VA STREAMLINE REFINANCE

In the National Association of Realtors June report, they indicate that home sales slowed to it's lowest level since January and that prices increases nationwide slowed to it's lowest level in 10 years. Serious buyers have more purchase power now than they have had for many years. Here's what makes it a great market for owning your own home: House prices do continue to rise. In fact in May, house prices across the board rose from $229,000 median sales price to $231,000, but that increase represents the smallest increase in 2 years. With the market taking longer to sell a home but yet prices still seeing moderate increases, could there be a better time to be a homeowner? This is kind of like having the best of both worlds. Buyers are feeling much safer entering the market now because it seems like a pretty safe bet that your home will continue to increase in value while at the same time being able to capitalize on the slowest market in several years. That's my definition of a "buyers market". And to boot, mortgage rates are as low as they have been in years. Staying very close to the 6% range, could there be a better time to purchase a home? All indicators say no, there isn't a better time...now is a great time to be in the market and becoming a home owner.

Although adjustable rate mortgages are great for first time home buyers because the initial rate and payment are somewhat lower than a fixed rate, making it easier to qualify. As rates increase, the ARM loans are increasingly more useful and popular. However, an ARM is advantageous only for the initial home purchase and should be streamlined or refinanced to a fixed rate as soon after the initial purchase as possible.

Throughout 2005, the Federal Reserve has found it necessary to gradually increase short term interest rates in an effort to control inflation. This is a good and a bad thing. It is imperative to keep inflation in check for economic reasons, but in doing so can sometimes push mortgage interest rates higher. That is what is currently happening. As interest rates increase, so does the annual adjustment on and ARM loan. The risk is not so much the affordability of the monthly payment with each adjustment as  losing out on the lowest possible fixed rate available for long term rate protection. It is highly unlikely that rates will skyrocket over the next year or two but at the same time, with interest rates at current lows, your current payment over the next year or two will most assuredly increase to what a new fixed rate mortgage would if you were to refinance at today's low fixed rates which are going to continue to rise and become further and further out of reach for many consumers to refinance out of their current ARM loan at a later date. The experts strongly suggest that home owners that presently have a ARM loan make your refinance move to a fixed rate mortgage now rather than later to insure that your existing adjustable payment doesn't rise higher in the next year or so than what a fixed rate would be at today's fixed rate.

One of the biggest advantages of initially financing your home through the VA is the ability to Streamline your current mortgage from a ARM loan to a fixed rate loan at no cost, qualifying and in most cased, no appraisal. Not all mortgage companies are adept at VA streamline refinancing but a good VA approved mortgage lender can refinance your loan very quickly, and continue to monitor your mortgage and your current rate over the coming years. 

In Early 2006, the Feds have mandated a new law requiring credit card companies to increase minimum monthly payments to credit card holders by almost double the existing rates. The new law raises payments from 2% of the existing monthly balance to 4%, literally doubling the payment. This move by the Feds is in an effort to control consumer debt and to lower monthly credit card balances manageable for the average consumer. They fill that if consumers are required to make larger payment reductions on a monthly basis, consumers will control the amount of charges against their cards and be more diligent in keeping their balances as low as possible. 

This is fine if your a new card holder and have small balances. But for most of us, we are accustom to using our credit card for pretty much everything from buying food and gas, to buying cloths and taking vacations, all financed with our credit cards. Our spending habits matched our ability to afford the monthly payments. Now, with this new law taking affect, our payments will most likely double, throwing our monthly payment budget completely off balance. As a result, it may necessary for most of us to consolidate debt into a low rate mortgage and pay off our credit cards so that going forward we can keep credit card debt at an affordable level. This coupled with the high interest rates charged by the credit card companies to carry this debt could eat up most of an applied payment to interest rather than principal. Times are a changing and carrying credit card debt is not as attractive as it once was. As a result, smart consumers are opting to pay off their credit card balances in favor of a low rate mortgage with one lower monthly payment.

ARM vs FIXED RATE LOANS - Which is the better mortgage option for you?

The low initial cost of adjustable-rate mortgages (ARMs) can be very tempting to home buyers, yet there are some uncertainties associated with them.  Fixed-rate mortgages offer rate and payment security,  but they can be more costly initially.  Here are some pros and cons of  ARMs vs fixed-rate loans: