Current Mortgage Rates: Richmond, VA
3.625% (3.659% APR) 30yrs
3.125% (3.195% APR) 15yrs
as of 01/22/20
Read More

Building on Trust™


Mortgage Blog

Aug 24

Getting Started with VA Loans

VA Loan

A VA loan is a mortgage loan that is offered specifically for active military and veterans and is guaranteed by the United States Department of Veterans Affairs (VA). A VA loan is issued by a mortgage lender, similar to other loan types, but is backed by the Department of Veterans Affairs. VA loans have additional benefits, making them an attractive option for buying a home if you are eligible. To purchase a home with a VA loan, you do not need to provide a down payment or purchase mortgage insurance.

Although costs are generally lower with a VA Loan, they do require a one-time funding fee of 2.15%. This fee is reduced to 1.25% if the buyer provides a down-payment of 10% or more, and is zero if the veteran receives disability. Another benefit of a VA Loan is that Veteran’s Affairs will renegotiate on behalf of the loan recipient should they run into financial difficulty.

Who is Eligible for a VA Loan?

VA Loans are specifically for United States veterans, service members, and widowed spouses of deceased service members. You are able to apply for a VA mortgage if:

  • You are on active-duty military
  • You were separated from military service in a situation other than “dishonorable discharge”
  • As a veteran or active military, if you meet specific length-of-service requirements
  • As a reservist or a member of the National Guard, if you meet specific length-of-service requirements
  • You are a qualified surviving spouse of a deceased veteran

In addition, the home must be intended as your primary residence. Also, you must have a valid certificate of eligibility from the VA.

Benefits of a VA Loan

There are many benefits that make VA loans an attractive option for those that are eligible, including:

1. You do not need to provide a down payment. Because the loan is backed by the VA, you are not required to provide a down payment. However, if you choose to provide one, your monthly payment will be reduced.

2. You do not have to purchase mortgage insurance. Again, because the loan is backed by the VA, there is less liability for the lender and you do not need to purchase mortgage insurance.

3. There is no minimum credit score. However, a lender can impose a credit score range for approving a VA loan from their firm, which is typically 620. The VA will not require a minimum mortgage score when granting approval.

4. Lower annual percentage rate. VA loans generally have a lower APR than other loan types, however, this is variable based on the lender and the type of loan.

5. You can reuse your VA loan benefit. Unlike an FHA loan, you can reuse a VA loan benefit, meaning that you may be eligible to receive a VA loan to purchase an additional home or to refinance.

6. VA loans have a lower closing cost. The VA requires loan recipients to pay a one-time lending fee, and the lender may receive a 1% origination fee that is similar to closing costs on other loans. Because of the reduced closing cost, VA loans are easier to qualify for if you do not have large savings.

Types of VA Loans

There are several types of VA loans, and each has separate qualifications.

1. Home purchase
Also called a VA purchase loan, this loan allows veterans and active military, who meet the requirements of the VA, to purchase a home.

2. VA refinance
Similar to other refinance loans, a VA refinance loan allows the homeowner to cash-out their equity in their home.

3. Interest rate reduction refinance loan
A VA interest rate reduction refinance loan, or IRRRL, lowers your interest rate by refinancing your current VA loan. This is similar to other refinance loans, and allows the homeowner to find a lower APR or monthly payment.

4. Adapted housing grants
The VA provides grants to active military or veterans that require modifications in their home in order to live with a permanent disability. These grants are not found through a mortgage lender but come from the VA directly. However, if you are seeking an adapted housing grant, it may be important to begin the process before your loan is finalized.

Shop Around

When applying for a VA loan, homeowners should still shop for the best lender that will meet their specific needs. Interest rates may vary from one lender to another.


Add CommentAdd Comment | Views: 1346 | Read more
Jul 25

Should You Refinance?

Should you refinance


Many homebuyers use the equity that they own in their homes to refinance their mortgage. There are multiple benefits to refinancing a mortgage loan—however, there are specific times that can benefit the homeowner significantly more. That’s why it’s important to think about when and if you should refinance your home.

Refinancing allows you to pay off your current mortgage by financing a new loan. Lower than normal interest rates can have many homeowners considering refinancing. Refinancing can allow the loan recipient to “cash out” the value that they have invested in their home in order to make another large purchase, work on home improvements, invest in other ventures, or lower additional debts. There is also the possibility that a homeowner could refinance their mortgage for new loan terms, such as a lower annual percentage rate or monthly premium. In best cases, both goals can be accomplished at the same time.

If the factors involved in securing your first mortgage have changed—for example, a better credit score, income increase, or improved banking history—you could qualify for a decreased monthly mortgage payment

Aside from the benefits of refinancing, there are also some costs. The process of refinancing a home is estimated to cost 3 - 6% of the original loan amount in order to finalize a new mortgage. These costs come from home appraisal costs, closing fees, and new escrow account setup.

Did you know that the best time to refinance your mortgage is the last month of the quarter? March, June, September, and December typically provide you the lowest APR rates.


So why refinance?

To lower your monthly payment

This is the most popular reason to refinance. If the factors involved in securing your first mortgage have changed—for example, a better credit score, income increase, or improved banking history—you could qualify for a decreased monthly mortgage payment if you refinance.

Interest rates are low

Many homeowners will refinance their loan when annual percentage rates (APR) are low. How much lower do they need to be? It depends on the outstanding balance of your existing mortgage. Large mortgages see significant payment reduction with only ½% lower rate, while smaller mortgages would need a rate more than 1% lower to justify the cost and effort.

Your credit has changed

If your credit score has changed for the better, you have a strong chance of finding better mortgage terms. First-time homeowners, who may have been building credit at the time of their first mortgage, may have a good chance of getting a better mortgage premium and APR.

To change your mortgage type

If you want to shorten the duration of your loan, change the mortgage type, or find a mortgage with new terms, refinancing is a smart option. If you have an adjustable rate mortgage (ARM), it is smart to refinance a fixed-rate mortgage so that you do not have to pay a larger monthly premium due to the adjusted rate.


Follow these steps to refinance your loan

1. Understand the equity that you own in your home

The percentage of your first mortgage that you have repaid, in percentage to your new appreciated home value, will affect the amount that you need to refinance. However, you may be able to refinance the whole value of your home.

2. Get your home’s estimated current value

In order to have your home refinanced, you may have to have the home’s value appraised. This can be beneficial if the housing market has changed for the better, your home has been renovated or improved in a way that adds value, or if your neighborhood market has increased in value or demand. Call your local lender when needing help estimating your home’s current value.

3. Learn your current credit score

Check your credit score before you apply for a new loan. If you did not have established credit when you signed your first mortgage but have made payments on time, then your credit score may have improved. If your credit score has remained the same, you will need to rely on other factors, such as increased income or high equity to get a lower monthly premium or APR.

4. Check current interest rates

Check the interest rates at the time of your refinancing attempt.

Refinance Calculator

5. Use a refinance calculator to figure out what your payments could be

Use a refinance calculator, like the one shared above, in order to build a realistic goal for what you would like your monthly premium and APR to be.

6. Shop for a rate and speak to mortgage lenders

After researching interest rates, look for a mortgage lender that will meet your needs. Refinancing can be more attractive to lenders because you are already approved for a previous loan, meaning that you are an ideal customer.

7. Look into HARP

The Home Affordable Refinance Program (HARP) is a federal program of the United States that was established in 2009 and was intended to help “underwater” or “near-underwater” homeowners to avoid foreclosure. In order to qualify for HARP, the following must be true:

• The mortgage is owned or guaranteed by Fannie Mae or Freddie Mac

• The mortgage was sold to Fannie Mae or Freddie Mac on or before May 31, 2009

• Borrowers are current on mortgage payments with no payments having been made more than 30 days late in the last 6 months and no more than one late payment in the last year

• The property type must be a primary residence, one-unit second home, or a one-to-four-unit rental property

• The current loan-to-value (LTV) ratio must be at least 80%. There is no maximum LTV limit for a new fixed-rate mortgage. The maximum LTV for a new adjustable-rate mortgage is 105%

• You cannot have previously refinanced under HARP

Refinancing is a large benefit of being a homeowner for several reasons. Homeowners may use the value of their home to improve their loan situation or to make a large investment. Whatever your reason for refinancing, follow the steps above in order to get the best options for your loan.


Add CommentAdd Comment | Views: 1328 | Read more
Jun 27

6 Things First Time Home Buyers Need to Know About FHA Loans

Copy of Understanding conventional mortgage terms


Federal Housing Administration (FHA) loans are an attractive offer for first time home buyers, as they allow for a low down payment, accept lower credit scores than conventional mortgage loans, and are government insured for both the buyer and the lender. However, there are important details that first time home buyers need to know about FHA loans that may not be apparent when shopping for a home and comparing rates.

FHA Loans were originally created to help first-time home buyers, or home buyers with either a history of bad credit or that could not provide a down payment that would purchase more than 20% of the home’s cost. The program was created after World War II to help finance homes for returning veterans and families of soldiers. Now, the FHA is one of the largest sources of mortgage funding, alongside Fannie Mae and Freddie Mac. FHA Loans account for roughly one-third of all mortgage loans issued in the US.

Down payment requirement

An FHA loan requires a downpayment of 3.5% of the home’s purchase price. Originally, this was one of the most attractive factors for FHA loans, as they were available to younger buyers with less savings. The FHA loan covers the remaining cost of the home.

Credit score requirement

FHA loans require a minimum credit score of 580, making them attractive to homebuyers with a lower credit score than what is required for conventional loans, 620. However, most lenders still require a score of 620 as an underwriting overlay.

Annual Percentage Rate

The APR for FHA loans fluctuates with the economy. In June of 2017, it is 3.375% for a 15-year fixed rate mortgage and 4.5% for a 30 year fixed rate mortgage. It fluctuates constantly, but only goes up and down drastically when the economy sees majors changes. The actual Note rate will be lower than the APR.

Shorter term FHA loans will have a lower APR, creating an incentive for homebuyers to sign a 15-year mortgage if the FHA loan requirements are attractive to them.

Approval amount for the loan

FHA maximum allowable loan amounts are also variable over time and even by location. However, in the past few years, many locales saw an increase in the maximum loan amount due to the rising cost of homes. Mortgage lenders will also be able to grant a higher loan limit based on the borrower’s information, such as their income, work history, and bank statements.


FHA mortgage insurance

After the 2008 recession, FHA loans began to require insurance for the full term of the loan. This provides insurance for both the mortgage lender, as well as the FHA insurance fund reserves.

The insurance is paid out in two separate ways: First, there is an up-front mortgage insurance premium of 1.75% of the loan amount, and while it is financed on top of the base loan amount, that is paid at closing. Second, there is a monthly mortgage insurance premium that is between 0.80% and 1.00% of the amount of the loan.

FHA loan approval

Borrowers must get their FHA loan through an FHA-approved lender allowing the lender to use some discretion when granting the loan. For this reason, home buyers may have to meet certain requirements for income, credit score, and work history in order to be approved by the individual lender. It is also possible that lenders charge different interest rates and closing costs, so it is important to ask about this when shopping for rates.

FHA loans create an opportunity for home buyers to purchase a home because of many beneficial differences from conventional mortgage loans. However, it is important to speak with your mortgage lender about their specifications for FHA loan approval, as well as any closing costs that may be presented.



Add CommentAdd Comment | Views: 1586 | Read more
Jun 7

Understanding conventional mortgage terms

Understanding conventional mortgage terms 1

The mortgage term is the length of time that it takes to repay your mortgage in full. It is one of the most controllable variables with your mortgage, but like other factors, it can be a huge determinant in the type of loan that you choose. Along with the loan amount and the monthly payment, it can decide the size of the home that you can ultimately buy. Choosing a mortgage term that fits your income and lifestyle is an important choice. This article will teach you how to do it.

15, 30, and more

Conventional mortgages are available in many different terms, but the most common are 15- and 30-year mortgages. The main difference between shorter and longer term mortgages is the interest rate and principal payment amount. Most conventional mortgages have a fixed rate, meaning that the interest rate is not adjusted over time. However, adjustable rates are also available.

This being said, shorter term mortgages can be seen as beneficial to mortgage lenders, and will, in most cases, allow for a lower interest rate. 15-year mortgages are ideal for those that have a stable career and source of income, as well as a low debt to income ratio.

30-year mortgages allow the homebuyer to plan on saving more in the future, but to ultimately pay more money in interest than what would be paid on a shorter term mortgage. Most mortgages allow homebuyers the ability to “pre-pay” if your income situation changes. This will allow you to pay an amount over your monthly principal on a regular or irregular basis in order to repay your mortgage sooner. A longer term mortgage can also allow a home buyer to purchase a home at a larger price point while knowing that they can pay off the loan amount in monthly payments over time.

Other mortgage terms can be between 10- and 20- years, but they are less commonly used.

Saving money in interest

Because interest is charged over time, a 15-year mortgage will allow the homebuyer to save money because the total amount of interest charged is less than that of a longer term mortgage. The monthly principal on a 15-year mortgage will be higher than a 30-year, but both will add up to the amount of the loan plus interest. If interest is compounded over 30-years, the amount paid would be significantly greater than what is paid on a shorter term mortgage.

For conventional fixed-rate mortgage loans, the interest rate will be fixed over the term of the loan, meaning that it will not increase or be adjusted. Because of this, a longer term mortgage will have a higher interest rate throughout the term of the loan. However, it is beneficial for homebuyers to not have variable interest rates through the term of the loan, especially if it is over 30 years.

Monthly payments

The main difference between shorter and longer term mortgages is the monthly payment. The principal payment amount for both mortgage terms will add up to the full amount of the loan, plus compounded interest. However, the principal of a shorter-term mortgage will be significantly higher and may require a higher source of income or lifestyle adjustment. Longer term mortgages will allow for lower monthly premiums so that the homebuyer can use these savings to pay off debt or save for retirement.

However, a general rule for lenders is that a monthly payment, including principal, interest, insurance, and taxes, should not exceed more than 28% of a homebuyer’s monthly income. This amount, as well as the term, will all be considered during a pre-approval for a mortgage loan.

Mortgage insurance

Many different types of mortgages will require mortgage insurance, at least for a period of time. It can be discontinued after the homebuyer has paid 22% into the equity of a home. It may also be negated by providing a down payment of 20% when purchasing the home.

Because the payments on a shorter term mortgage will be higher, the homebuyer will reach the amount of equity that they need to cancel mortgage insurance sooner than with a longer term mortgage. This is the only way that mortgage term can affect mortgage insurance, as many lenders will require it when borrowing more than 80% of the purchase price, regardless of the term.

Paying off early

Any mortgage can be paid off early. There are other ways to change the length of your mortgage, such as refinancing with your original mortgage lender or a different lender. If you choose to sell the home, the amount of equity that you have in the home can be sold and used to pay off the remainder of the loan amount.

Some mortgages such as a 5/1 Adjustable Rate Mortgage are intended to be paid off early to avoid a large increase in interest rate. Other mortgages may be ended at different times due to relocation, refinancing, and more.

Mortgage terms are one of the reasons that homebuyers are able to work with lenders to find a home that meets their needs and fits into their budgets. Mortgage terms should be approached in the pre-approval process, as they can greatly affect the amount that you will be granted for the loan.


Add CommentAdd Comment | Views: 1147 | Read more
May 3

Why you should get pre-approved for a mortgage

Why you should get pre approved for a mortgage 1


Let's be honest—Homes move FAST! We are currently in a sellers’ market, and people are seeking homes for their families at an accelerating rate. Now more than ever, pre-approval is an important factor in getting the home you want when you have the chance.

What is pre-approval?

Pre-approval is part of the mortgage loan process, but it doesn’t have to be a difficult one. It involves meeting with a mortgage lender before an offer is made on a property in order to get approved for an amount that you can then include in an offer to buy a particular home. Many mortgage lenders will be able to grant pre-approval for your home loan within the same day.

Being pre-approved will allow you to make an offer on a home when you are ready without having to wait for mortgage lender approval. Although pre-approval is not necessary to make an offer, most offers without pre-approval will not be taken seriously. Pre-approval shows the seller that your finances have been evaluated by a professional and you are actually in a position to pay the money that you’ve offered for the home. Many sellers and real estate agents won’t review an offer unless it comes with a pre-approval letter from a mortgage professional indicating that you will most likely qualify for a loan and that way the seller knows that the offer is a real opportunity for them to close the sale on their property.

Pre-approval is actually to the benefit of the seller, but it’s useful for buyers to get pre-approved early in the shopping process, especially if they are shopping a competitive market, so that when they find the home they love they can put an offer in and not then have to spend an extra day or two meeting with mortgage professionals to get pre-approved while the seller is potentially reviewing other offers, and likely selecting one to accept.

Make an offer with confidence

Pre-approval will allow you to get excited about the home buying process without having to worry about the possible loss of the property you love. Meeting with a mortgage professional should be a comfortable and easy task, but it should not be part of the process that slows you down.

You can also more confidently look into homes that you are interested in without worrying about your approval because you will better understand your home buying budget. Pre-approvals come with a maximum loan amount that will give the buyer an ideal range for purchasing price. This can also aid in making offers if a listing price is slightly above your pre-approved budget. If the offer is seen as legitimate, the seller may yield to a lower price in order to make the sale.

When is the right time?

Getting pre-approved is free, easy, and should not be time-consuming. If you find the right mortgage lender, which may be the first step towards buying a home, you should be able to ask for a pre-approval at the beginning of the home-buying process. This will give you an idea of your price range, as well as the ability to make an offer at any time when you find the perfect home.

Pre-approvals will often have an “approved” time period of 60-90 days to make an offer on a home. This is negotiable with your mortgage lender and should be an ideal time period during which to find a home. If the home buying process exceeds this time, you will need to reapply for pre-approval.

What will you need?

• Proof of income, either by 30 days’ worth of paystubs, 2 years of tax returns, or 2 years of W2 forms.

• Assets, such as bank statements or other documents that show your savings.

• Good credit. A score of 620 or higher for approval of an FHA loan.

• Documentation. A social security card, passport or ID, or other legal identifying documents.

If you want real speed with the homebuying process, schedule a meeting with a local mortgage lender to get pre-approved. This should be a comfortable, transparent, and informative meeting that will help you to realize your goal of owning a home. Pre-approval is a great time to learn more about mortgages, answer questions about the loan process, and to talk about your loan options.

Add CommentAdd Comment | Views: 1206 | Read more

Mortgage Rate Meter

' We found Rate Pro mortgage after working with several other mortgage companies all of whom failed to grasp our complicated financial situation and ... more '
by zac5
' We just purchased our first home and went through RatePro Mortgage to do our lending. I have worked in both big and small retail banks so I have seen ... more '
by zuser20140424054854787
' This was my 3rd home purchase and 3rd different mortgage company, and Rick and his staff at RatePro were by far the best. Rick was timely, honest, ... more '
by jweimer1968