5 Things You Should Know About VA Loans

“Working in the DC Metro area we deal with VA Loans on a regular basis.  They are truly a wonderful tool to use when buying a home.  Even though everyone who is eligible to use one knows who they are, there are many aspects about VA Loans that people just aren’t aware of.  This article helps educate home buyers on several special aspects of the program.”

DC Metro Realty Team – Denise Buck & Ed Johnson 

VA loans are the most misunderstood mortgage program in America. Industry professionals and consumers often receive incorrect data when they inquire about them. In fact, misconceptions about the government guaranteed home loan program are so prevalent that a recent VA survey found that approximately half of all military veterans do not understand it.

With this in mind, we would like to debunk the most common myths about VA Loans.

Myth 1: The VA loan benefit has a “one time” use.

Fact: Veterans and active duty military can use the VA loan many times. There is a limit to the borrower’s entitlement. The entitlement is the amount of loan the VA will guarantee. If the borrower exceeds their entitlement, they may have to make a down payment. Never the less, there are no limitations on how many times a Veteran or Active Duty Service Member can get a VA loan.

Myth 2: VA home loan benefits expire if they are not used.

Fact: For eligible participants, VA mortgage benefits never expire. This myth stems from confusion over the veteran benefit for education. Typically, the Montgomery GI Bill benefits expire 10 years after discharge.

Myth 3: A borrower can only have one VA loan at a time.

Fact: You can have two (or more) VA loans out at the same time as long as you have not exceeded your maximum entitlement and eligibility. In order to have more than one VA loan, the borrower must be able to afford both payments and sufficient entitlement is required. If the borrower exceeds their entitlement, they may be required to make a down payment.

Myth 4: If you have a VA loan, you cannot lease the home.

Fact: By law, homeowners with VA loans may rent out their home. If the home is located in a non-rental subdivision, the VA will not guarantee the loan. If the home is located in a subdivision (such as a co-op) where the other owners can deny or approve a tenant, the VA will not approve the financing. When an individual applies for a VA loan, they certify that they intend on making the home their primary residence. Borrowers cannot use their VA benefits to buy property for rental purposes except if they are using their benefits to buy a duplex, triplex or fourplex. Under these circumstances, the borrower must certify that they will occupy one of the units.

Myth 5: If a borrower has a short sale or foreclosure on a VA loan, they cannot have another VA loan.

Fact: If a borrower has a claim on their entitlement, they will still be able to get another VA loan, but the maximum amount they would otherwise qualify for may be less. For example, Mr. Smith had a home with a $100,000 VA loan that foreclosed in 2012. If Mr. Smith buys a home in a low cost area, he will have enough remaining eligibility for a $317,000 purchase with $0 money down. If he did not have the foreclosure, he would have been able to obtain another VA loan up to $417,000 with no money down payment.

Veterans and Active duty military deserve affordable home ownership. In recent years, the VA loan made up roughly 13% of all home purchase financing. This program remains underused largely because of misinformation. By separating facts from myth, more of America’s military would be able to realize their own American Dream.

This article originally posted by Keeping Current Matters. Read more articles like this at www.KCMblog.com.

Find a Better Financial Return

“Understanding your investment options is critical to your future financial success.  It pays to know what the multiple options are as well as the Pros and Cons of each.”

DC Metro Realty Team – Denise Buck & Ed Johnson

A certificate of deposit will generate a cash flow based on the interest rate that it pays which is the only way it generates a return for the investor.

An investment in a stock that doesn’t pay dividends, would need to be worth more than you paid for it to earn a profit. On the other hand, a stock that paid dividends could make the investor a profit even if it sold for the same price that he paid for it.

Investors can profit four different ways with an investment in rental real estate.

1. Cash flows that result from having a surplus after collecting the rent and paying the expenses.

2. Equity build-up results from a portion of each monthly payment reducing the unpaid balance.

3. Tax benefits can result from the depreciation allowed on the property and the preferential long-term capital gains tax rate.

4. Appreciation benefits the investor when the value of the property increases.

The most conservative investors in real estate make decisions to purchase a rental property based on its ability to generate a cash flow and reduce the mortgage through normal amortization. If the property can offer an acceptable rate of return compared to other available investments, the tax benefits and possible appreciation become an added bonus.

With increased rents and low mortgage rates for investors, rental property can offer significantly higher returns than many of the available alternatives. Contact me for more information- Denise.Buck@DCMetroRealtyTeam.com; you may be amazed about what is available in the market.

Personal Finance Review

“It’s amazing how things can change over time.  Even short periods of time.  Knowing where your money is going is a critical step in financial planning.  This article explains how to periodically review your expenses to make sure you are not spending more than you should.”

DC Metro Realty Team – Denise Buck & Ed Johnson 

You’ll need to earn $2.00 for every $1.00 you want to spend assuming you pay 50% of your earnings on income tax, social security and Medicare. On the other hand, you get to keep 100% of every dollar you save on your personal expenses because the taxes have already been paid.

Periodically, review your expenditures with the diligence of an exuberant IRS agent on commission. It’s an exercise that most people don’t feel they have time to do but the rewards make it entirely worthwhile.

  • Get comparative quotes on insurance – car, home, other
  • Review and compare utility providers
  • Review plans on cell phones
  • Review plans on cable TV, satellite for unused channels and packages or receivers
  • Review available discounts on property taxes
  • Consider refinancing home – lower rate, shorter term or cash out to payoff higher rate loans
  • Consider refinancing cars
  • Call credit card companies to ask for a lower rate
  • Review all of the automatic charges on your credit cards – consider no-fee cards
  • Search for late fees that are regularly being paid and eliminate them.
  • Review all bank charges for accounts and debit cards; determine if they can be reduced or eliminated.

If you don’t want to review your credit card accounts, consider reporting the cards stolen so that new numbers will be issued. You can notify the companies that need your number. Companies who might have your number won’t be able to automatically renew services that you may no longer be using. You can be assured that they’ll contact you when the old number doesn’t go through and you can re-evaluate the decision at that time.

Home Inspections can Improve Marketability

“Home Inspections are key to any home purchase. You know it’s going to be part of the Buyers Contract.  Why would they even consider buying your home without one?  They want to make sure everything is in good working order when they move in.  Why not beat the Buyer to the punch and get one done yourself so you know exactly what needs to be done.  It also shows that you care enough about your home to have gone ahead and had one completed.  So remove the stress of not knowing what might be wrong and order a Home Inspection yourself.”

DC Metro Realty Team – Denise Buck & Ed Johnson

One of the anxiety highpoints during the sale of a home is waiting for the buyer’s home inspection report. Most sellers willingly disclose what they know about their home to any potential buyers. The concern stems from the inspector finding something that they’re totally unaware of and that it will either cost them a lot of money to correct or the buyer will simply use it to void the contract.

If the inspection does reveal some unknown problem with the home, it’s probably as big a surprise to the buyer who is not as emotionally or financially invested as the seller. It is human nature to fear what you don’t understand and when a report identifies defects, they may simply opt-out of the home.

The solution to the situation may be for the seller to have the home inspected prior to putting it on the market. There is still a risk of becoming surprised by an unknown defect which at that point, would have to be disclosed to potential buyers or repaired by the seller. The advantage is that it creates a baseline to compare discrepancies that may arise when a future buyer has the home inspected.

If the seller’s inspection report is made available during the marketing process, it could give buyers a sense of confidence about the home even though they may still choose to have the home checked by their own inspector.

The cost of the inspection, possibly $500, keeps some sellers from taking this initiative when selling their home. In an effort to minimize their expenses, they forego getting valuable, disinterested 3rd party advice that could help sell their home. On a $175,000 home, the fee for the inspection will probably be less than 3/10 of one percent of the sales price.

Another option to the seller to increase marketability of the property and bolster buyer confidence in the home would be to offer a home protection plan. Generally, the seller doesn’t incur cost for this coverage until the home is sold and there may even be some coverage for the seller during the listing period. The benefit to the buyer is avoiding unanticipated expenses for specific items that are covered during their first year of ownership.

Contact me for recommendations of home inspectors or home protection plans.

Winter Maintenance Tips

“Here in the Mid Atlantic Region we see all types of weather.  Generally, our winters aren’t too bitter, however you still need to prepare for the cold days that will inevitably be here.  Even when you live in warm climates, some of these things are important to check periodically.”

DC Metro Realty Team – Denise Buck & Ed Johnson

Preparing for the change of seasons can make your home more comfortable and protect your investment. Regular maintenance extends the various components of a home and can generate savings in operating costs while avoiding expensive replacements.

  • Weather strips around doors and windows should be checked for possible air leaks.
  • Caulking around windows and doors should seal out moisture and air leaks.
  • HVAC should be inspected and serviced by a professional annually.
  • Smoke and carbon monoxide detectors should be tested regularly.
  • Ductwork and supply lines from water heaters should be insulated.
  • Fireplace chimneys should be cleaned regularly and fireplaces should be inspected for cracks in mortar and to see if the damper closes properly.
  • Gutters should be free of leaves and debris to prevent rainwater build-up.
  • Tree branches touching or hanging over your roof should be trimmed.

Please contact us if you need a service provider recommendation.

Denise.Buck@DCMetroRealtyTeam.com

Ed.Johnson@DCMetroRealtyTeam.com

Can You See the Savings? – Use LED Light bulbs

“Using LED light bulbs can save you far more than you realize.  Once you read this article you will be amazed at the potential savings.”

DC Metro Realty Team – Denise Buck & Ed Johnson

If you’ve considered changing your light bulbs to energy-saving LED bulbs but decided not to make the investment because the prices were too high, you might want to investigate again. The prices have come down considerably.

An initial investment now will generate immediate returns through energy costs and because they last longer, you won’t need to replace them for years.

The life of LED bulbs is projected to be from 35,000 to 50,000 hours compared to an incandescent bulb at 750 to 2,000 hours. For normal home use, a LED bulb could last more than 20 years.

80-90% of the energy used by fluorescent and incandescent bulbs is wasted by the heat generated. In contrast, cool LED bulbs converts 80% of the electrical energy to light energy.

• The color of LED lights is bright white, more like daylight, instead of the warm yellow of incandescent or the greenish tint of fluorescent bulbs.

• LEDs light up instantly instead of building to their intensity like some of the fluorescent bulbs.

• LEDs are more durable because they don’t have filaments or thin-glass bulbs like incandescent and fluorescent bulbs.

Shop around to find the best price on LEDs. If the LED only lasted 20,000 hours, you might have to purchase 20 incandescent bulbs during that same period of time. Using the chart below, you can see that the LED uses about 10% of the wattage without compromising on the brightness.

Watt comparison.png