Mortgage Matters

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Heidi, good morning and happy Sunday. Welcome to mortgage matters. I'm Heidi Griffith, your Director of Client Services and mortgage advisor with Geneva financial. My NMLS number is 2247754, company NMLS number 42056, thanks so much for joining us today. Unfortunately, Roland isn't on air today, but don't worry, he'll be back next week with some of the wisdom and straight talk he's known for. In the meantime, we've got a great show today. We're going to be breaking down the VA loan, sharing some practical goal setting tips to carry into the new year and giving you some easy budgeting strategies. Plus, I've got a great question of the week that we got that you won't want to miss. It's all about protecting your earnest money deposit when buying a home, so securing your money. So let's get into it. Let me start things off with VA loans, because it really is one of the best benefits available to veterans and active duty service members. Let's start things off with VA loans, one of the best benefits available to veterans and active duty service members. VA loans are a mortgage benefit that is backed by the Department of Veterans Affairs. They're designed specifically for veterans active duty service members and eligible surviving spouses. These loans make homeownership more accessible with benefits like zero down payment, no mortgage insurance and competitive interest rates, and the process is really straightforward. So let's talk about eligibility and who qualifies for a VA loan. First. VA loans are available to like I said, veterans who have served at least 90 days of active duty during wartime, or 181 days active during peace time, members of the National Guard or Reserve after six years of service, unless they've been called to active duty, which actually can qualify them sooner. And surviving spouses of service members who passed in the line of duty, or if they pass from service connected disabilities, as long as the spouse hasn't remarried. And there's different scenarios regarding who can go on a VA loan with the veteran. So if a veteran is married, their spouse absolutely can go on the loan with them. So combining both incomes will definitely increase their buying power. If the veteran isn't married but wants to buy a home with someone like a sibling, like a friend, like a fiance, it's possible, but only the veterans portion of the loan is guaranteed by the VA, so there would still be some down payment involved in that. So in cases where both borrowers are veterans, maybe they're not married, but they're both vets, they can combine their VA and actually then utilize both of their eligibility, and we've got documents that are going to be required. So a lot of times we hear that there's a lot of documents and a lot of paperwork that's required, it really isn't. So there are some documents that are in addition to documents that we need for other kinds of loans, but there's only a few, and they're easy additional items. First, the veteran's going to need their DD, 214 and that's going to verify their military service. If they're still active duty, a statement of service will be required instead. And another standard requirement is providing the name, contact information of their nearest living relative, and that's just part of the application process, and it doesn't involve the relative on the loan itself. It's just paperwork, and one of the most important documents is going to be the certificate of eligibility. We call it the COE on this end of the business, and this confirms that the veteran meets the service requirements for a VA loan. The good news is we at Geneva financial actually handle ordering that for our clients, all we need is their permission, and we take care of the rest, because our goal is to simplify the process so our veterans can focus on finding their dream home instead of worrying about paperwork. So if you have any questions, or if you'd like to get started, you can actually call or text us. We're at 702-540-0420, so let's talk about some myths surrounding VA loans, because there's a lot floating out there. There's a lot of bad information. And I'm going to start by telling you, in my previous lifetime, I was a real estate agent, I was a realtor. I was a realtor for over 20 years, and my dad. Had was a Vietnam vet. We had done a bunch of transactions together. I helped them buy and sell various properties. And as a real estate agent, I had bad information I had learned throughout the years, bad information, by the way, that VA loans were not only harder to do, but they cost the seller more. They took longer, and there were a bunch of hoops to jump through. Ma'am, was I wrong? There is a lot of misinformation out there, and one of the biggest myths I still hear today is that VA loans are too complicated or take too long to close. The truth really with a knowledgeable lender, someone who understands the VA loan, the process can move just as quickly as any other loan. We've closed VA loans in as little as 18 days from start, from the day we got the purchase agreement to finish when the buyer got their keys. And another myth is that the VA loans are riskier for sellers, or sellers have to pay more in fees. It's just not true.

Veterans are some of the most qualified buyers out there. They often have stable income, strong credit and a commitment to seeing things through the entire process. And another thing worth mentioning is how VA loan stacks up against down payment assistance programs. We have a lot of veterans that call us after hearing about down payment assistance and are curious. Well, here's the thing, VA loans are often a better option because they're completely zero down payment, no down payment. There's no second loan or any repayment obligations like you might have with a lot of down payment assistance programs, even the programs we work with, like Nevada housing and Nevada Rural Housing, although there's not a payment on the second, there is a second that must be repaid if you refinance or sell your home with a VA loan, that is not the case. There is no second. There is no repayment. It is a completely zero down loan, and there's no PMI mortgage insurance, which keeps monthly payments lower, plus VA loans can be paired with programs like Nevada housing divisions. Home is possible for heroes, and that will help them secure an even lower interest rate. So you don't have to use the down payment assistance because there is no down payment, but you can actually qualify and get a better interest rate. So why not? It's truly a winning combination for eligible buyers. The VA loan and home as possible can really maximize affordability and savings. And while I'm talking about veterans, I just want to take a quick minute to talk about homes for heroes. This program provides significant savings to those who serve our communities, including veterans, law enforcement, teachers, health care workers, firefighters and EMS. Our team at Geneva financial is really proud to be the number one homes for heroes team in both Nevada and also we're the top team in the country. It really is an honor to give back to those who have given us so much with homes for heroes. Heroes receive a lender credit, and if they're also working with a homes for heroes real estate professional, they're going to receive a check after closing, which actually helps offset costs and makes the home buying or refinancing process even more affordable. And when combined with a VA loan, these savings really add up. Plus there's no red tape, there's no paperwork to fill out, there's no hoops to jump through. It really is just a way to say thank you. And homes for heroes isn't just about the financial benefit, it's about us showing appreciation to the hard work and sacrifices our community heroes have given us we've helped so many, veterans, teachers, first responders find their dream home, and it really is one of the most rewarding parts of our work. So now that we've covered VA loans, and especially with no down payment and no mortgage insurance, I really want to quickly circle back to mortgage insurance, because this is something buyers need to understand, particularly if they're considering conventional or FHA PMI or private mortgage insurance is specific to conventional loans. It's required when borrowers put less than 20% down. Essentially, it protects the lender in case the borrower defaults on the loan. But here's the good news on a conventional loan, private mortgage insurance is not permanent. Once you reach 20% equity in your home, either by paying your loan down or through an increase in your home's value. Right as equity builds, you can request to have the mortgage insurance removed. And by law, your lender is required to cancel the private mortgage insurance automatically. When you hit 22% equity, the cost of PMI varies based on factors like your credit score, the size of your down payment, and the loan amount. So it's going to typically range from about point 2% to 2% of the loan amount annually. So for example, if you had, let's just say, a $300,000 loan, PMI could add anywhere. From 50 bucks to $500 to your monthly payment, and that's why credit is so important. When considering a conventional loan, the better your score, the lower your PMI. And so how does that compare to mortgage insurance on FHA loans? Well, FHA loans have their own version of mortgage insurance. It's called mortgage insurance premium, or MIP. The key difference is that MIP isn't tied to equity. For most FHA loans, the mortgage insurance lasts for the life of the loan unless you refinance or sell. And if you refinance, you're going to refinance into a different type of loan. An MIP is broken down into two parts. There's an upfront premium, which is 1.75% of the loan amount. Most borrowers choose to finance this into their loan so that they don't have to pay it out of their pocket at closing, so you can actually finance that. And then there's the annual premium, which is paid monthly, and that's going to range from point four, 5% to point five, 5% of the loan amount, and that's going to depend on the loan to value ratio and the loan term. So for let's go back to that $300,000 loan. If you're looking at an upfront premium of about $5,250 that's going to be added to the loan and the monthly mortgage insurance premium payment could be anywhere from 112 50 to 137 50. And while FHA loans are a great option for buyers with lower credit scores or smaller down payments, remember, mortgage insurance is going to be required unless you sell or refinance into a different type of loan. And then I'll come back to VA loans, because, again, one of the biggest advantages of the VA loan is that there's no mortgage insurance ever. Veterans, active duty service members, they both avoid PMI MIP, which is going to save hundreds of dollars a month and potentially 1000s of dollars over the life of the loan. So zero down, no mortgage insurance, and that really is a huge benefit. So when you pair that with no down payment and competitive rates VA, loans stand out as one of the best options for those who qualify, if you are a veteran or you know a veteran, please, please, please, understand that this is one of the best benefits that you receive, and that's why it's so important to work with lenders like us, who actually know the programs inside and out, whether you're considering a VA loan, a conventional loan or an FHA loan. We really are here to help you understand the pros and cons and make the best choice for you and your personal situation. And remember, if you're a veteran or an active duty service member, you've earned these benefits through your service, and it really is our privilege to help you make the most of them. So to all the veterans and active duty service members listening today, we'd like to thank you for your service and sacrifices. You've earned these benefits, and it really is our privilege to help you make the most of them. And to all the heroes out there, all the teachers, the healthcare workers, the firefighters, law enforcement and EMS. We're here to support you too. Homes for Heroes is just one of the ways we love to give back. So if you're ready to start your journey, or if you have any questions about VA loans, homes for heroes or anything else, please feel free to give us a call or text us. We're at 702-540-0420,

we'd love to help you navigate the process and get you into the home of your dreams. And because being part of this journey with our heroes is an honor we don't take lightly, let's make sure to let every hero know just how much they're valued, not just today, not just veterans day, but every day. So I'm going to go into our question of the week. Actually, we received a question of the week from Rochelle. She was one of our listeners, and I really do like this question. She called and asked us about a situation that her friend ran into while buying a home. Her friend ended up actually losing her earnest money deposit because the home didn't appraise at the agreed purchase price. And that stinks, because nobody wants to lose their earnest money deposit. Based on this, she said her earnest money deposit was 5000 remember, we always say that the earnest money deposit is going to be about 1% of the sales price, give or take. So I'm going to assume that this house was about a $500,000 house that didn't appraise, and Rochelle told us that this really made her nervous about buying a home, because she wanted to know how she was going to protect herself in a situation like this, if she moved forward with purchasing first of all, thank you so much for your question, and we completely understand your concern, because losing an earnest money deposit really is going to feel like a huge setback. Five grand is five grand, right? But the good news is there are safeguards in place to help prevent this from happening, as long as you stay on top of the details that are in your contract. So let's just start with the basics. Yeah, an earnest money deposit is essentially a good faith payment that shows the seller that you're serious about buying their home. It's usually held in an escrow account at a title company. So you would wire the money to the title company. They are a third party that is not interested, uninterested in the transaction, and they just hold on to that they follow the the rules that are set in the contract. Okay, so it goes to escrow, and it's applied to your closing cost or down payment. So in this instance, the earnest money was $5,000 if this transaction had gone to closing, then the buyer would have been able to use their earnest money deposit towards their down payment and or their closing cost. But if something goes wrong and the deal falls apart, like this one did right, that money could be at risk depending on your circumstances. So that's where contingencies come into play. A contingency is actually just a clause in your purchase agreement that allows you to back out of the contract without penalty. If certain conditions aren't met. That's where contingencies actually come into play, because a contingency is a clause in your purchase agreement that allows you to back out of the contract without penalty if certain conditions aren't met. In this instance, you would have got your earnest money deposit back. In this case, the appraisal contingency is key. It protects you if the home doesn't appraise for the agreed purchase price. And here's the important part, these contingencies, they have deadlines. So if you don't act before the deadline, the contingency expires, and again, your earnest money deposit could be forfeited. So if you're approaching a deadline and haven't heard from your lender or realtor, it really is important to reach out and get an update. Don't just assume everything is fine, stay proactive, and also know what's in your purchase agreement, because there's a lot of paperwork really and it really is easy to get overwhelmed by all of it, but understanding those deadlines and conditions that is essential, because your realtor and lender should walk you through these details, but ultimately it's your purchase agreement, so it's your responsibility to stay informed and follow up if something feels unclear or you just don't know. And Rochelle and for anyone else who's listening, who could be nervous about losing their earnest money deposit, the key takeaway is this, know your contingencies, pay attention to deadlines and communicate with your team. If you've got the right people aside, you These risks are very manageable. And one more tip, make sure that you're working with experienced professionals. Your realtor and lender are going to play a huge role in keeping the process on track. So if you ever feel unsure or need clarification, do not hesitate to ask. A good team is going to make sure you're protected every step of the way. So we hope this answered your question and helps ease some of the concerns about buying a home. Rochelle, thank you again for sending that in to us. I'm going to repeat that so Rochelle, we hope this answers your question, helps ease some of your concerns about buying a home. Thank you again for calling in and for everyone else. If you have any questions about the home buying process, financing or anything else, please feel free to reach out, send it our way. We'd love to feature it on an upcoming show. You can call or text us. We're at 70254004, oh, 25400420, again, that number is 702-540-0420, so I want to shift gears a little bit. I want to talk about setting financial goals for 2025 because it is almost here, isn't it. So last week, I actually talked about the importance about having clear goals, and today, let's focus on how to make them more actionable. Because when it comes to financial goals, one of the most important things is to make them specific and measurable. So for example, instead of saying, I want to save for a house, you want to set a goal like I want to save $10,000 for a down payment for my home by December 30, whatever that looks like to you. So this is great in any type of goal setting, not just home related. So if you've got a goal to, let's just say lose weight, because who has a goal to lose weight around this time of year, I do. If you've got a goal to lose weight, you just don't write down lose weight. That's not sending you in any direction. That just says what you've been saying for a long time. You want to lose weight. So instead of just putting that down, you're going to want to put down. I want to lose, or I'm going to lose. Let me rephrase that, I am going to lose x pounds by this date. And to make it even more measurable, right? I'm going to lose x pounds by this date. I'm going to save X dollars for my new home by this date. By. Doing x. So that could be by working out three times a week, by eating healthier, by taking $75 out of each check and putting it into an account where I can save money. So that's a really easy way to jump in and start making those those those goals more manageable to you. And I think another great tip is actually just prioritizing your goals, so you can have a bunch of different goals, but if you're working on improving, let's say your credit score, you want to focus on paying down high interest debt or setting up automatic payments to avoid missing due dates. Those are always great. So you want to you want to figure out what are those most important goals and work with them first. So if purchasing a home in 2025 is your goal, right, and you want to get your credit score up again, the number one tip, set up automatic payments. I said that, and it really is just that simple, because a lot of times people have late payments, and that hurts our credit right? It could hurt it substantially. 130 day late could be anywhere from 60 points to 140 points on your credit report. And when that happens, it could have just been an error. Ooh, I forgot to pay my bill. Well, if you set up automatic payments just the minimum, they get paid every month, you're not going to get that that late payment ding on your credit report, and you can always go back and add whatever else you were going to pay to that minimum payment. So if the minimum payments 25 and you were going to pay 150 that month, and you go and just pay the remainder of that. So it's not just about perfection, really, it's about progress. Celebrate the small wins along the way, whether it's increasing your savings or in seeing an improvement in your credit score, but these things will really help you in the long run. And going hand in hand with goals, right? Is budgeting? Because I believe that budgeting is actually the foundation for achieving any financial goal. And one approach we recommend is the 5030, 20 rule. So you're gonna use 50% of your income for necessities, that would be your rent or your mortgage, that would be your car payment, that would be insurance, that would be utilities, 30% for wants, okay, so that could be your nails and hair that could be

saving up for a home that's something that you want. You can still use that 30% towards that, or, you know, Christmas presents, all of that kind of stuff. And then you want to take 20% and put it into savings or utilize it towards paying down debt. Now, if it were me, and you're trying to pay down debt and save, the best thing to do is kind of cut that 30% of wants down a little bit. But the 5030, 20 rule really does work well. So if you're saving for something specific, like I said, like a home, create a separate savings account for it, automate a portion of your paycheck to go directly into that account. So if you can afford 40 bucks a month, or if you can afford $800 a month, whatever that looks like to you, take that money and instead of commingling it into your current bank account, put that into a separate savings account, preferably a high yield savings account. Most online banks offer them. So I know that, discover, I know that Capital One a bunch of them offer high yield savings accounts, and what will happen is you're going to earn interest on that money. Right now, most of my high yield accounts are sitting at 4% or so. So you're going to make money on the money you're saving, and then you're going to be surprised at how quickly it grows when you don't even have to think about it. Another thing I like is to actually review your recurring expenses. This is a big one, and I'm totally guilty of it. Are there subscriptions or services that you aren't using? How many times have I signed up for a subscription because I wanted to see one show? You know, I signed up for a streaming service because there was one show that I had to watch, and then I forgot about it. If you're not using it, canceling that is going to actually free up the extra money to put towards your goals. So one of your goals, and maybe one of the top goals at this point, moving forward, should be go back into your bank account, go through all of your charges and make sure there's not stuff you're paying for that you do not use. Well, that is going to wrap up today's show. We covered a lot everything from the benefits of VA loans and debunking myths to understanding mortgage insurance for conventional FHA loans and that there is no mortgage insurance for VA loans, and even how all of these programs compare. Plus, we had a great question the. Week about protecting your earnest money deposit, and we shared some powerful ways our community heroes can save through homes for heroes, it always really is such a privilege to talk about these programs and tools that make home ownership accessible. And don't forget, we actually have some exciting homebuyer education classes coming up, starting again in January. These are perfect opportunities to learn more about the home buying process and make 2025 the year you find your dream home. If you'd like to register for any of those classes, please, you can always feel free to reach out and as always, if you have any questions or want to explore your options, whether it's a VA loan, FHA, conventional, or, quite honestly, anything else, please feel free reach out. We'd love to hear your story and help you take the next step towards home ownership. You can call or text us. We're at 702-540-0420, again, that number is 702-540-0420, thank you so much for spending your morning here with me where mortgage matters, Roland and I will be back next Sunday at 7:30am right here on K, U, n, b, 91.5, with more insights, advice and tools to guide you towards your dream of home ownership. And as Roland always ends each show, make sure to stay true to yourself and to Your Mind. Have a great week ahead. Everyone. Bye. You

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