VA Loans Blog

    So, what happens when you fall in love? Are you driven by the passion? Do you overlook any potential problems that might develop in the relationship? Or perhaps you are cautious from the get-go and prefer dating for some time before making a long term commitment. Believe it or not there’s a corollary to buying a house. That is especially true in today’s market.

    Back to our tempestuous lover who has fallen head over heals. That can be the result of walking into a home. Some realtors claim a buyer makes a decision on a house within minutes of walking through the front door. Head over heals. But mortgage rates have increased substantially in recent months (although, as of this writing they’ve slipped downward). This love affair is going to cost you money. You just have to have this house. So, what to do?

    Brad at VALoansMN has a solution. If you’ve talked to him perhaps you’ve heard him say “date the mortgage, marry the house”. This makes a lot of sense in today’s housing market. As mortgage rates increased there is downward pressure on home prices. About a year ago we were definitely in a sellers’ market. We were seeing great price increases and yet we also saw some multiple offers which, in some cases, drove the sale price above asking. That is not the case now.

    The pendulum has swung back toward the buyer giving you more power at the negotiating table. Realtors always seem to say “it’s a good time to buy” but there may be truth in that. Now is a better time to buy than say one year ago. Home prices have stabilized or have fallen. So when you fall for that home remember what Brad says; go ahead and marry the home because you’re only “dating” the mortgage. 

    Just because you’ve made a longer term commitment to the home doesn’t mean you will end up living with the mortgage for ever. You'll notice home loan rates go up and they go down. No one can predict the future. If you get a VA Loan today at 6% might that rate be less attractive due to a future of falling rates?   So take advantage of another VA Loan benefit and refinance at a cost much lower than conventional loans. Remember, you’re only dating the mortgage. You’re not married to it. On the other hand let’s say inflation is unforgiving and rates tomorrow are higher than your 6%. In this scenario you may look like a financial genius for locking in today’s rate.

    Don’t let fear of fluctuating rates keep you from your true love. Go ahead, get married to that house and remember, you’re only dating the mortgage. At VALoansMN we will help you with your love life. Well, at least in terms of housing and mortgages.


 

Posted by Joan Rusco on January 14th, 2023 11:52 AM

Perhaps our version of “build it and they will come” has indeed come to pass. Our version should read “write it and it will happen”. Two months back we predicted, based on historical data, that interest rates will drop in a recession. It’s happened every time since the early 1970’s. At the time of our writing this rates were zooming up, crossing the 7% mark. That is not the case today even though the economic gurus are shying away from use of the word “recession”. Say it isn’t so Joe! But, in fact, it is. Ask anyone on main street. But, here comes that silver lining in an otherwise gray cloud of downward moving economic numbers.


Despite the Federal Reserve Open Market Committee (the Fed) raising it’s Prime Rate 7 times thus far this year we’ve seen some decline in VA mortgage rates here in the upper Midwest. VALoanMN rates have tumbled in recent weeks. We suspect the perception of high rates have not followed suit.


Less than a year ago VALoansMN was able to procure rates in the 3% range. Then came the inflation (stagflation?) in the following months. So as we were getting used to very cheap money here came the increases catapulting to the 7% range. If we’re still seeing 6% mortgages as high it’s only because we’re comparing it to the lower rates available earlier this year. Surely we can all agree that a 6 is lower than a 7 and lower is good, right? But what will happen now?


The short answer is “no one knows”. We do mean NO ONE,  not even the Fed (they so misjudged the severity of the inflation why would we trust their prognostications anyway?). We can only harken back to the data we reviewed in our earlier post. In every recessionary period since 1973 mortgage interest rates have DROPPED. The question becomes are we sliding further into a recession in the coming year? 


Here’s the rub: you can sit on the sidelines hoping for dropping rates (or home prices) or you can take what’s available today and perhaps look back in a few years and think to yourself “wow, and I thought a VA Loan rate of 6% was high and look where we’re at today!”  Any homeowner over the age of 50 can tell you what a high VA mortgage rate is and it is stated in double digits. Rates today may, in the long run, be very attractive.


Finally, we at VALoansMN/Luminate Home Loans wish you good tidings this holiday season. May you and yours make many good memories!

Posted by Joan Rusco on December 15th, 2022 4:36 PM

The rapid mortgage interest rate increase this year has shocked the real estate market. In 2020 VA Loans were below 3%. Today we’re seeing rates over twice that. Many home buyers or refinancers have not experienced this level of VA loan rates, but there is a silver lining in the rate cloud and it shows the strength of the Veterans benefit. This could be your pot of  gold.

We know of a homeowner who took advantage of this Veterans’ benefit in 2020 using his loan to finance 100% of his purchase price. His VA Loan rate is just under 3%. But now, he’s had some life-changes and is preparing his home for sale. Fortunately his real estate agent contacted us and ask about the assumability of his current mortgage loan. Our Veteran is thankful he had sought out an agent who had familiarity with VA Loans.  

“Yes”, we said, “another qualified buyer, veteran or not, chooses to buy this homie  she can assume the mortgage at it’s current rate”. Our home owning  veteran has made about 18 payments on that loan. His principal loan amount has decreased only slightly. Our new homebuyer can purchase this home and assume the current, very low interest rate. 

In this somewhat slow real estate market here comes a home for sale that has an assumable mortgage rate less than half of today’s market rates. Here comes a very appealing opportunity for another buyer. This feature is but one of the benefits VALoansMN can offer.  However, as they say on TV “wait, there’s more!”.

Staying with our home-selling Veteran he must now find a house in a new location and he will face today’s VA loan rates which are considerably  higher than the loan he once had. But, no worries, he’ll obtain another VA loan to purchase his new home and, if rates return to lower levels, he can take advantage of the streamlined refinance offered at VALoansMN. Using this feature here’s no need for an appraisal nor is there any income verification. As Brad at VALoansMN puts it “you marry the house but you’re only dating the mortgage”. 

Don't overlook your pot of gold. Call us today and we'll show you how easy it can be.

Posted by Joan Rusco on November 10th, 2022 12:33 PM

A home is NOT an investment. That’s what many money managers have told their clients.  Really? Yes, really…mostly. If your consideration is just return on the dollar you may be disappointed. There is so much more to a house than its dollar value. This can be expressed with a very simple question; do you own a house or a home?

If your answer is house then you likely put a dollar value on the house. There’s nothing wrong with this outlook. Who doesn’t want to make a profit on any commodity when sold? Over time real estate can return profit but only if you sell. If you measure your wealth by dollars you may be shorting yourself.

What’s the difference between a house and a home? Each of us will answer in our own way. A Wall Street Journal reporter wrote an article titled  "How Houses Eat Money" It’s a worthy read and may change your outlook. As you consider this it might be worth some serious thought concerning the value of a home.

A home is where you and your family live. It’s where memories are made, joys shared, tears shed and all else life has to offer. Returning to the concept of the house as an investment, what dollar amount would you place on these life experiences? Does this value change your mind on the cost of a home?

At VALoansMN we strive to enhance your value to meet your goals. Mortgage rates have increased this year but we’re also seeing some weakness in housing prices. But as you consider what’s best for you please keep in mind the value of your HOME


Posted by Joan Rusco on October 3rd, 2022 10:54 AM

So VA mortgage rates have gone up but it still may make financial sense to consider buying a home. We’re going to spend some time in the next few paragraphs re-examining the question: should I continue renting or should I buy? First, we need to spell out a few assumptions necessarily made for comparison purposes. 


  • Here at VALoansMN we consider many factors when offering your personalized mortgage rate. What is one rate for Joe may be somewhat different than the rate available to Jane. There is no one VA mortgage rate but for purposes of this article we’re going to use a general rate which may be higher or lower than your personalized rate. To give you a personalized rate contact Brad at 612-240-9922. 
  • The cost of a house and the cost of monthly rate will vary depending on size, location, availability and other factors.  For our purposes we are going to use mean or average prices in the Minneapolis/St. Paul metro area.


If you are currently renting an apartment or house it may be time to take the plunge and become a homeowner. There are several advantages:


  1. There’s no landlord to answer to
  2. You can upgrade or improve the home to your tastes
  3. You may build equity and credit
  4. There may be some tax benefits (although the new tax laws diminish this likelihood)
  5. More stability (especially in schools)


There are some disadvantages as well and at VALoansMN we want you to have the complete picture:


  1. Responsible for repairs, remodeling and maintenance
  2. Could lose money if home values decline
  3. Requires more paperwork
  4. Extra expenses beyond mortgage payments

Perhaps a major factor in this consideration is money. Keep in mind we’re using the generalizations outlined above in our money discussion.


Cost of rent can vary depending on the size. A studio can rent for around $1,000 where as a 3 bedroom home will rent for closer to $3,000+. What could you buy for about $3,000 a month? 


Using Redfin as our source the median home price in Minneapolis is $345,300. This means half of all homes sold in the metro area are price below this number and half are priced above. We’ll us the median price for our calculations.


Here’s the beauty of a VALoansMN mortgage, you do not have to have any downpayment.  With your earned VA benefit you can finance 100% of the cost. The monthly payment for our median priced home would be just over $2,000. That’s less than your current rent for 2 or 3 bedroom apartments. Of course there are property taxes to pay. Minneapolis tax rates are higher than the state in general so we’ll use worst case scenario. Taxes on our median price Minneapolis home will run about $300 a month. Then there’s homeowners insurance of about $100 dollars. (You should also be paying insurance as a renter which will likely cost about half the cost of the homeowners insurance).  Add up the numbers and you can see you can actually save money by owning your own home.


We need to emphasize that we’ve used very general numbers for this illustration. To drill down on your real costs start with a call to VALoansMN (number for Brad above) then consult with an accountant or financial planner. A little due diligence may uncover a great gift for you and your family.

Posted by Joan Rusco on September 11th, 2022 3:23 PM

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

Archives:

My Favorite Blogs:

Sites That Link to This Blog:


VALoansMN.com

2523 S. Wayzata Blvd #300
Minneapolis, MN 55405