Are you a veteran currently holding a VA loan on your mortgage?

If so, now could be the perfect time to save a ton of money by using the IRRL program exclusively designed for US veterans.

What is IRRL?

IRRL is the "Interest Rate Reduction Loan" program.

This program allows you, the veteran, to easily lower your interest rate thus lowering your monthly housing bill substantially...

Plus the rules of the program make it easy to qualify for... but only if you are a veteran or active serviceman or woman.

Here are 4 key features that make this program easy and possible for many Vets to save money:

1) You will need no appraisal on your current home
2) All closing costs can be rolled into the new loan
3) You will not need to present bank statements, pay stubs or even prove employment
4) No minimum FICO score to qualify

How much can you save?

Potentially tens of thousands over the life of your loan. Consider your current mortgage for example:

If your current mortgage is based on a loan of $200,000 at 6.5% interest rate for thirty years, your monthly housing bill (principal and interest) is $1,264. If you've lived in the home for 3 years you would owe $192,602, so this is how much you would need to refinance. It's not uncommon for the IRRL program to drop your interest rate 1 full point to 5.5%, which puts your new monthly bill at $1,093 or a savings of $171 a month.

Who couldn't use the extra money?! So why not look into this exciting IRRL program if you are a veteran? It makes no sense to pay extra money on a mortgage when you don't need to, especially when the process is so easy.

The Veterans Administration of the United States of America, under the direction of the Department for Veterans Affairs, is the agency that awards benefits to veterans of the United States military. One of the best benefits available to military personnel, both active and retired, is the VA home loan.

100% Financing For Veterans

The VA home loan provides one hundred percent financing for certain members of the military, both past and present to purchase their home. You qualify for financing if you have been active in the military for 90 days during combat, or 180 days during peacetime for members of the Army, Navy, Air Force, and Marines.

Additionally, if you have served in the National Guard or Army reserve, you may qualify as well. If you are the surviving spouse of a military service person who has either died, is missing in action, or is a prisoner of war, you may qualify for a VA home loan under certain conditions.

Government Guaranteed Loans

The VA home loan is a government guaranteed loan. The government does not put up the funds to purchase your home, but it does guarantee repayment to the lender if you should default. This means that veteran borrowers can save hundreds each month because there will be no need to add mortgage insurance on top of the principle amount owed on your home because the loan bears the government guarantee of repayment.

Many Advantages Yield Huge Savings For Veterans

1) Among the many advantages of obtaining a VA home loan as opposed to traditional funding is that there usually is no down payment required. The VA will most often require no out of pocket expenses whatsoever when approving a veteran for a home purchase. The seller is allowed to pay the closing costs for you on your VA home loan, which makes buying the home you need easier and more affordable.

2) Because the lender assumes a minimal amount of risk when writing VA home loans, the interest rate that you will be charged is nominal. In terms of interest, veterans save thousands of dollars over the life of their VA home loan by going with the VA as opposed to traditional funding sources. Furthermore, buyers with most credit types can be approved for VA home loans, because the Veterans Administration only looks at your past twelve months credit performance.

3) There is no prepayment penalty for VA homeowners who wish to pay out early, usually by selling their home. Your VA guaranteed home loan is also assumable, which means that if you do decide to sell your home, the buyer can assume your mortgage, which can be a big selling point with the low interest that you mortgage will carry.

4) You can choose your loan type when you take out a VA home loan, either fixed or adjustable rate. Many borrowers of VA home loans prefer the predictability of a fixed rate payment, while others go for adjustable rate mortgages because of the ultra low interest that is charged for the first few years. The VA leaves that choice up to you.

Military personnel have special duties and special financial needs as well. The most important feature of military loans is that there are no restrictions as far as purpose is concerned. You can utilize the amount borrowed to improve your home or pay for the education of your child. You can also use it to consolidate your debts.

Numerous Advantages

The advantages offered by these loans are numerous. These loans are available at low interest rates. That is a big thing. Further, the loans are approved a lot faster as compared to other loans available in the market.

The procedural formalities involved in such loans are not difficult to complete. Fill a short form, provide the necessary information and get your money by wire or mail. Get your money where you want it.

All those who want these loans can get it very easily. There is no question of fees charged for late payments as well.

Only Condition: Be Military Personnel

It does not matter with branch of the military you work in. You can now obtain a Navy Loan if you work in the navy and so on. All military personnel are treated equally as far as these loans are concerned. The only important condition is- you must be military personnel. The best part is that you do not have to be in active service to get these loans.

These loans are available even to those persons who have spent their productive lives serving their country in the military. You must have served in the armed forces. That is what is important

The BLS reported that the US economy shed 539,000 jobs in April, the smallest number of jobs losses since October 2008 and better than the market expectations for 590,000 job losses. The unemployment rate rose from 8.5% to 8.9% and the hourly work week held constant (as usual) at 33.2 hours. The number of unemployed persons in the US is now 13.7 million.

After the release the oversold 10yr note yield fell from 3.36% to 3.28%.

Results of the Supervisory Capital Assessment Program, better known as the Stress Tests, were released after markets closed on Thursday. The tests ― a comprehensive measure of how the top 19 banks would perform under various “what-if” scenarios for the economy ― revealed that 10 of the nation’s banks must raise $75 billion over the next six months.

In a statement released with the 37-page summary of results, Federal Reserve Chairman Ben Bernanke said the report “should provide considerable comfort to investors and the public.” 

He said all of the firms are solvent, nearly all have enough Tier 1 capital to absorb losses even in the worst hypothetical scenario, and only half of the institutions must restructure their capital base.

“Many of the institutions have already taken actions to bolster their capital buffers and are well-positioned to raise capital from private sources over the next six months,” Bernanke said, adding that the Treasury stands ready to provide extra capital if necessary.

Many of the report’s key details were released on Wednesday afternoon, relieving some investors and allowing U.S. stock markets to soar. On Thursday, however, all major indexes turned south when Bernanke gave a speech endorsing a reformation of regulation and oversight.

The S&P closed Thursday down 1.32% to 907.39; the Dow fell 1.20% to  8409.85; and the Nasdaq suffered the biggest blow, falling 2.44% to 1716.24.




Details:

Citigroup, whose equity needs are in excess of $50 billion, must raise $5.5 billion in new capital. The institution has already bolstered its balance sheet by converting preferred shares into ordinary stock.

The institution most in need of fresh capital, Bank of America, must raise $34 billion. Like Citi, BofA could convert some of their rescue funds into ordinary stock. In addition, the bank has been in talks with China Construction Bank to sell an $8 billion stake in the company.

Wells Fargo needs to raise $13.7 billion. GMAC must raise $11.5 billion.

Banks that are not required to raise capital include Goldman Sachs, JPMorgan, American Express, and State Street. 

Wells Fargo and Morgan Stanley each announced stock offerings after markets closed but before the test results were published. Wells Fargo will offer $6 billion in new stock, while Morgan will sell $2 billion.

Plans to raise capital must be submitted to regulators by June 8.

Mortgage backed securities (MBS) moved above their recent range following a successful 10 year Treasury note auction yesterday.   To remind the readers and for any new rate watchers, mortgage rates are generated by trading in MBS market.  As investors buy MBS, prices moves higher which helps mortgage rates move lower.   Yesterday, higher MBS price levels helped lower consumer borrowing costs by about .125 in discount; unfortunately this morning MBS gains have evaporated and lender rate sheets reflect it. Although par 30 year conventional rate mortgages remain in the 4.625% to 4.875% range for well qualified consumers,  borrowing costs are .125 discount points higher as rate sheet yield spread has diminished.

 

Let’s dive into the economic data of the day. Generally speaking, positive economic data usually leads to a rally in the stock market.  As a result, investors sell lower yielding less risky assets such as MBS and treasuries in favor of higher yielding stocks.   Negative economic data usually spurs a rally in fixed income market which includes MBS and treasuries.  Investors sell stocks and move their money to the safe haven of fixed income assets. 

 

Every Thursday we get the release of jobless claims. This data is a report of the number of US citizens who have filed a first time claim unemployment insurance in the prior week.  The Department of Labor reported that 601,000 people filed for unemployment in the past week. This is much better than economists’ expectations for 635,000 new claims.   Continuing claims, which reports the number of people who continue to file for unemployment benefits, rose for the 14th straight week and set another new record at 6.351 million people.  So the number of layoffs are leveling out; however, the supply of jobless workers is making it increasingly more difficult to find employment.

 

The Bureau of Labor Statistics released their quarterly report on Productivity and Costs.   Productivity, which is defined as the ratio of output to input and lets investors know how efficient companies are at producing goods and services.  Higher productivity will allow companies to produce more goods and services with the same workforce, higher productivity  keeps production costs low and wards off wage based inflation.   Expectations were for this report to show a flat (0.0%) change from last quarter, surprisingly the actual data indicated a 0.8% increase in productivity.  Labor costs also came in better than expected with a 3.3% rise instead of the expected 3.4% increase.   So, this report  shows that business’s labor costs are being held in check, while their labor force is producing goods at a greater pace which will allow them to post higher profits (because of lower marginal costs) once the economy starts to improve.   

 

 

Federal Reserve Chairman Ben Bernanke spoke vie video before the Chicago Fed’s Conference Board this morning. The topic of discussion: Bank Structure and Competition.  Some of the questions being posed relate to the bank stress tests conducted by the Treasury Department.  The results of some of these tests have been leaked but the official report is being released later today at 5pm eastern.  Read More about Bernanke's Speech

 

Other than headline news items, the last significant event today is another round of treasury auctions.  At 1pm eastern time, the US Treasury Department will be auctioning off $14 billion 30 year Treasury Bonds.  As always, the added supply of debt on the market can apply pressure on both treasury yields and mortgage rates to move higher.  The amount of each auction is known well in advance so the more important aspect is the demand at these auctions especially by indirect/foreign investors.  Yesterday’s 10 year treasury note auction and Tuesday’s 3 year treasury note auction both saw above average demand and above average demand from indirect bids which is what we hope for to help keep mortgage rates low.

 

Tomorrow we do get the big piece of chicken in the form of nonfarm payrolls.  This report is the single most important piece of economic data and it can have a major impact on all markets.  If this report comes in better than expectations, we could see a rapid decline in MBS price which will move mortgage rates higher.   Expectations are for this report to show a loss of 630,000 jobs from last month and an increase to the unemployment rate from the current 8.5% rate to 8.9%.  I will cover this report tomorrow once it is released at 8:30am eastern time.  If you are currently floating your rate and closing within the next 30 days, you might want to consider locking your rate ahead of this report especially if you think the employment situation report comes in better than expectations.

 

Early reports from fellow mortgage professionals are showing lender’s rate sheets to be slightly worse than yesterdays by about .2 in discount.   That means if a rate was costing 1 point yesterday, it will now cost 1.2 points.    The day is still young and plenty of time for the markets to change course.  The stock market opened higher this morning but since has turned and is currently lower on some profit taking.  MBS are moving off the lows of the day, but not near any level to prompt a reprice for the better from lenders.    If you are planning on locking your rate today ahead of the employment situation report, you might want to wait until later in the day.  Most lenders have already released rate sheets and when they did, MBS were at the lows of the day.  If we can have a rally, we might see lenders pass along lower borrowing costs/better rates later.  For intraday updates and reprice alerts from lenders, click over to the MBS Commentary blog.