4 Benefits of Using a VA Loan to Buy a Home

01. No Requirement for Private Mortgage Insurance (PMI) – One of the most significant advantages of utilizing a VA loan is the absence of private mortgage insurance (PMI) requirements. Unlike conventional loans, which often require PMI for borrowers with a down payment below 20%, VA loans do not impose this additional monthly expense. PMI can significantly increase the overall cost of a mortgage, making VA loans an attractive option for those seeking to save money in the long term.

02. Zero Down Payment – Another notable benefit of VA loans is the ability to purchase a home without making a down payment. Traditional mortgage programs typically demand a substantial down payment, which can pose a significant financial barrier for many homebuyers. With a VA loan, eligible borrowers can finance up to 100% of the home’s value, eliminating the need to accumulate a sizable upfront payment. This aspect of VA loans not only enables easier entry into homeownership but also preserves valuable savings for other purposes, such as home improvements or emergencies.

What do you think of these 4 benefits of using a VA loan to buy a home?

03. No Prepayment Fees – Flexibility is a key advantage of VA loans, as they do not impose prepayment penalties. Prepayment penalties are charges incurred when borrowers pay off their mortgage ahead of schedule or make larger payments to reduce their principal balance. By eliminating these fees, VA loans empower borrowers to make additional payments or even pay off their mortgages early without incurring any financial penalties. This feature grants greater financial freedom, allowing homeowners to save money on interest and potentially become debt-free sooner.

04. Lower Minimum Credit Score Threshold – Obtaining a mortgage often requires a good credit score, which can be a challenge for some homebuyers. However, VA loans typically have more lenient credit score requirements compared to conventional loans. While individual lenders may have their own credit score standards, VA loans generally offer greater flexibility, accepting lower minimum credit scores. This accessibility enables more aspiring homeowners with less-than-perfect credit histories to secure favorable loan terms and realize their dreams of homeownership.

Utilizing a VA loan to purchase a home comes with an array of compelling advantages. The absence of private mortgage insurance (PMI) requirements reduces monthly expenses, while the ability to secure a loan with zero down payment enables easier access to homeownership. The elimination of prepayment fees promotes financial flexibility, and the lower minimum credit score threshold broadens eligibility for a wider range of homebuyers. These benefits make VA loans an attractive option for veterans and active-duty military personnel looking to embark on their homeownership journey. If you are eligible for a VA loan, it’s worth exploring this opportunity and taking advantage of the numerous benefits it offers. Ready to start your home buying journey? Visit us here!

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Learn about Mortgages for Teachers and Educators

What is down payment assistance? – Down payment assistance is a type of financial assistance that can help qualified buyers cover the upfront costs associated with purchasing a home. This assistance can come in the form of grants, loans, or other types of financial aid.

Who qualifies for down payment assistance? – Qualifications for down payment assistance programs vary depending on the specific program. However, many programs are targeted toward low- to moderate-income homebuyers, first-time homebuyers, and those who work in certain professions, such as education.

What types of down payment assistance are available for teachers? – There are a few different types of down payment assistance programs that are available specifically for teachers depending on your state. In Georgia, one of the programs is PEN with GA Dream! The Georgia Dream program was created to make homeownership possible for eligible low and moderate income Georgians by providing affordable financing options, down payment assistance, and homebuyer education. Potential homebuyers apply with participating lenders for Georgia Dream loans. The loans are secured or guaranteed by FHA, VA, USDA-RD or conventional uninsured loans. Borrowers must attend and complete either a homebuyer education workshop, individual housing counseling sessions, or an online homebuyer education course through E-Home America. As of February 23, 2023, the standard amount was increased to $10,000, and for PEN (Protectors, Educators, and Nurses) that amount has been increased to $12,500!⁠

More about Mortgages for Teachers and Educators

How do I apply for down payment assistance? – To apply for down payment assistance, you’ll need to research the specific programs that are available in your area and determine which ones you may qualify for. You’ll then need to fill out an application and provide documentation to support your eligibility. It’s important to note that down payment assistance programs often have limited funds available, so it’s best to apply as early as possible. Best place to start is with your local Realtor. They can point you towards the right lenders that offer assistance! 

Ready to start your home buying journey? Click here to connect with a Sage & Cedar agent!

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What the new FICO scoring system means for homebuyers

Recently, FICO, one of the largest credit scoring companies in the world, announced that it will be rolling out a new credit scoring system in 2023. This new system, called FICO 10 T, aims to provide a more accurate picture of a consumer’s creditworthiness by taking a more holistic approach to credit scoring.

So, how will the new FICO scoring system affect home buyers? Let’s take a closer look.

What is FICO 10 T?

FICO 10 T is the latest version of FICO’s credit scoring system. It will use the same 300-850 point scale as previous versions of FICO, but it will take a more nuanced approach to credit scoring.

FICO 10 T will look at trends in a consumer’s credit behavior over time, rather than just their current credit utilization and payment history. This means that if a consumer has a history of responsible credit behavior, but experiences a setback like a missed payment or a high credit utilization rate, their score may not be as negatively impacted as it would have been under previous FICO scoring systems.

Additionally, FICO 10 T will differentiate between consumers who have revolving credit (like credit cards) and those who have installment loans (like mortgages or car loans). This is designed to recognize that consumers who have successfully managed installment loans may be better credit risks than those who only have revolving credit.

How will FICO 10 T affect home buyers?

The new FICO 10 T scoring system could have several impacts on home buyers.

First, consumers who have a history of responsible credit behavior but have experienced a setback (like a missed payment or high credit utilization rate) may see less of a negative impact on their credit score under FICO 10 T than they would have under previous FICO scoring systems. This could make it easier for these consumers to qualify for a mortgage or secure a better interest rate.

Second, consumers who have successfully managed installment loans (like mortgages) may see a boost to their credit score under FICO 10 T. This could make it easier for these consumers to qualify for a mortgage or secure a better interest rate.

Third, lenders may be more willing to work with consumers who have less-than-perfect credit under FICO 10 T. This is because the new scoring system takes a more nuanced approach to credit scoring and recognizes that consumers who have had setbacks can still be good credit risks.

FICO scoring system and homebuyers

The new FICO 10 T scoring system could be good news for home buyers. Consumers who have a history of responsible credit behavior may see less of a negative impact on their credit score if they experience a setback, and those who have successfully managed installment loans may see a boost to their credit score. Additionally, lenders may be more willing to work with consumers who have less-than-perfect credit. However, it’s important to remember that credit scores are just one factor that lenders consider when evaluating a mortgage application, and other factors like income and debt-to-income ratio will also play a role in the lending decision.

Interested in starting the home buying process? Click here to connect with a Sage & Cedar agent!

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Check out what Rob Downs with Southstate Bank has to say about lowering rates in 2023!

“Mortgage rates go the way of mortgage bonds. Bonds sold = higher rates. Bonds purchased = lower rates. There was a big selloff the later half of December, but there was very little volume, or liquidity, behind this move, i.e. fewer trades happening with many traders taking off for the holidays. So far, with traders rolling back into the office in 2023, we’ve recovered about 30% of those losses.

We probably won’t see a significant rally in advance of December CPI being released on Jan. 13th, which is a key inflation metric, but this is a really good start.

Lower rates are coming? Are you ready?

But… there’s a trap set! Home buyers expecting to wait for lower rates will be met with much more competition as these lower rates bring back a lot of buyers priced-out from the 2022 rising rate environment. While a lower rate can save you quite a bit in monthly payment, you can save THOUSANDS negotiating seller credits to cover your closing costs. That opportunity will be going to the wayside as lower rates bring back more buyers, increasing demand on a still limited supply of homes. And increased demand with still limited supply? Well, we’ve seen that game play out! Sale prices are expected to increase 5-10% in the Atlanta metro area this year as we remain one of the strongest markets nationwide.

Is now a good time to buy? That depends on what amount of home you can afford to buy while staying within a comfortable payment (made even more comfortable when you refi into a lower rate) and using no more than the amount of cash you’re comfortable with.”

Interested in learning more about your mortgage options in 2023? Get intouch Rob Downs here! Ready to start the

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Why is credit important during the home buying process?

Having good credit increase your chances of qualifying for a mortgage, and the better your credit is, the better interest rate you may get! So, how can you maintain good credit? Firstly, recognize that building credit takes time! And, there are some things you can do to keep your credit looking good!

01. Always pay on time – This one is very obvious but also very important. You must make any payments to your rent, other bills, credit cards, loans (including student loans), etc., on time! Paying bills on time is the biggest influence on your credit, so this should be taken seriously.

02. Debt to Income Ratio – Your ratio of how much debt you have in relation to how much income you earn will affect your credit. You’ll want your debt  to be minimized as much as possible to have a better ratio!

Diversifying your credit means having a mix of credit sources.

03. Student Loans – Take another look at your student loans. You’ll want to make these payments on time of course, but even if you do this, they may still be affecting your debt to income ratio as mentioned previously. Therefore, the size of the payments you make on these loans also matters.

04. Don’t close out credit – Closing out a credit account, such as a credit card, may seen like a good idea at first glance, however, doing so will actually lower your current credit availability. If you wish to no longer use a specific card, don’t close it; just use it lightly for smaller purchases and make those payments on time.

05. Consider Diversifying – Diversifying your credit means having a mix of credit sources. Having a variety ( credit cards, student loans, car loan, etc.) may help boost your credit. Only do this if you are able to make the payments on all the accounts. However, if you are planning on buying a home very soon, you shouldn’t open a new account.

Interested in starting the home buying process? Click here to connect with a Sage & Cedar agent and set up a new buyer meeting!

Start your online search here!

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