Summary

In this conversation, Brian Willingham, an expert in VA home loans and Streamline refinancing, discusses the benefits and intricacies of VA loans compared to conventional and FHA loans. He emphasizes the importance of working with knowledgeable lenders, understanding the VA funding fee, and navigating the transition from military to civilian life when purchasing a home. The discussion also covers VA loan limits, the Streamline refinancing process, and the potential costs involved, providing valuable insights for veterans and service members looking to utilize their VA benefits effectively.

Chapters

00:00 Introduction to VA Mortgages and Streamline Refinancing

02:52 Understanding VA Loans vs. Conventional and FHA Loans

05:49 Choosing the Right Lender for VA Loans

08:57 The Role of Mortgage Brokers vs. Banks

12:57 Explaining the VA Funding Fee

14:57 Navigating Disability Ratings and Funding Fee Refunds

19:23 Challenges of Buying a Home During Transition

23:24 VA Loan Limits and Entitlement Explained

27:38 Streamline Refinancing: The VA Earl Process

30:32 Cost Considerations for Streamline Refinancing

35:06 Due Diligence in Refinancing Decisions

38:54 Final Thoughts on VA Loans and Choosing a Lender

Takeaways

• VA loans typically require no down payment and no mortgage insurance.

• Choosing a lender experienced with VA loans is crucial for success.

• The VA funding fee can be waived for certain veterans.

• Streamline refinancing is a quick and easy process for existing VA loan holders.

• Understanding your entitlement is key to maximizing VA loan benefits.

• VA loans have no maximum loan amount for first-time users.

• Interest rates for VA loans are generally better than conventional loans.

• It’s important to evaluate the total costs when refinancing.

• Communication with lenders should start early in the transition process.

• Veterans should ensure they are working with knowledgeable professionals to leverage their benefits.

Links

Brian Willingham – https://mission.mortgage/

Payment Calculator – ⁠https://whatsmypayment.com/va-entitlement-calculator/⁠

Schedule a consultation with Mike: https://nextmissionfinancialplanning.com/contact/

Schedule a consultation with Amy: https://www.instarfp.com/contact

Transcript

Amy (00:00)

So today we have a guest who is an expert in VA home loan mortgages and the Streamline refinance option. Super excited about this. The VA home loan is one of the most ⁓ widely, know, one of the benefits that people are most eligible for. It’s one of the kind of lowest hurdles, if you will, to get access to. So it’s an amazing benefit. It is something that probably everyone at some point will do, which is buy a home. And we talk about it in context of the transition from the military, which is kind of a tenuous time. ⁓ So Mike, anything additional to add?

Mike Hunsberger (00:37)

No, definitely listen. I think you’re going to enjoy it. I learned a lot, so I’m sure our listeners will also. So sit back and enjoy this episode.

Amy (01:20)

So today we’re going to continue with our interviewing of experts. ⁓ Today we have Brian Willingham ⁓ to end to talk with us about VA mortgages and streamline refinance. So these are topics that tend to come up quite a lot, particularly when with interest rates on the move, but especially when you’re getting ready to retire. So Brian, why don’t you tell us a little bit about your background and a little bit about what you do now.

Brian Willingham (01:47)

So I was born in Maryland, born and raised in Maryland and enlisted in the Marine Corps in 1993, served for four years and got out, went back to Maryland, went to University of Maryland and graduated from there with a business degree, did a few things here and there and then found my way into the mortgage business in 2002. And I’ve been doing that ever since. And finally,

started my own company almost a year ago today called Mission Mortgage Company. So I’m an independent broker owner of Mission Mortgage.

Amy (02:23)

Awesome, congratulations on the soon to be one year anniversary or about one year anniversary.

Brian Willingham (02:28)

Thank you.

Thank you.

Mike Hunsberger (02:30)

Yeah,

that’s awesome. So, ⁓ you know, lot of different options out there for mortgage financing, VA being one of them, but there are also some others. Do you mind giving us a little comparison and contrast of what kind of the difference is and why somebody might consider using their VA benefit?

Brian Willingham (02:52)

Sure, sure. So in general, you’ve got VA loans, conventional loans, and FHA. And 99 % of people are getting one of those three and typically it’s going to be a 30-year fix. So all of them have 30-year fixed rate options or shorter or adjustable rate options in some cases. But for active duty and veterans, for people who qualify, VA is generally going to be the best deal out there.

It’s got a couple of big advantages. Number one, for most people, it’s not going to require any down payment. Even with no down payment, there’s not going to be monthly mortgage insurance on the loan. And the interest rates are going to be typically better than conventional, similar to FHA, but FHA has got a lot of mortgage insurance. So VA loans with that combination, no down payment, good rates, no mortgage insurance, generally going to be the best deal.

for people who qualify for it.

Mike Hunsberger (03:54)

Is that rate ⁓ piece where VA’s are, you know, the best? that always been the case? ⁓ Or is there, I sort of remember, I think one time when we were looking for a house that, you know, VA was a little bit higher, but now with our last house, it was a little bit lower. So I’m just curious if that fluctuates some or if that’s now kind of the general rule.

Brian Willingham (04:19)

it’s been the case as long as I can remember early in my career. So early to mid two thousands, I didn’t do a ton of VA loans actually didn’t understand them at that point. So I’m not too sure where the rates were back then. One of the things that I do see a lot though, is that VA rates should be better in most cases than conventional conventional. There’s a lot of things that affect the interest rate though. You’re.

income, credit scores, down payment, ⁓ where you’re buying and your income compared to the average in that area. All those things can make pretty significant differences in the interest rates. So for some people, conventional can be fairly competitive with VA, but also a lot of banks for whatever reason will not offer the lower rates on VA that they could.

I’ve worked for banks like that before and that’s kind of where I learned it is some banks will offer similar rates on VA as they would on conventional and that just makes VA more profitable for them. But in general, if you’re doing an apples to apples comparison, VA should have better rates than conventional in most cases and should be pretty similar to FHA. Like I said, FHA, there’s a lot of mortgage insurance on those loans. So VA generally will beat those out.

Mike Hunsberger (05:45)

Okay, yeah, that makes sense.

Amy (05:49)

And I’m glad that you brought up and you kind of said early in your career, you didn’t do a lot of VA mortgages and said, you didn’t understand them. And I’m actually glad that you said that because the point there is that ⁓ they are, you need to work with somebody who understands a VA loan, right? So can you just talk to us a little bit about when it comes to finding a mortgage, ⁓ you might choose one lender over another lender?

Brian Willingham (06:19)

Sure, VA, VA is kind of a whole different animal in the mortgage world. It has a lot of similar rules to conventional and FHA, but it also has a lot of very unique rules, whether that’s who’s eligible, what kind of down payment is required, or just some of the standard underwriting guidelines like debt to income ratios and things like that. VA has a lot of very ⁓ unique rules.

compared to the other loan types. And if you don’t do a lot of them and see a lot of different scenarios, you don’t really know those very well. So I know from my own personal experience, when I got into the mortgage business, the person that trained me didn’t really know VA. So I didn’t learn them until a little later on when I started realizing all the benefits of them for veterans like myself and took it on myself to learn them.

A lot of lenders are the same way. A lot of companies don’t really train the loan officers on VA because VA is a lot less common than FHA and conventional. for a lot of companies, if you’re not going out and looking for VA buyers or VA customers, then you’re just not going to do very many of them. And then as an individual loan officer, if you don’t do many of them, you’re not going to learn all the ins and outs of them. So it can be

pretty tricky. as far as finding a good lender, interest rate definitely matters. You don’t want to pay more than you should for a loan. And there are a lot of good lenders out there that are offering good interest rates. I would typically say if you talk to a lender and you get the sense that maybe they’re not 100 % comfortable with VA loans or that they don’t do a lot of them, if they tell you anything that

seems like it might present a problem, maybe double check it with another lender. A lot of people will just go with the lender that they’re realtor recommends, which is usually a good sign because if you’re realtor recommended a lender, they probably have experience with them. They know they can trust them to take good care of you and deliver on what they promise. But that doesn’t necessarily mean they know VA. They might be really good at conventional and FHA, and they might be good loan officers, but they may not really know.

VA in and out. So it’s probably a good thing to ask the loan officer. How many VA loans do you do? How many have you done in the last year or something like that? Just to get a sense of what kind of experience they have with it.

Amy (08:57)

Those are all really good points. And there’s something else that I want to kind of draw out because I didn’t understand this before I was in the finance world. ⁓ Can you talk about the difference between going to a bank for a loan versus someone like yourself where you’re a mortgage broker?

you’re shopping across different ways of funding loans, right? Can you just kind of explain that to listeners who may not be familiar with that idea?

Brian Willingham (09:26)

Yeah, absolutely. So with VA loans, ultimately the loan is going to be guaranteed by the VA. So every bank is going to follow to some degree VA’s rules. ⁓ Every lender will follow VA rules. Some of them will have what are called overlays though, where they’ll say, ⁓ okay, VA doesn’t require this, but we do, we’re just going to be a little bit more conservative on one thing or another. A good example is credit score.

VA doesn’t actually have a minimum credit score to get a VA loan. So there’s lenders out there that will do VA loans down to a 500 credit score. But most banks are going to say, our minimum is 620 or something like that. ⁓ As a mortgage broker, I’m signed up with right now, think it’s 13 different investors that I can send loans to. So my advantage as an independent broker is

I’ll be your main point of contact. I’ll help you all the way through the process, but ultimately I’m going to send the loan to where we can get you the best interest rate or if there’s a lender that has better guidelines like lower credit score limits or something like that, then we can take your loan there. When you go through a bank, the bank is essentially just following their own rules that they’ve set and they’ve got their set of interest rates. The advantage that banks

like to ⁓ talk about compared to mortgage brokers is that everything is done in house. They control the process start to finish. And that is true. And in some cases, working through mortgage brokers, ⁓ it can be a little bit more difficult. If I’m working with an investor that I don’t do a lot of business with, or they’re not the best on customer service, maybe we sent your loan there just to get a slightly better interest rate or something like that.

can sometimes add a little frustration to the process where I don’t have direct control over the loan. Where at a bank, when I worked at a bank as a loan officer, I could walk down the hall and talk to the underwriter. Now I’ve got to call somebody at a different company. And so there are advantages and disadvantages. My experience as a broker is that the investors I’ve been dealing with are very responsive. So that kind of takes away a lot of the advantages that the banks have.

Ultimately with the bank, are controlling the loan from the whole, you know, start to finish all the way through closing. After closing, almost everybody ends up transferring the servicing of the loan. There’s a whole industry of servicing loans and getting paid for that. So banks like to make loans and then sell the servicing rights to somebody else. So regardless of who you go through upfront, it’s almost always going to get transferred after closing, no matter who you deal with.

Amy (12:21)

Gotcha. So I think the key takeaway there for listeners is that if you go to a bank, you should shop several banks. There could be differences between the banks. ⁓ Or you can have a broker shop other alternatives for you. ⁓ So I think that’s the key takeaway for a lot of listeners. And Mike, think you have some questions on funding fee, kind of moving beyond the selecting of the lender.

Mike Hunsberger (12:44)

Yeah, yeah, no, no, great info. But yeah, so one of the things with the VA is the funding fee. Can you talk a little bit about that and how that gets factored in?

Brian Willingham (12:57)

So the funding fee is basically what ⁓ literally funds the VA loan program. The VA loan program, last I heard, does not cost the taxpayers any money. It’s completely financed through the interest that they earn on the loans and the funding fees. So VA is generally going to charge a funding fee on every loan. The exception to that is if you have any kind of disability rating through the VA or if still on active duty.

If have a Purple Heart, you can get the funding fee waived. Or if you’re nearing the end of service and you looks like you will get a disability rating, sometimes we can get the funding fee waived in advance. But the funding fee itself, if you do have to pay one, it’s a fee that the VA is going to charge upfront. They generally will let you add it onto the loan amount so you don’t have to pay it out of pocket at closing. And how much it is will depend on if you’ve used your VA mortgage benefits before.

or not and how much of a down payment you’re making. for example, when I bought my current house, I was using my VA benefits again and I put no money down. So the funding fee ended up being 3.15%. That’s what it was about five years ago. That’s still what it is for what they call subsequent use, no money down. So that’s about as high as it gets. Most cases it’s going to be that or below if you’ve

never used your benefits before. think it’s 2.3 right now off the top of my head. ⁓ So it’s a percentage of the loan amount, and then they just add it on to the loan amount in most cases, unless it’s waived.

Mike Hunsberger (14:41)

No, that’s great. Yeah. And so again, you mentioned at retirement, you know, if it’s projected, but if you’re buying before you retire, any way to get a refund there or how does, how does that work?

Brian Willingham (14:57)

So I’m usually not involved in this part of the process. So I’m not, I haven’t seen it done before, but the VA guidelines say that if you were to buy a house and pay a funding fee and then earned a disability rating, if that rating is effective, basically backdated to before you bought the house, then you can apply to the VA and get the funding fee waived.

But let’s say you buy a house on September 1st and then you leave the service and your disability rating is approved October 1st, effective October 1st, there’s no way to get that refunded. You’ll never pay it again if you do any more VA loans, but you can’t get it refunded. But if they were to say approve it on October 1st, backdated to August 31st in that example, then you could apply to have it refunded to you.

Mike Hunsberger (15:51)

Yeah, that honestly actually happened to me. We bought our house. I was on terminal leave, you know, one August. I think we closed. My retirement wasn’t effective till one November. And, you know, that’s when my disability was rated back to. So, yeah, I didn’t qualify for that. I looked at that and I was like, ⁓ but yeah, if you need if you need housing before you actually, you know, you’re officially separated, it gets more challenging. So just, you know.

listeners keep that in mind if you are approaching that window. And now we see it more with folks still in the skill bridge where they maybe even buy in earlier than terminal leave type thing that you will pay that funding fee, even though, yes, you probably eventually will get your disability rating at that point. So just something to keep in mind.

Brian Willingham (16:44)

Yeah, one more point on that. There is a process you can go through. actually working on one right now where if you, because most service members have a pretty good idea before they leave the service, if they’re going to get some sort of disability rating, they may not know exactly what that’s going to be. With the funding fee, it doesn’t matter how much your rating is. As long as you get, I think the minimum the VA ever gives is 10%. As long as you get 10 % or more, then the funding fee is waived.

So if you are in the process of leaving the service or coming up on that soon, and you’re going through the process of getting your disability claim ready, there is a way that we can take your medical records and submit it to the mortgage side of the VA before you’re closing and ask them to waive the funding fee. And they’ll basically look at your medical records and say, well, we know this person is going to get some kind of rating.

Doesn’t matter what it is, but we can sell for the medical records, they’ll get something. And then they’ll give me a new VA certificate of eligibility, which is the form we need to do any VA loan. They’ll give me a new certificate of eligibility that waives the funding fee. So even if the disability isn’t fully approved yet, if it’s in process and it looks likely, we can try and get that funding fee waived ahead of time.

Amy (18:08)

Sounds like it’s worth asking about. ⁓

Mike Hunsberger (18:09)

That’s great. Yeah.

Brian Willingham (18:13)

Yeah, it’s definitely worth it in

the case I’m working on right now. It’ll save them. I think it’s $10,000 somewhere in that that range. So and the process itself is pretty simple. It’s one form. I fill it out. I send it to them to sign. They send it back to me with their medical records and I submitted to the VA. The last one I did was a couple years ago. That one took about a week. This one were a little over a week and still don’t have an answer, but I would expect one here pretty soon. So it’s.

It’s definitely not a difficult thing to do. And the worst thing they can do is say, no, there’s no fees for it or anything like that. So it’s, if, you’ve got the medical records put together and we can submit it, it’s definitely worth trying.

Amy (18:58)

Yeah, sounds that way. mean, and trying to buy a home as you retire from the military is a little fraught anyway. ⁓ You know, it’s kind of a challenging time because income changes and things like that. Can you just, you know, sort of give our listeners an idea of why that can be such a challenging time and maybe how to set themselves up for success in buying a house?

Mike Hunsberger (19:06)

Thanks.

Brian Willingham (19:23)

Yeah, absolutely. So every situation is different. Everyone’s ⁓ process of leaving the military is a little different. so this is just speaking in generalities. But when we’re looking at qualifying someone to buy a house, if you’re leaving the service, then we still have to document what your income is going to be. And that’s generally the rule of thumb is

Any income we need to use to qualify, we just have to be able to document it. So if it’s disability income or retirement income, then we have to have something in writing from the VA that says what it’s going to be. And that can sometimes be a little tricky to get right around the time of the end of your service, because unless it’s changed since the last time I talked to someone about it, generally.

You can put all that stuff in motion, but you’re not going to get anything official from the VA that says what your disability amount is or your retirement amount until a little bit after you’ve left the service. And if you’re trying to buy a house in that window, can be, pardon me, that can be a little tricky. With civilian income, it’s a little bit easier, especially if you’re going into a salary job, because then we just need an offer letter that says what your salary and your start date is going to be. ⁓

The veteran that I’m working with now on the funding fee waiver, that’s his situation. He’s on terminal leave already. He’s got a civilian job. starts ⁓ about a week after our closing, but we have an offer letter so we can use that income. ⁓ It can be a little more difficult on jobs that are hourly or will include bonus or commission since we don’t can’t really predict what that will be.

Sometimes if the company can get us something that says it’s definitely going to be 40 hours a week, we can use that if it’s hourly, bonuses and commissions can be tricky. Self-employment income is ⁓ much more difficult. Generally, we’re going to need a year or two of history on that before we can count that as stable and predictable income. So in general, it’s every, like I said, everybody’s situation is different.

To me, the best thing to do is just start talking to a lender as early as possible. Once you have an idea of what your plans at the end of service are gonna be, do you wanna buy right away? Do you have a civilian job lined up? Those types of things. Then we can get a much better idea, but it’s never too early to start having the conversation just so you know what your options will be.

Amy (22:04)

Awesome. I’m sorry, I was going to say, you know, we do have a lot of service members that end up, you know, wanting to start their own business and things like that. So I think it’s a great idea for people to immediately, as soon as you know that you’re transitioning, put it on your list of things to go find as a lender to start talking with, especially if you plan to start a business.

Mike Hunsberger (22:05)

No, yeah.

Brian Willingham (22:29)

Absolutely. And I’ve had people that I’ve talked to ⁓ two years ahead of their discharge and just kind of stayed in touch and worked things through all the way through when they left the service and when they bought. I’ve had people that I’ve talked to right before they left the service who didn’t end up buying until two or three years later. ⁓ it’s like I said, it’s never too early to start having the conversations and stay in touch. And as

the situation develops, can adjust and figure out what your options are.

Mike Hunsberger (23:04)

Yeah, that’s great. ⁓ So moving on to kind of the VA loan limits. ⁓ I know this has also changed ⁓ from a while ago, but is there a max benefit that you can use or a max price on a house that ⁓ you can get, Brian?

Brian Willingham (23:24)

So it’s pretty easy now if you’ve never used your benefits before. Basically, VA has no maximum loan amount and no minimum down payment required regardless of the sales price of the house. So ⁓ if you qualify for it and you want to buy a $5 million house and get a $5 million loan, VA says you can do that. That is an area where a lot of lenders will have their own overlays and say, our

Our max is 3 million or over 2 million. want a down payment or something like that. But as far as VA goes, their guidelines say if you have what they call full entitlement, then no down payment is required as long as you qualify for that loan, as far as income and debt and other things like that. Where it gets fairly complicated is if you have used your benefits before and not had them fully restored. So

A really common example is someone is on active duty for a long time. They’re married. They have a family. bought a home. Now they’re leaving the service. They’re moving back to wherever they’re from and they want to buy a house there. They still have that other house at their prior duty station and they’d like to keep it as a rental, but it has a VA mortgage on it. So they use some amount of entitlement when they bought that house and used the VA loan and they haven’t had that entitlement restored. now they have.

⁓ some amount of entitlement, but not full entitlement. And when that happens, then there’s a formula that says, okay, based on the price of the house you want to buy, the county where it’s located and how much entitlement you have remaining, here’s your down payment required, if any. Sometimes even people who don’t have full entitlement can still do no money down on the new house. And sometimes they have to do, you know, pretty

decent sized down payments. all just depends on the amount of entitlement they have remaining, the price and the location where they’re buying. And ⁓ I thought about this after we were ⁓ emailing about some of the things we were going to talk about. There’s a website where you can plug in that information and it will tell you exactly how much your down payment would be required. And I can send you guys that link and you can put it in the show notes if you want.

The trick to that is you have to know how much entitlement you have remaining, you can, ⁓ you veterans can get their own certificate of eligibility from the VA website. I always pull them for my customers. It takes me about two minutes to do it. So it’s really easy for me to, ⁓ but if someone is a DIYer, you can go to the VA website, get your own certificate of eligibility, and then plug those up numbers into this other, ⁓ public website and.

get an idea of what you might be looking at. I would always recommend talking to a lender on that though, just to double check. It is a little bit of a funky formula. So I would always double check those numbers with a lender before you start making any decisions.

Amy (26:21)

That’s really all.

But it’s, mean, it’s a good starting point. ⁓ And quite honestly, I think it probably happens fairly often because even if somebody doesn’t wanna see, keep the house as a rental, they, you know, it may take longer to sell than you had expected and you need a home to live in. So you’re gonna purchase this home, it’s gonna close a few months before your other home, that entitlement is still tied up ⁓ regardless of what your intentions are with the house. So I think that’s a great explanation. And one more reason why you should talk to

lender sooner rather than later when it comes to transition from the military.

Brian Willingham (27:07)

Definitely.

Amy (27:10)

⁓ Now we’ve gone over some, you know, quite a few details about VA loans. We know they’re complex. ⁓ One of the things I kind of want to turn our attention to and I fully expect that the activity will pick up on this pretty soon. So I mentioned Streamline, the official name of the Streamline refinances, the interest rate reduction refinance loan or IRRL, three Rs, I three Rs N and L.

Typically people are finding these offers in their inbox ⁓ and maybe even in their email inbox. ⁓ Can you just tell us a little bit about what this is and how it works and all that kind of stuff?

Brian Willingham (27:55)

So in the mortgage world, call it an Earl instead of the I, R, L, whatever. So Earl or Streamline are the generally accepted jargon for that. Basically what it means is if you have an existing VA loan and all you want to do is refinance it to get a better rate, then the VA will say, okay, all you’re doing is putting yourself in a better financial position and less risk for us.

So we’re not going to worry about verifying your income. We’re not going to worry about doing an appraisal. And unless you’re bringing a bunch of money to closing, for whatever reason, we’re not going to verify your assets. ⁓ Some lenders, some of the investors I work with will also do it with basically just one credit score and a mortgage history. They won’t even look at anything else on your credit report. So it’s really easy. It’s not.

It’s not too much more difficult than basically we send you the loan application paperwork to e-sign. You sign that, send back three or four pieces of paperwork, like homeowners insurance and a couple other things. The underwriters approve it. And then we set up the closing, do a title search too. So there’s a title company involved in most cases, but it’s, it can go really, really quickly and it’s really easy to do. just closed one in 10 days. so it’s super easy.

There are some limits to it. VA says you can’t do it too soon after you got the existing loan. You have to save a certain amount relative to your closing costs. So there are some rules on it. But essentially, if you’re just going from 7 % to 6%, it’s super easy. And the reason why veterans get so much junk mail about it is because for lenders, it’s really easy to do, but they still make money on it.

by doing the new loan and then selling the loan servicing or basically getting the guarantee from VA on it. So lenders love them because they still make money on them and they’re really easy to do. And that’s why veterans get so much junk mail about them. it’s kind of the good with the bad. It’s a great option that people have, but you got to deal with the junk mail and the phone calls and text messages and emails.

Mike Hunsberger (30:22)

And what’s, is there a ballpark cost on that? Is there, or, you know, is there any kind of funding fee tied to that or? ⁓

Brian Willingham (30:32)

So the funding fee is half a percent unless you have a funding fee waiver. So it’s a pretty low funding fee. Generally, you’ve got some standard closing costs. There might be a lender fee, title company fee, and title insurance. ⁓ Some states will tax refinances. So they basically tax you on the new loan amount or the difference between the old loan amount and the new loan amount. But that varies.

significantly from state to state. So it really depends on the loan amount and the state you’re in, what those closing costs will look like. What a lot of lenders will advertise and what I’ve done a lot too is what we call a no cost refinance, which is not technically an accurate term. But basically what happens is there’s always going to be closing costs, but we can give the homeowner a little bit higher interest rate.

and in exchange for that interest rate, we’ll pay the closing cost for them. And for some people that makes sense. For some people it makes more sense just to pay the closing costs and get a better rate. But it is an option that’s out there. So if you see any advertisements that say no closing costs, that’s what they’re going to do is they’re going to basically give you a little bit higher rate and pay the costs on your behalf. They shouldn’t technically be advertising it as no closing costs because there’s, you know, they can’t control what the state

may charge or the title insurance companies, but they’re paying it on your behalf out of the interest rate. so what we look at in those circumstances is how long are you planning on being in the house? How long you plan on keeping this mortgage? Does it make sense to pay some fees and get a lower rate, save more money in the long run? Or maybe if you only are thinking you’ll be in the house for a few years, let’s get you a better rate than you have, but don’t.

don’t pay any closing costs, we’ll use that lender credit to pay them for you. So every situation is different. And I always try and look at those options with everybody.

Mike Hunsberger (32:38)

Yeah, or even if you think, hey, rates may continue to drop, do it, you know, short time and then, you know, keep your fingers crossed that they do go down and you can potentially do it again if it’s if it’s still lower at some point. So, yeah, no, all great points to factor in. So.

Amy (32:38)

And

Brian Willingham (32:55)

I’m,

I’m a little weird in this sense from being in the business. I’ve done. refinances to save a quarter percent before, but we use the rate to pay all the closing costs. And when you refinance, there’s always the way the numbers work out. There’s always a month where you don’t have a payment. If you want to structure it.

This way you can make it so that you go two months without making any payments. So I’ve done it before where I went two months without making any payments, dropped the rate a quarter percent and everything was rolled into the loan. And I still ended up with a little bit lower payment, but a couple of months worth of monthly payments in the bank. I don’t recommend that for everyone, but I say that just to emphasize how easy the process can be that it’s, I’ve done it for, you

pretty minimal savings before, but I also do this for a living, it’s easier for me.

Amy (33:53)

⁓

I mean, I think your point is well taken is that there are circumstances where that may make perfect sense. Particularly if you are leaving the military, you’re not planning to leave the area that you’re in. So you own your home. Even if interest rates are just a tiny bit lower than where your mortgage is, it might still make sense if you didn’t have enough time to build up your cash cushion and now you need to give yourself a little breathing room while you find a job. ⁓

while it’s not the rule of thumb advice, it might be the right answer. And it really kind of depends on your situation. one ⁓ of the things I want to kind of foot stomp here is because we get so many of these notices and my clients get a lot of notices. ⁓ we’ve talked about this, Brian, you and I have talked about this where…

lenders will say your payback is two months or something and it’s not quite calculated correctly. So do you have advice for people in making sure that they’re doing proper due diligence in really what the loan is gonna cost them and what it’s gonna save them and when their breakeven point really is.

Brian Willingham (35:06)

Yeah. So one of the things, especially on the Earls that you see a lot of lenders advertise is really low interest rates. And then they gloss over what the fees are. They really sell the interest rate. And again, every situation is different. For some people that makes a lot of sense, but I’ve seen so many times over the years where a past customer of mine will call me up and say, Hey, I got this thing in the mail. I talked to this lender. They’re going to get me.

3 % and I’m at 5%. Does this make sense? And it sounds great. And then you look and they’re charging $25,000 in fees. And so then it’s a different conversation. It’s like, well, 3 % is great, but are these fees worth paying to get there? So you have to take the whole thing into consideration. Watch how much is getting added onto the loan because that’s the other thing with the Earls is

you can, what we call roll in most, if not all of those closing costs when you do them. So I can set ⁓ an URL up where someone’s getting a lower rate and a lower payment and everything is rolled into the new loan, but that doesn’t mean that’s a great deal for them. ⁓ So, especially if there’s a lot of high fees upfront, some people might be fine with that. And if you plan on staying in the house long-term, great.

like get that really low rate, but you have to be careful of what the fees they’re charging are. Even if they’re rolling it in, it’s still a fee that’s being paid. Always look at lenders have to give you a loan estimate when you start the loan and they have to give you a closing disclosure before you sign the paperwork. So always look at that. Make sure that the fees are in line. One thing that VA put in a few years ago was some kind of guardrails to keep lenders from.

churning these Earl loans and abusing customers. So there’s rules now that say if the customer isn’t recouping the closing costs, I think it’s 36 months off the top of my head. If their monthly payment isn’t going down enough to recoup the fees within 36 months, you can’t do it as an Earl. So some of the abuses in the past are gone, but they’re not completely gone. You still have to, still have to watch and see what’s going on with the rates and the fees.

Mike Hunsberger (37:36)

Brian, this has been great. ⁓ Did you have something else?

Brian Willingham (37:40)

I was also going to say VA adjustable rate mortgages have come back recently and I’m getting a lot of junk mail advertising VA arms. So that’s the other thing you have to watch out for. Arms are adjustable rate mortgages. They offer a fixed period at the beginning of the loan, but then the rate can change. So there is some risk in that. A lot of lenders that are doing junk mail are starting to advertise the arms.

The advantage to arms is they start at a lower rate. So the rate that they can put in their marketing looks even better than if they were advertising a 30 year fixed Earl. So have to be careful. Sometimes they’re very upfront about it and sometimes not so much. So they’ll put, you know, this, this really great rate on a 30 year loan to try and make you think it’s a 30 year fixed. It’s a 30 year loan. That doesn’t mean the rates fixed for 30 years. So it can be tricky. And, you,

You just have to make sure you’re reading the fine.

Mike Hunsberger (38:40)

Yeah, that’s fantastic. So as we start to wrap up, there anything else? I think we hit a bunch of things, but anything else you want to make sure listeners understand on the VA that we might not have hit on?

Brian Willingham (38:54)

just in general, like we said back towards the beginning, the interest rate is important. You never want to pay too much for the interest rate, but with VA loans, it’s not the only thing you really need someone that is going to explain things to you, show your show you all of your options, help you if you need to try and get that funding fee waived. That’s going to help you with that. ⁓ so someone with knowledge and experience that’s going to look out for you.

And there’s lots of those out there, but that’s not everybody. So just be a little bit picky. You’ve earned those benefits, so make sure you’re working with someone that’s going to help you take full advantage of them.

Amy (39:36)

That’s great advice.

Mike Hunsberger (39:39)

Yeah, definitely, definitely appreciate that. So, ⁓ Ryan, if folks want to learn more about you or potentially get in contact with you, ⁓ where can they do that?

Brian Willingham (39:49)

So easiest thing would probably be my company website. It’s ⁓ www.mission.mortgage, node.com or anything like that. Just mission.mortgage. I’m not the only mission mortgage company out there. There are some other ones, but I’m the only one that’s a mission.mortgage. So ⁓ that’s best way to reach me. It’s got all my contact info and info on what states I can lend in and other it’s it’s in development, but all the info.

People need to reach me there.

Mike Hunsberger (40:20)

that’s fantastic. So ⁓ Amy, anything else from you?

Amy (40:24)

No, just Brian, I want to thank you for your time today. I found you to be incredibly knowledgeable as I’ve had questions in helping clients realize their refinancing needs. So just thank you so much for coming on today and sharing all of your knowledge. I appreciate it.

Brian Willingham (40:41)

Sure, my pleasure. And if anyone out there is watching this and they have questions and you go to my website and see, I don’t lend in the state you’re looking at, I’m still happy to answer any questions, even if I can’t necessarily do the mortgage in your state. So feel free to reach out. I’m happy to help any fellow veterans with mortgage questions.

Mike Hunsberger (41:00)

appreciate that. So thanks, ⁓ everyone else. Thanks for listening and we’ll be back next week with or in two weeks with another episode. Thanks.