors say they’re receiving up to 7 offers per property. Real estate investment firms remain bullish for the coming year. There is some good news for VA home loan borrowers, however.

 At VALoansMN we have noticed VA mortgage rates are lower than conventional mortgage rates. In addition to this good news VA loans are available no matter the cost of the home. If you can afford the loan, the VA will back home loans in all areas of the upper Midwest regardless of the home price. Speaking of affordability, the good news for VALoansMN clients is mortgage rates remain extremely low.

 In blogs past we have outlined many of your VA loan benefits but we think they are worth listing again:

  1. No down payment required
  2. No monthly mortgage insurance
  3. Limited closing costs (which can be paid by the seller)
  4. No penalty for paying off the loan early
  5. Personal access to us at VALoansMN to answer any questions or concerns

 If you’re sitting on the sidelines waiting for the market to turn in favor of buyers, you may have a long wait given the data coming from real estate analysts.

 Do not make any real estate investment decisions based solely on information in this blog. Real Estate market forecasts in this blog are based on an educated guess and should not be considered financial advice. Always seek professional financial help when investing.

 

 

 

 

Posted by Joan Rusco on November 2nd, 2021 3:07 PM

Inflation? What inflation?  Surely you don’t believe your lying eyes!  Let’s look at the numbers and sort this out.

The most apparent sign of inflation is seen at the gas pump. Fuel prices have soared since the beginning of the year. That in turn has resulted in increased pricing for many goods because it costs more to take goods from point A to point B. Here’s an insight into the economy; businesses pass increasing costs whether it be transportation or taxes on to consumers (you). But there’s another sign of inflation and that is the cost of housing.

Strictly speaking inflation relates to the money supply. When the Federal Reserve prints money, which they are doing at record levels, the result is more dollars chasing fewer goods. Perhaps you’ve noticed, housing prices have escalated. Generally, there are fewer homes for sale than usual. Even though the Federal Reserve is inflating the money supply they’ve continued to keep interest rates extremely low. It’s easier to borrow more because these low interest rates will keep payments down. This is a classic example of more dollars (loans) chasing fewer goods (houses).

The Case-Shiller National Home Price Index indicates home prices in major cities nationwide rose 19% year over year as of July 1. Since 2006 home prices nationwide have increased 41%. Is this a bubble soon to pop?

Many economists, especially those tied to real estate firms, say no.

“…Zillow economist Chris Glynn said too much demand and not enough supply means the housing market can’t tumble overnight.   But the double-digit price hikes won’t last forever.

“We’re seeing signs that the market is beginning to cool just a little bit, and by cool I mean house price growth is slowing, not that prices are going to decline,” Glynn said.”~~Marketplace, 08/31/2021

According to the National Association of Realtors it is millennials with good credit scores driving this market. 

At VALoansMN we continue to offer millennials and others great rates at these historically low interest rates. Be prepared if you enter the housing market. Let Brad arm you with a pre-approval letter which will strengthen your offer to buy a home in this hot housing market.

It doesn’t cost anything to talk and talk can sometimes help you make the right decision in such an important step toward home ownership or refinancing.


Posted by Joan Rusco on September 20th, 2021 1:14 PM

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2523 S. Wayzata Blvd #300
Minneapolis, MN 55405