Many veterans who have used their VA Home Loan benefit to purchase their homes have also refinanced with an Interest Rate Reduction Refinance Loan (IRRRL). An IRRRL is a refinancing program that is offered by the VA for veterans who want to refinance their current loans to get a better interest rate on their mortgage.

Some interesting facts that you should know about the VA IRRRL are:

• An IRRRL is used to refinance an existing VA loan with a new VA loan that usually has a lower interest rate.
• An IRRRL can be a fixed rate loan, an adjustable rate loan, or a hybrid adjustable rate loan.
• An IRRRL must be at a lower interest rate than your previous mortgage loan unless you are refinancing from an adjustable rate mortgage loan. This is because the interest rate with a fixed rate loan may be the same or slightly higher than your current interest rate with your adjustable rate mortgage loan, but once the rate begins to adjust it may increase. Therefore you should refinance an adjustable rate mortgage before the interest rate starts to increase.
• The monthly payment for an IRRRL must be lower than the previous loans monthly payment unless you are refinancing an adjustable rate mortgage or the new loan term is a shorter amount of time than the old loan term, like 20 years instead of 30 years.
• For most IRRRLs the VA does not find it necessary to get an appraisal, credit information, or underwriting. Your VA approved lender may require these things, and if they do the costs can be financed into the new loan.
• The lender can usually close an IRRRL automatically, so it is not a complicated loan process like taking your original mortgage loan.
• If the loan that is being refinanced is over 30 days past due then the VA must approve the refinance so it can not be submitted automatically by the lender.
• If thee loan that is being refinanced is more than 30 days past due then the late payments and charges to bring the old loan current can be financed into the new loan. The costs that are involved if the lender has already begun foreclosure can also be refinanced into the loan as long as they are reasonable.
• Energy efficient improvements are allowed to be refinanced into the IRRRL. This means that if you want to purchase a more efficient furnace, put in new windows, re-insulate, or make any other home improvement that will save you money on utility bills in the future, then you can use the equity in your home and pay for these improvements with your IRRRL.
• There may be an increase in your monthly mortgage payment amount if you finance energy efficient home improvements, finance your closing costs, include the funding fees in the loan, finance points, or get a higher interest rate when moving from an adjustable rate to a fixed rate mortgage.
• Only as much as two points can be financed into the IRRRL at closing. A point is equal to 1% of the loan, and if you take more points on the loan then you can lower your interest rate.
• You can not take cash out with an IRRRL. You can finance home improvements for the purpose of saving money in the long run, but that money is paid back to you as a reimbursement after the work is completed and it must be within 90 days of the loan closing. You do not get cash out of your home with this refinance loan.
• If your monthly payment will increase by more than 20% due to home improvements, fees, closing costs, a shorter loan term, or other factors then the VA does require credit information and underwriting.

For more information on the VA IRRRL program go to www.va.gov

Today’s guest writer is Houston Neal who works with City Light Financial. He has a few basic ideas for expanding with your investment properties and the financial basics of getting started.

HELOC For Investment Property

There has never been a better time to be a homeowner. From continued performance in the housing market to the availability of online mortgage resources, you now have the upper hand and are in a good position to cash in on the value of your home.

Many homeowners and investors have taken advantage of market performance by taking out a home equity loan to finance other property investments. Specifically, a HELOC or home equity line of credit, provides a way to ‘cash in’ on the value of your home and it allows you to borrow money against home equity.

So why not put your home equity to work? With a home equity line of credit you can use the capital from your home to begin earning returns from two properties instead of one.

Understanding Equity

An important consideration for any homeowner in the home equity loan process, is to understand how to build equity in your home. Equity is simply the difference between your remaining mortgage balance and the value of your property. So, as your property value increases and your mortgage balance is reduced, your home equity increases.

Equity is a significant source of net worth for many homeowners and it continues to provide new sources of revenue. Housing prices have appreciated over the past years and the national market has seen considerable growth. Certainly some states have witnessed greater gains than others and an extreme example is the ongoing increase in California property value. The state jumped 27.18 percent in home value during the third quarter of 2003 alone while the national housing market reported 12.97 percent growth over the same period. Overall, home prices are still up and homeowners have an opportunity to use equity for other investments.

HELOC vs Home Equity Loan

A home equity line of credit is very similar to a home equity loan and shouldn’t be confused for the latter. The main difference between a heloc vs home equity loan or mortgage refinancing is the way you are able to access the line of credit. A home equity loan or closed-end home equity loan differs in that the loan is typically set for a fixed amount of time and a specific amount. Mortgage refinancing is similar and gives you the equity in a single check. A HELOC, on the other hand, provides you with an open-ended line of credit or a revolving line of credit. Similar to a credit card, you are able to borrow an amount whenever you need to as long as that amount does not go over the credit limit. A home equity line of credit only requires you to pay back the amount you borrowed and is a practical and flexible type of mortgage loan.

Overall, a HELOC is a great resource to utilize for investment opportunities and other financial ventures. It helps you establish what you can afford first and provides the opportunity to manage your investment by reducing the line of credit. It can open new sources of revenue and allows you the flexibility you need for investing in property.

Time is the mysterious and invisible “something” granted by our Creator as the roadway of the soul.

The flow of time is graphically recorded throughout nature and although seemingly infinite, all persons are allotted the same amount each day… no more, no less. One can neither buy it, sell it, nor barter it. Lost or unused time vanishes as a shadow in darkness, never to be found again.

Upon the skein of time are woven life’s patterns from the threads of love, joy, sadness, and pain. It is the magical element that heals the deepest wounds and lessens the spectacular.

Yesterday is dead time.
Tomorrow is unborn time.
The now time is the only live time.

Therefore, fill each waking moment with the highest you know and understand. Let the fertile moments of today spawn greater works for tomorrow.

This week’s guest writer, Duane, posts his above work in the bathroom of his airport hangar. At 90 years old, Duane continues to operate his own airport, take visitors on scenic flights, fix airplanes, and teach people to fly. Duane is the epitome of happiness–he holds passion for the aerial business in a way that few people love their career focus. He’ll kiss a girl’s hand or cheek, invite you for ice cream, show you his favorite websites and e-mail his friends, and hop up and down with cheer when he emerges from his plane work. He has the money for his dreams… that’s all he wants, all he needs.

Duane, you’re an Aridni hero.

When I was a little girl, it took me several tries before I finally mastered the art of riding a bicycle that was not equipped with training wheels and a pink and white basket. Conversely, when I was a high school student, it took me more than one trip to the DMV before I was the proud owner of a driver’s license. In short, moving vehicles are not my forte. But for real…in the midst of my maneuvering mishaps, I learned a valuable lesson:

It often takes more than one failure to perfect (or at least improve) the status quo.

The same situation applies to money management. I entered college completely oblivious about anything and everything that has to do with handling money. However, over the past year, I have learned more about money control than I ever learned in the past two decades. After my Dad set me up with a checking account at a local bank within the first few weeks of my college career, I took advantage of the belief that I had plenty of money to last me a semester. Nevertheless, as the weeks started to pass and my bank account started to dwindle, I realized that money is not disposable, especially since I did not have a job to replenish what I was spending. Wow; I could say that I had an epiphanic moment…or I could say that I had just gotten some common sense knocked into me.

It took me a couple of arbitrary purchases and a shameful conversation with my Dad in order for me to learn my lesson about money management in college. As I am entering my sophomore year, I feel as though my checkbook is in a better place than it has ever been. I regularly do several small tasks in order to make sure that my money is under control…under MY control.

First, I balance my checkbook on a regular basis; therefore, I always know the status of my checking account. One of my initial mistakes was writing checks and not recording the information in my checking log for several days, often weeks.

Next, my paycheck is directly deposited into my bank account. I worked at a food establishment for a summer in which I received weekly checks that I cashed at my workplace. It was definitely tempting for me to purchase unnecessary items while carrying around a wad of cash, using that rationale that I had plenty of green paper to justify the purchase. In layman’s terms, go for the direct deposit route.

Further, it is imperative to be intentional about purchases. Don’t go shopping just for the sake of going shopping; be evaluative. If you realize that you need a new pair of tennis shoes, go to the store to buy a new pair of tennis shoes; do not meander into another department or even check out the clearance racks. It does not matter if something is a good deal, for it is not worth buying unless you really need it.

After traversing over gravel for a little too long and getting stuck in one too many potholes, I feel as though from here on out it will be smooth sailing.

This week’s guest writer is Laura. We know that she’s a fantastic biker now, an avid reader, and a wild singer. She loves giving back to the community, and Aridni feels lucky that she’s offered her Indiana perspective for our Saturday Strategies.

If you’d be interested in being our next Saturday Strategist, let us know..