VA Loan Updates

Households typically had one wage earner, who got a job with a “good company (the phone company, electric company, auto manufacturing etc.) and worked until retirement. Upon retirement you received your gold watch and pension which was supplemented by social security benefits. College was not considered a “must” and many folks got a good job with just a high school education. You saved your money at the local bank, and celebrated paying off your mortgage. Bills were paid in cash as credit was not widely available and no one had ever heard of the term FICO score. In other words most folks followed the same rules of money that their grandparents did.

Enter the future! Cash is virtually extinct. We pay our bills with credit cards. We pay our credit cards, mortgage payments and utility bills online. Everyone knows their FICO score because it impacts your rates on everything from financing to insurance. We have financial professionals to manage our investment accounts and advise us on retirement.

Pension, what is that? Even if you thought you had one, many pension funds are seriously under funded and scandals such as Enron have taught us that we had better seriously consider funding our own retirement. Most employers have opted for 401k or similar plans in lieu of pensions so most of us are self-funding our retirement. Social Security is no longer viewed as a “given” but as a bonus. Even sacred cows such as government and union pensions are getting a closer look.

Many of us do not pay cash for our cars, heck we do not even buy them anymore. We lease them and pay rent on the portion that we use and turn them in every few years for a new payment. Many households have two wage earners who consider it of vital importance that their children go to college. We are a global economy and what happens in China can impact your mortgage rates.

With all this change financing your home has changed dramatically also. And although you hear the media tossing around disparaging terms such as exotic loans and toxic mortgages, the truth of the matter is that homeowners have never before had so many wonderful options available to them to purchase that American dream…. their own home.

The menu of options includes such fare as Adjustable Rate mortgages, hybrid adjustable rate mortgages (fixed for 3, 5, 7,or 10 years then reverting to an adjustable rate loan), interest only fixed rate mortgages, interest only adjustable rate mortgages, 100% mortgages, piggyback mortgages, option ARMS, and buy down mortgages. In addition these loans can be available in A paper, Alt A paper and the sup-prime markets. Government loans are still widely available, and these include fixed rate and adjustable rate loans as well as buy down loans.

It’s not your grandfather’s mortgage anymore! You have to buy today’s home purchase with today’s rules of money. With such a vast array of financing options available to the average borrower, how does one choose what is best? Are some of these products actually exotic or toxic? Why would anyone consider anything but a fixed rate mortgage? Where does one turn for advice? How does one shop for mortgage financing?

Enter the era of the Mortgage Planner. Mortgage Planning is a relatively new concept. Mortgage Planners are certified by the Certified Mortgage Planning Specialist institute and must take an extensive course and pass an exam in order to obtain their designation. (www.cmpsinstitute.org) Mortgage Planners are committed, qualified and equipped to implement cash flow and real estate equity management strategies enabling their clients to build and conserve wealth, become debt free sooner and achieve financial freedom. A mortgage planner will know how to analyze your financial profile and will suggest various strategies to finance your home purchase.

A mortgage planner will know how these financing options can impact your financial profile now and in the future. A mortgage planner is building a practice and will help you to manage your mortgage over the years. A mortgage planner views the mortgage loan as a financial tool to create and manage wealth rather than a huge debt. A mortgage planner can offer suggestions on how to restructure your financing so that you are able to save for retirement and pay your mortgage too! A mortgage planner is in the relationship for the long haul and has a vested interest in giving you good advice. Mortgage planners do not charge up front for their advice and expertise. They work in conjunction with a licensed lender and are paid by the lender at closing.

If you are not speaking with a mortgage planner chances are that you are speaking to a sales person for the lender. Sales people are given the titles of loan officer, loan originator, mortgage advisor etc. A bank or lender can hire anyone to be a loan originator. They do not have to have a financial background, they do not have to have a college education, they do not have to pass an exam or any licensing requirements. As long as you are employed by a licensed lender you can originate loans for that company. You can literally be a ski instructor one day and a mortgage originator the next day.