Section 4: VA Streamline First-Time Homebuyers
NOTE: Maybe you are looking to do a VA Streamline and your home and this is the first and only home you have ever bought. Although that does fit the criteria for a first-time home buyer it is important to remember that VA Streamline are not traditional first-time home buyer programs. Although this section will talk about the benefits of being a first-time home buyer, please do not confuse this program if you are indeed a first-time homebuyer.
Purchasing Your First Home
Purchasing a first home is an exciting milestone in any person's life. For some, the process may also seem very intimidating. Buying a home can be challenging for a first timer. After all, there are so many steps, tasks, and requirements, and you may be anxious about making an expensive mistake. But first-time homebuyers actually enjoy some special advantages created to encourage new entrants into the real estate market. Please don't hesitate to give us a call or start your quote online.
How Much Home Can I Afford?
Typically, the first question would-be homebuyers ask themselves is, "What can I afford?" There are many factors that determine what a reasonable mortgage payment should be for an individual, including annual income, existing debt payments, down payment (if any), as well as additional costs like homeowners’ insurance and housing association fees. Orbit Home loans provides a handy VA Loan Payment Calculator to help homebuyers find a monthly payment that's comfortable for them.
VA Streamline Payment Calculator →
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What Type of Loan Should I Get?
There are many financing options available for homebuyers out there, each with their own unique advantages. For most borrowers, we at Orbit Home Loans highly recommend the working with one of our loan officers to find out what best fits your needs. Of course, if you are still researching then you can continue to explore our many loan options here on our website.
Advantages of a VA Streamline:
1. Refinance With A Lower Interest Rate
A lower interest rate can mean big savings. For example, on a $200,000 30-year-fixed loan, reducing the interest rate 1% can mean a monthly savings of almost $120.
2. Get Rid Of Mortgage Insurance
Mortgage insurance can add quite a bit of money to a borrower’s monthly payment. How you get rid of mortgage insurance depends on what type of loan you have.
3. Extend The Term Of Your Mortgage
If a lower payment is your goal, extending the term of your mortgage with a new loan or loan modification can help you get there. A longer mortgage term spreads out the loan balance over more payments.
4. Shop Around For Lower Homeowners Insurance Rates
If you’re paying for your homeowners insurance as part of your monthly mortgage payment, then shopping for a better homeowners insurance rate could be an easy way to lower your overall monthly payment.
5. Appeal Your Property Taxes
If you have an escrow account on your mortgage, then you’re probably paying for your property taxes as part of your monthly mortgage payment.
6. Lower monthly payments
When it comes to how refinancing works with a FHA Streamline, your monthly payments often decrease. Lower monthly payments may result from an extended term on the loan, which allows more time to pay on your mortgage. A lower interest rate could also result in a lower monthly payment if the length of the loan is held equal.
7. Lower funding fee
Instead of mortgage insurance, FHA loans have a funding fee that can either be paid at closing, offset with a lender-paid credit, covered by seller concessions (where a seller agrees to pay partial closing costs) or added to the loan balance. The amount of the funding fee on a regular FHA loan is anywhere between 1.4 – 3.6% of the loan amount depending on service status, down payment amount, if it’s your first time using a FHA loan and whether it’s a purchase or refinance. For a FHA Streamline, the funding fee is 0.5% of the loan amount in all circumstances.
8. Potential change in mortgage structure
As a reminder, refinancing with a VA Streamline could allow you to move from an adjustable-rate mortgage to a fixed-rate loan. ARMs change over time, depending on rate fluctuations. Fixed-rate mortgages lock in a single interest rate until you pay off your mortgage.
9. Net Tangible Benefit
The VA actually requires that there be some advantage for the borrower if they go ahead with a Streamline Refinance. If refinancing makes it easier for you to make your monthly payments on time, then the VA is off the hook for reimbursing your lender in the case of you defaulting on your mortgage. For a reduction in the term of the mortgage to be considered a net tangible benefit, certain things must apply. The remaining amortization period of the current mortgage bust be shortened, the new interest rate should not exceed the original one, and the principal, interest, and MIP payment of the new mortgage must not exceed the combined amount of the existing mortgage by more than $50.
Getting Preapproved
The first step toward securing your loan is getting pre-approved. This involves a prequalification process, where a loan officer assesses the homebuyer's financial situation and determines what they qualify for and is followed by the homebuyer submitting a completed loan application to the lender for approval. Orbit Home Loans offers two ways to begin this process: You may either call us directly or reach start the application below to get a complementary call.
Contact an Orbit Home Loan Professional
Finding a Real Estate Agent
When using a VA Streamline, it's important to find a real estate agent that not only knows the intricacies of the VA Streamline Benefit Program, but also understands the specific needs of borrower. Orbit Home Loans has put together a network of friendly real estate agents for just this purpose.
Learn More about Orbit Realty →
Helpful Resources
- The Guide to VA Streamline Homebuying
Browse our VA homebuyer education and resources page. - VA Streamline Home Loan Mortgage Payment Calculator
This free VA streamline Home Loan calculator gives you a snapshot of what your monthly payments could be with a VA Streamline Loan. - VA Streamline Glossary
Use our glossary to reference any unfamiliar terms or acronyms.
As a first-time homebuyer, you have many options when it comes to purchasing your home - including homes in hi