You Served Transcript – Podcast Eposide #16
CJ: Hello everyone welcome to the VA Mortgage Center.com’s You Served radio show. We are featured on Blog Talk radio. I am one of your hosts, CJ Grisham. I write for several milblogs one of which is the YouServed.com website. I also write on my own personal site which is A Soldier’s Perspective at ASoldiersPerspective.us. And I also have a site called They Have Names where, at least I used to write about our fallen troops, but I haven’t been able to do so lately.
Troy: And I’m your other host Troy Stewart. I write several milblogs, one of which is at the You Served website for VA Mortgage Center.com. I also write on my main site www.bouhammer.com and the US Naval Institute’s Get the Gouge website at community.getthegouge.com
CJ: Hey thanks Troy good to talk to you tonight, good to be back.
Troy: And good to talk to you too. Good to have you back after a couple week’s absence.
CJ: Oh it’s been crazy, I’ve got this nice headset and I haven’t been able to use it. Let me just state now that even though Troy and I are active duty, well, we’re both in the military, I’m active duty, Troy’s in the National Guard. This show is sponsored by the VA Mortgage Center.com however our views, our opinions, and our comments, that we express during this show are our and ours only. We do not speak for the US Army, the National Guard, the DOD or the VA Mortgage Center.com. In fact the views and opinions expressed by our guests are also only theirs unless they explicitly state they are speaking on behalf of someone else. Not that the legalese is out of the way lets go ahead and get on with the show. Hello to everybody out there in the chat rooms. It’s good to be back with you again. I also want to publicly thank, one more time, Troy for doing the show the last couple of weeeks and also Markus for taking place of him, while he took place of me. You guys did an excellent job and I hope I can maintain the standard that you guys have brought the show up for the past few weeks. But before we get to the beginning of the show I want to publicly recognize, for the benefit of those who don’t read my blogs, or haven’t been to the You Served podcast in a little while, those individuals that were awarded the Presidential Citizen’s Medal the other day by President Bush, you can can read that post at YouServed.com. But what I wanted to bring up is that the President yesterday awarded 23 individuals with the Presidential Citizen’s Medal. And one of those awards was posthumous. Of those four were veteran and military supporters. So I want to kind of talk about those individuals real quick. The first one was General Wayne Downing.
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CJ: By the way the President’s Citizen’s Medal was established in 1969 and it was established to recognize US citizens who preformed exemplary deed of service to the nation. It’s one of the highest honors a President can confer upon a civilian, second only to the Presidential Medal of Freedom, of which, if I’m not mistaken, General Petraeus was awarded. Am I correct?
Troy: I think that’s correct, yep.
CJ: One of those four is General Downing. He was the one that received the award posthumously. He was a Vietnam Veteran and went to Vietnam in December of 1964. He was also, under President Bush, the National Director Deputy National Security Advisor for combating terrorism. His awards and decorations include two distinguished service metals, two Army distinguished service metals, two silver stars, four legions of merit, the Soldier’s Medal, seven bronze stars, the purple heart, three Meritorious Service medals, the Air Medal, four Army Commendation Medals. This guy is incredible. He’s also got the combat infantry badge, the military free fall jump master badge, the master parachutist badge, the ranger badge, and even the pathfinder badge. One of the things that he did, and he did not just get this award for his military service, he was an American hero who stepped forward, he helped the nation to uphold the ideals of our founding. He served with honor, decency, resolve. And he earned the respect and admiration of an entire nation. Unfortunately he passed away last year in July. He was the first one I wanted to bring up. The second one is Arnold Fisher. It’s kind of interesting that yesterday Mr Fisher was given the Presidential Citizen’s Award because we’re going to be talking to his brother today. And everyone knows Mr Fisher, one of them at least, but Arnold Fisher joined the army in 1953. He served 18 months in Korea. Got out shortly after he was able to. He’s done a lot of things. He active in the Veterans Bedside Network, the development of the Vietnam Memorial in Westchester county. He is the chairman of the board of trustees of the Hall of Honor which is the home of the Congressional Medal of Honor Society. He founded and established the Intrepid Fallen Heroes Fund. Which for those of you who have never heard of that, if you go to TheyHaveNames.com, which is the site I write about our military fallen — all the money that I get on that site, that goes above and beyond what I need to operate, goes straight to the Intrepid Fallen Heroes Fund. He was the one who established that. And of course, as we all know, the Fisher Armed Service Foundation and as well as a part in Fisher House that does a lot for our wounded troops. Admiral James Watkins; let me just read his stuff real quick: Distinguished Service Medal, Legion of Merit, two gold award stars, bronze stars, I mean just all kinds of stuff, but he’s got the Vietnam Service Medal, the four campaign stars, Vietnam Campaign Medal, decorations from Brazil, Korea, Italy, France, Spain, Japan, Pakistan, Sweden. The guy’s just a wonderful patriot. And finally, the other one I want to highlight is Gary Sinise. I can’t say enough about Gary Sinise. This guy is a true patriot. You ever met him Troy?
I have never met him, came close. I wish I could, I tell you. He almost, our buddy Matt over at Black Five almost got him to come down and see us at the Milblog conference.
CJ: That would have been so cool. But he is the ultimate. When you think of the 1940’s style, USO, celebrity, you think of who?
Troy: Well, 1940s you think of Bob Hope.
CJ: Exactly, Bob Hope. I don’t know, maybe it’s just me, but when I think of 2003 to present and I’m talking about a celebrity supporter. You know two people come to mind. One is Toby Keith the other one is Gary Sinise.
Troy: Without a doubt. Without a doubt.
CJ: So I think that was definitely well deserved.
Troy: Let me just say, when I think of Forrest Gump, I think of Lt. Dan. Who else is there to think of?
CJ: And that’s right. And for those of you who are going to go read this site I intentionally left that off because as I was scouring the Internet trying to find out what people are writing about this Presidential Citizen’s Medal. One of the things I noticed, is that when they talked about Gary Sinise, it was always, “Lt. Dan, Lt. Dan” and they skimmed, most articles didn’t even talk about what he’s done for the military. I would say 9 out of 10 of the articles, that I read, that talked about Gary Sinise winning this metal, mentioned absolutely nothing about his troop support. Probably 90 percent of the them did mention Forrest Gump.
Troy: Probably because a lot of people who do this, they mean it that way. They don’t want that to be the mainstay or . . . they like to do that stuff behind the scenes. It could be that way with him.
CJ: Well yeah, but he didn’t win the metal for Forrest Gump.
Troy: Right, right. That’s a good point.
CJ: Anyway. What else is going on out there? Oh. In the last week President Elect Barack Obama chose a new VA Secretary or lead of the VA. What do you call that guy? Czar?
Troy: [Laughs] Well he appointing a car czar, but that’s the director of veterans affairs.
CJ: Well is it safe to say that Barack Obama is going to turn every cabinet position into a czar position? I mean aren’t we kind of moving toward that style of government?
Troy: You know Bill Clinton did that when he put someone I respect, Gen. McCaffrey in as the drug czar. On the democratic side of the House, that seems to be a popular term. I don’t remember President Bush ever making a Czar. Maybe he did, but I don’t ever remember him creating a czar, per say.
CJ: Well no because when you think of czar you think of . . .
Troy: Goose stepping.
CJ: Exactly. I don’t know what your thoughts are about Gen. Shinseki, but you know it’s a minor thing, but I can’t get over this beret that I have to wear on a daily basis. I can’t get over it. And when you think about the beret the first person that comes to mind is Gen. Shinseki. That and one other thing. And that was what he said just prior to going into the war which was what everybody has used to this day as proof that President Bush wasn’t listening to his soldiers. And that was about troop strength going into Iraq. As you recall Carl Levin was grilling all the military leadership prior to the war in Iraq and had ask Gen. Shinseki ‘how many troop do we need going in there?’ And he was like ‘that’s not up to me that’s up to me that’s the combatant commanders’. And that’s what the civilian people don’t understand. For the civilian people out there let me quickly, because I hate going off on tangents, but I need to kind of distinguish the Army Chief of Staff, which was what Gen. Shinseki was and the Combatant Commanders. The Army Chief of Staff is responsible for the military as a whole. Personal, planning, equipment and all that kind of stuff.
Troy: He really an admin guy.
CJ: Exactly. It’s a staff position. The Army Chief of Staff is not a Combatant Commander position. And so when you ask question like that it was kind of an unfair question because 1) your asking a non-combatant commander to answer a combatant question. Gen. Shinseki had nothing to do with Centcom. I’m sure he read up on it like most generals do. And when ask he said ‘I don’t want to answer that, that’s up to the combatant commanders.’ Carl Levin said, ‘If you were to just through out a number there’ or whatever. And he said, ‘I would say a few hundred thousand soldiers.’ This is what the anti-war crowd has been on forever. Which is odd because that would be like a non-smoker basically getting onto someone for smoking the wrong brand of cigarettes. Even though that person is ardently non-smoking and hates smoke and cigarettes, they get onto someone for the kind of cigarettes they smoke. So here’s the anti-war movement harping about what someone says about troop strength when they could really care less what the troop strength is. It kind of a non-argument to them.
Troy: Well if it was up to them they’d want troop strength to be zero.
CJ: Exactly so it kind of a moot point. And it was nice to see Matt had fletched out something I had briefly touched on, (of Black Five). I’m not saying that he went off of my post but he just talked about the same thing I did. But I kind of briefly, at the end of my post, when I talked about Shinseki, glossed over this number. But Matt talks about this and I’m glad he fletched it out more than I did. I hope people go to BlackFive.net and kind of read that post about Shinseki. When he says a few thousand troops, what does that mean because it’s not a couple hundred thousand. So the minimum he’d be talking about would be 300,000. That’s a few hundred thousand troops. Now back in 2003, I think this in Feb. 03, when this conversation took place. I don’t even think we had 300,000 soldiers on the ground. Or even in the Army. That would have taken every Tom, Dick and Harry out of the military and stuck them on the ground in Iraq. Am I fairly accurate?
Troy: You’re pretty close. After eight years of being gutted, of the military gutted by Bill Clinton, we didn’t have what we had for the first Gulf War. The first Gulf War we put 500,000 on the ground. We didn’t have that. We lost eight divisions.
CJ: Exactly. First of all that number make no sense at all because we don’t even have those kinds of troop strengths. Second of all, we went into Iraq with 130,000 troops. The anti-war movement and the Bush detractors, the people who don’t like Bush that much, when the surge happened it was one of those aha, ‘See we told you. We finally got it right. We need these troops all along. And see if they would have listen to Gen. Shinseki to begin with, we would already had this surge, from the beginning and then we wouldn’t be where we are today.’ Ladies and Gentleman, at the height of the surge the number of troops in Iraq was 170,000. Only 40,000 more than what we started with. Do I think Gen. Shinseki is a good choice? On one hand yes. It’s good to have a military veteran in there, in that post. On the other hand I don’t like it. I’m not a big Shinseki fan. Anyway let’s go ahead and move into our show, before I get myself . . .
Troy: Yeah. We’ve gotten on a tangent there.
CJ: Today’s financial mess is affecting everyone. It’s affecting our troops as well who are fighting a multi-front war and maintaining split households. On tonight’s You Served show we’re going to going to talking to three individuals: Mr. Nathaniel Long. He is the CEO of our sponsor VA Mortgage Center.com. Mr Long is here to discuss whether or not veterans will be affected by the current mortgage crisis. And whether now is even a good time to buy or sell. He’ also going to give us pointers about some of the new changes to VA Loans. Another addition to our line up is Mr. Jeff Rose. Jeff Rose is a certified financial planner. He’s the co-founder of the Alliance Investment Planning Group. He’s also the author of “Good Financial Sense” a financial planning and investment blog. You can learn more about Jeff at his web site, you can go to JeffRoseFinancial.com or GoodFinancialCents.com.
Troy: Alright. We’re also going to be talking with Mr. Ken Fisher who you mentioned a little bit ago as his brother. Ken is the chairman and CEO of the Fisher House Foundation. His brother is actually one of the vice-chairmen. The Fisher House is a non for profit organization that constructs comfort homes for families of hospitalized military personnel veterans. It was founded in 1990 by his late uncle Zachary Fisher. The Fisher House program aides more than 10,000 guest families each year and have saved families more than $80 million. The Fisher House Foundation has built houses at military bases and VA medical centers across the country and overseas. They plan to finish 28 more houses by the end of 2010. Tonight we’ll be talking to Ken about all the great things Fisher House does and how the American people can help the Fisher House, our warriors and their families. If you want to learn more about Ken or the Fisher House you can always go to www.FisherHouse.org. There’s a lot of information there. I can tell you personally it’s one of the few non-profits that I support whole heartedly. It has benefited many of my soldiers and their families. I’ve had the opportunity last year during the book signing tour with Gary Trudeau to spend an evening in there having dinner with the guys and their families and seeing first hand what it does. We’re very pleased to have him on tonight CJ.
CJ: Absolutely. I’ll talk more about Fisher House when that comes down. I am also a huge supporter of the organization. We’re also going to get a special visit from First Lt. Dennis Chamberlain who is going to be this weeks Tribute to Freedom focus. . . We’ve got on the phones with us right now two great and wonderful patriotic individuals who are going to try to help us navigate these financial times. We’ve got Mr. Nate Long from the VA Mortgage Center. Mr. Long welcome to the You Served Podcast.
Nate Long: Thank you.
CJ: I suppose you’re the one we’re suppose to suck up to to stay on the air? Is that correct?
Nate: I guess so. I guess I’m the right guy.
CJ: [Laughs] And we also have Mr. Jeff Rose. Mr. Rose, how are you doing today?
Jeff Rose: Doing well.
CJ: Thanks for coming on. IF you read the news, we’ve got bailouts left and right. We’ve got companies that are going into bankruptcy. We’ve got financial crisis, credit crisis, housing crisis and I guess Mr. Long, if I could, I’d like to start with you because for people that are paying attention stories are coming out over and over again about soldiers, deployed soldiers, soldier that are back here in conus that are facing foreclosure. A lot of soldiers right now are wondering if this is even the right time to buy. What does the VA mortgage process look like right now for soldiers. Is it harder for them to get a loan these days?
Nate: It is a little bit harder to get a loan these days. The process itself hasn’t changed with the exception of a few additions that can make it easier for some and harder for others. The main thing that’s changed is that it used to be that the investors — and when I say investors I’m talking about the end lender such as your US Banks or Bank of America or Chase Manhattan — these companies would accept lower credit scores. And they would accept people who had a more difficult credit history. since the credit crunch and since the crisis and since the mass amount of foreclosures, they’ve really tightened their guidelines which kind of cuts a certain sector of individuals out that had those borderline credit scores where they were able to get a VA loan before and now their not. So that’s one thing that is affecting the loan process right now.
CJ: Is it easier for soldier to get a loan these days than it is for a non-veteran?
Nate: I would say so. It may not be necessarily easier but the same individual can get a much better loan. So if you’re looking at soldier vs. a civilian and they were both in the same financial circumstance, similar income, wanted to buy the exact same house, that veteran could get a much better loan product at this time based on the interest rates and the mortgage insurance that the civilian would have to pay that the veteran would not.
CJ: OK. And it’s probably a little safer for these lending institutions knowing that . . .
Nate: It is. It’s much safer knowing that worse case if that person were to foreclose the department of veteran affairs is going to step in and help them with 25 percent. That definitely makes it more appealing.
CJ: Recently there have been a lot of changes to the VA mortgage process. Are you aware of those changes?
Nate: We stay on top of those pretty well. There’s been quite a few changes. One of them that I think is going to be really big for a lot of people is they’re going to allow a 100 percent refinances now where the old limit was 90 percent. The strange part about the old limit was they’d let you purchase at 100 percent but if you purchased and used a conventional product or a sub-prime loan they wouldn’t let you refinance over 90 percent of what your home was worth. Which means if you owed over 90 percent and you were in a sub-prime loan and you were eligible for a VA loan you couldn’t use it because they wouldn’t let you. They’ve just recently changed that so that’s really going to help a lot of the military people that got in these bad loans, these sub-prime loans, option ARMs and a lot of those exotic mortgages. They can now refinance into a VA loan and have the security that comes with that as well as they’re going to save possibly tons on just the interest rates alone. And hopefully it can avoid foreclosure for a lot of those folks who are in some of those ARMs that are set to adjust in a year or whatever other programs they may have got stuck in. On top of that there are a few other things that they’ve done. They’ve raised the limit. It used to be at 359. Then they raised it to 417. And recently they’ve went along with the FHA loan limit which is all set on county. So depending on what county you live in you can get a 100 percent up to the . . . it’s usually, and I want to say it’s a 150 percent of the median county home price there. For example if you’re in Alameda, California you can actually get a loan a 100 percent up to 1,094,000 which it’s a lot for most people but there’s some areas in the country where they didn’t get in a VA loan because they needed a higher loan amount than the VA would guarantee so they ended up in those exotic mortgages. This will definitely prevent that and open the door for more people to own homes in some of the high cost areas.
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Troy: A couple of questions. The first is based on what you just said. You talk about the million dollar marker or it could get up to that amount. But just to be clear even though soldiers get a VA loan their credit and income still have to substantiate the exact amount they are going to get right? It’s just not automatic.
Nate: That’s correct. That’s only the amount that they can go up to. They still have to qualify for that amount based on credit, income, assets and all the normal things you have to qualify for a loan you still do that. And sometimes that’s a misconception, a lot of times is there’s a difference between being eligible for something and qualifying for something. So they are eligible for that amount but they still may not be able to qualify for that amount. And that goes with any amount, I mean not that many people probably can qualify for a million dollar loan. The same goes for $150,000 loan you are eligible but if your income and your credit don’t qualify you’re not guaranteed a VA loan.
Troy: . . . I’ve had two VA loans and some of my younger soldiers have always thought that a VA loan meant guaranteed whatever and you still have to go through GMHC or USAA or whoever is going to finance it, it’s just the VA is backing up a chunk of it. Right? Is that a good way to explain it?
Nate: Right. That’s a good way to explain it. The lender is still going to look at the same qualifying factors as any loan and the VA is going to come in and guarantee it.
CJ: This is a good jumping point to bring in Mr. Rose. He, again, writes for JeffRoseFinancial.com and GoodFinancialCents.com. As you’ve heard Jeff, even though we’ve got that opportunity to have a fairly decent shot at still purchasing a home. What do soldiers in your mind, and I guess probably just people in general, what can we do to meet the goal of owning a home one day especially our limited budgets?
Jeff: First and foremost I just want to say the first home I actually purchased was in 2005 when I was deployed overseas. And with my wife being home we went through the whole VA home loan process and got approved and actually bought my first house while I was overseas. I was just at ease at how the whole process worked. I never thought I buy a house while I was actually in combat, but it was kind of a neat experience. . . the whole VA home loan process because my wife spearheaded everything. It just worked out smoothly. Came back home, walked into our new house and that was a great process. But you know times are tough right now, the market is going everywhere. I’m out of the midwest so we’re not affected much by the housing bubble that a lot of the other markets have been affected by. You don’t see as much here but unemployment is still pretty high in this area and other factors. I haven’t seen it as much here but people that were buying homes or getting approved for homes that were just well out of their price range. They just focused on just what the payment was. You know, ‘Can I afford that payment?’ As Nate was mentioning as far as all the ARMs that were adjusting, they just got into deep trouble. One of the American dreams is for everybody to own their own home, but you got to be in a financial position to do so. You can just jump into it and hope that you can do it. With anything I think most people they just have to find a way . . . we’re so bad as a country as far as just having any amount of savings. Most of us just live paycheck to paycheck. You have to have a good amount of savings to even contemplate wanting to ever own a home.
CJ: [as a retired soldier] you recall coming up through the ranks in you time in the service and you walk outside the gate and the first thing you see are all these money lending institutions. What is some good advice for soldiers who are trying to get their investments in order and figure out how they can afford a car or afford a house? What are the good measures to judge what you can afford and what you can’t afford?
Jeff: Kind of going with the whole theme of the house, you know, just being able to afford the payment. I think that’s just what a lot of us focus on. ‘Oh no oh, can I afford that $500 a month car payment. Oh I can make $500 a month.’ Of course I’m going to finance it over a 72 month period and it’s going to cost me that much more. One thing that’s always helped with me is that is hard for anyone for that matter to write a check and deposit it into your savings account. Who wants to write a check into savings? The automatic investments where it’s automatically taken out of your paycheck or automatically deducted out of your checking account to where you’re directing it into either a separate savings account that you’re not going to touch or in an investment account or an IRA of some kind. You can also do the TSP as well. But just doing the automatic savings where out of sight out of mind, you don’t see it and that way it’s not there and you’re not tempted to go buy whatever thing you don’t need to buy. The whole payday loans I mean obviously we all know that that’s just the biggest rip off ever. . . A lot of soldiers fall into that same trap.
CJ: So it’s sort of like a pay yourself first kind of thing right?
Jeff: Absolutely. I started it myself and then I was able to convince a lot of folks to do it. I always have people start off smaller because you don’t want to start off all gung-ho saying ‘Hey I’m going to save $500 a month’ because usually if you start off strong just like any diet or exercise program you’re going to fall off pretty quick. What I’ve been able to show is that if you’re just saving a little bit, whether it be $25 a check or $50 a check. If you are doing that consistently, after a few months you don’t even notice it. Then you get use to it, you get comfortable with it and all of a sudden you’re able to increase it to maybe $25 again and kind of keep going. Especially if you are getting promoted or getting any pay increases if you can direct towards that as well and not get crazy, if you get a raise and go oh, I’m going to go out and buy something new. There’s always self discipline.
CJ: Or a bonus.
Jeff: Or a bonus.
Troy: I had a financial advisor tell me when I was active duty that the best way, the easiest way to do it, when we get our raises every January — of course in active duty that the only time we’ve ever saw them — or if you get a raise at any time, just take that raise that you’re already use to living without. Tax time you’re expecting to get a return that kind of your one time to splurge or pay off something. But when you get your two point some percent raise, you’ve been use to living without it, that’s the best time to take that chunk and even if it’s just putting it in savings that’s a start. Would you agree that still holds true today?
Jeff: Absolutely. Like you said, you are already use to the income level that you’re at and once you’re kind of content . . . hey, as long as everything is kind of working out for you, why not divert that into a retirement account or into a savings account. In my younger years I was living paycheck to paycheck and as I’ve grown older and the gray hairs have come along, me and my wife have made it a point to have a substantial in savings. We don’t have any credit card debt. That just freaks us out and we don’t ever want to have debt. But it wasn’t an overnight thing, it was kind of a plan we put in place and have been able to do it. After a few years, it’s worked out quite well for us.
CJ: Jeff let me ask you another question then I want to get back to Nate. Let’s take a soldier or actually anyone because some of this financial advice can really apply to anybody. If a soldier has got 20-30,000 dollars in credit card debt. The average interest rate of this credit card debt is 12-15 percent and he got a TSP and a savings account. Is it good advice to still save when you’re spending 18 percent or should you try to pay off that debt before you start investing?
Jeff: Usually what I’ll tell somebody that has a exorbitant amount of credit card debt is that you want to have — I don’t know if you guys have heard of Dave Ramsey who has a book called Total Money Makeover. He has a little thing that I kind of follow as well. You want to have at least something in savings. He’ll encourage you to have at least a $1,000 in savings. The reason you get to that thousand dollars is that next whatever happens, you’ve got to replace the water heater or your car breaks down or whatever happens, you’re not putting more on you credit card. You are able to pay cash. And once you get to that point, once you’ve got that money in savings, then absolutely not, there really is no point in investing anymore just because like you said if you’re paying that high of interest in credit cards there is no point. You’ve just got to pay that off, be done with it, cut them up, move on then you start saving whole heartedly. I’ve had people ask me, ‘Hey I’ve got a credit card or I’ve got a loan that I’m only paying 5 percent. Can I invest it, make more and then pay the difference?’ In theory yeah it makes sense, but in practice, it’s not going to happen. It’s never going to happen. So you just pay off your credit cards and be done with it.
CJ: Let use an example here real quick. Are you pretty familiar with the Thrift Savings Plan?
Jeff: Yes I am.
CJ: If a soldiers got let’s say 8 or 10 thousands dollars in their TSP and they’ve got . . . let’s put it this way: I’ve got this friend and he’s got about $10,000 in his TSP, but he got about $20,000 in debt –in unsecured debt not houses and cars and stuff. What do you suggest for that? Pulling out money or just stop putting money in there? Bring it down to $1,000.
Jeff: The TSP being the fact that that’s a retirement account, you never want to pull money out of a retirement account to pay off debt. Especially credit card debt because in the event of a bankruptcy that TSP should be protected. So you should always have that. Not to mention that since it is a retirement account and you pull it out you’re going to look at taxes and penalties. IF you’re pulling out $10,000, net to you is probably going to be more like $7,000 and you’ve just give a nice little gift to Uncle Sam. Any type of retirement account like that like a TSP or an IRA, you would leave those in check. It would be like if you had 10,000 . . . say if you’ve got $10,000 in a savings account and $3000 credit card debt, there is something that doesn’t just make sense. Why have all that savings when you are making maybe 1 percent on your savings account and you are paying 12 percent interest on your credit cards.
CJ: And we definitely don’t want to . . . well actually pretty soon we may need to give a bailout to the government. They might want that $3,000. . . So Nate, let me get back to you. Let’s say a soldier takes all this great advice and they’ve cleaned up their credit, or they are credit worthy, what is the process for going through and getting themselves a VA loan? Well, let me actually back up and say is now even a good time to buy for soldiers?
Nate: Well you can look at it two different ways on if it’s a good time to buy. One thing, it depends on what area of the country you are in, different areas or in different states. Overall, looking at the big picture, it’s a good time to buy with the idea that there’s a lot of homes on the market. I do think right now is a good time to get into something. There’s been talk of the government dropping, buying mortgage back securities in hope to lower the interest rate. If that were to happen things can swing a lot of different ways. It can go from a buyers market to a sellers market pretty quick. And that could happen sometime next year or it could never happen. You know how it goes when rumors like that start. But if that does happen that could totally swing it from there’s a lot of homes on the market, they’re all relatively well priced compared to where they’ve been over the last year. And if the rates drop that’s going to through a bunch more buyers out there. It goes back to this supply and demand thing where the more buyers, sellers don’t have to have to sell as low a price and the home prices then can go back up.
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CJ: What is the process for getting a VA loan?
Nate: The way you would do it with — and our company obviously does VA loans and that’s what we specialize in. The first thing you do is you have to apply for the loan, you have to decide, you know, ‘This is what I want to do.’ First thing you want to do is find out how much you are qualified for because that’s going to tell you what homes you can go and look at. The application process is fairly easy. It’s going to be comparable depending on where you go. I don’t want to turn this into a commercial because I think we’re the best, but I do think we’re the best, but I’m not going to go there. Once you apply there is going to be a credit check based on the information that you’ve provided. It’s not much different than the loan process of any loan. There just a few differences. Obviously the product is different, but the loan process itself is not different. So once the application has been approved the loan officer is going to let you know how much you qualify for and they are going to request some documents from you that basically documents that backs up what you’ve told them — your income statements, your assets statements. Here we’ll help you get your certificate of eligibility because that is a requirement. That’s the form that says yes you’ve served the time and you’re eligible. Going from there, once you find the home the appraisal is ordered and most lenders are going to require very little work from that veteran other than gathering the things they need. Unfortunately sometimes with a VA appraisal they will require repairs. The whole program is set up with the veteran in mind. If the home isn’t in the shape that it needs to be the VA going to say ‘you know what we’re going to . . . before we guarantee this loan you’re going to have to fix those things because we want this veteran getting in the home they deserve to get in.’ And doesn’t have any dangerous things with the home or repairs that should have been made before. To some extent it causes problems because it’s hard for the sellers to understand that and the buyer wants to get in the house, but that’s how the loan was set up and everyone follows those guidelines. At the end of the day it does help the veteran. I’m not sure where to go from there. That’s the basic process. At that time the lender ultimately will fund the loan and keys will be handed over.
Jeff: About two months or so ago one of the guys I was deployed with he contacted me and he had just actually bought a home and he did the VA home loan process. Let’s say I had that happen again, how would they go through the process, would they just go to the website or would they go to a local provider? How does it exactly work in that process?
Nate: It’s a few different ways. We’re not the department of Veteran Affairs. They could come to our website. A lot of local companies will do VA loans. Some won’t. The problem you run into is you end up a loan officer that’s done one VA loan, three years ago and he’s not familiar with the terms. But if someone where to ask you, there’s a few different ways to go about it. You could send them to our website and they can get a lot of information there and go ahead and apply right there and get all their, at least get all their questions answered. Then from that point go in the direction they choose to. The way it works usually the end investor is going to be, probably won’t be the person that they are talking to. Unless they walk right into a retail office where a lot of times they may not be able to get the lowest rate. Another misconception about the VA loan is rates are the same no matter what on every VA loan. That’s not the case. Rates are different depending on what company you go to and their overhead and all kinds of things that.
CJ: And Nate if I could interrupt you and answer Jeff’s question a little bit more too. I’ve had two VA loans and both of them were through different companies and I got two different interest rates. I did go through the VA Mortgage Center and so I’ll kind of through a commercial out there because i wouldn’t be working with the VA Mortgage Center if I didn’t think they were hot stuff myself. The second house I bought which is the house I currently live in I bought through the VA Mortgage Center and I’ll tell you, it could not have been any easier. My wife and I bought the house practically sight unseen. We had a good realtor too. But we were in the middle of a PCS move, kind of like you were coming home from a deployment. Nate is actually the guy I worked with at the time, I didn’t realize he was the CEO or I would have been more respectful to him. Every question I had for VAMC was expertly answered, quickly answered. They went out of their way to get me the answers when things kind of crept up on me that were unanticipated. We found a way to make it work. Where as my first loan through the VA process was very very frustrating because I didn’t know what to expect. I’d do one step then they’d say ‘now you gotta do this, now go and do that one, now you gotta do this.’ And so I highly recommend if you got somebody or you yourself are looking to use that VA loan it doesn’t hurt to check out the VA Mortgage Center.com. It is a really easy process. I don’t know if it’s easy for them, but as the end user here, it was easy for me. And I love my house Nate.
Nate: Good. The thing that sets us apart is all we do is VA loans here. If you go somewhere that does the occasional VA loan they are not going to know the ins and outs. They’ve made so many changes in the VA program just this year alone if you haven’t done a VA loan is 6 months you are going to be behind the 8 ball not knowing what’s going on. We’re ahead of the game. Every person in this office could tell you the ins and outs a VA loan. That’s something that we are proud of and we stand behind.
Troy: A little bit ago you talked about the home inspections. Having gone through a couple of VA loans myself i know that the VA inspector . . . we always look forward to, you know, sometimes the the seller doesn’t know what to think. . . do lenders tend to feel safer when they know . . . it’s one thing you can hire your own inspector but when you get a VA loan you have to get the VA home inspection. Do they tend to like that better, or is there negativities to that, or anything like that, that’s happened to VA home inspections.
Nate: As far as the lenders go I don’t know whether they . . . I don’t know the total answer to that to be honest with you. What I’m thinking is they feel better about it because they know that the buyer or the seller didn’t have their cousin come and do an appraisal and say, ‘Yeah the value’s definitely there.’ They know they have somebody that’s on the line and is signed up for this program and is a VA approved appraiser. He going out there and saying, ‘Yes, I’m putting myself on the line here. I have not interest in this transaction what so ever. I’m giving it this value and I’m also taking a little more in depth look at this property and saying yes, let’s fix the paint on the back, let’s check the crack in the concrete to make sure it’s not a foundation issue, and let’s do this and this.’ At the end of the day the lenders going to be, I would think, more satisfied with that, but the main thing they are looking at is the 25 percent guarantee.
Troy: Right. But it doesn’t, I want to point out, if I’m correct, it doesn’t take the place of the buyer hiring their own home inspector right? Because their own home inspector looks at some of the same stuff but really is looking out to make sure that . . . they look a lot more at the construction, foundation, and electrical than the VA inspector does, correct?
Nate: That’s very true. That’s another thing that we’ll tell our borrowers nearly every time. The VA is an appraisal. It’s just an in depth appraisal is what it is. It should not take the place of an inspection. If you are out there and thinking of buying a home I encourage you to get your own third party inspection done on the home. The lender doesn’t need it for a VA loan, but it’s good piece of mind for you because they are going to look at everything. The VA appraisal does not take the place of that. It’s more in depth than a regular appraisal, but it’s not going to take the place of a third party inspection.
Troy: A question we have from the chat room is if there are any closing costs associated with VA mortgage and if there are any points. And I’ll caveat that because the question kind of goes along with what I was going to ask is the old double zero, triple zero down that the VA use to have. I know my first home was a triple zero down. It kind of goes along with that. Could you kind of go into that a little bit?
Nate: The point situation is going to come down to which lender you use, ultimately. It’s set up where the VA will allow points, they’ll allow discount points, they’ll allow an origination fee possibly. It depends on the situation on each individual loan. If you’re wanting to buy down the rate, you can do that with a VA loan. Points are not required. So it just depends on the interest rate. It’s a negotiating tool that you can use. If you’re willing to pay higher costs you can usually get a lower rate and vice versa. Less cost, a little bit higher rate. That is true across the board.
Troy: Does the VA still today still have the double zero, triple zero down loans where that’s pick those costs or those zeros are to the buyer because they’re picked up by the seller? Or is that not around anymore.
Nate: That’s still around and that’s something a majority of the loans that we do here, the purchases, we’ll work hand in hand with the realtor to help negotiate those costs in. The title cost, the lender cost. We’ll even often times get the pre-paid charges . . . what I’m talking about that is setting up your escrow account so your taxes and insurance are paid at the end of the year. We’ll negotiate all those into the contract when the realtor is putting it together. We do loans every single day where the buyer doesn’t bring a dollar to the closing and often times gets whatever earnest money they put down back.
Troy: We lucked out on our first one because the seller tried to go on the cheap and tried to sell it themselves without a realtor. They agree to triple zero down to which I don’t think they’ll ever do that again.
CJ: Is that like a poker thing? Is that like russian roulette with loans? What’s triple down? I know what a double down is. You got me. I’ve never heard of that.
Nate: We don’t still use that term. I’m not familiar with the term, I’m familiar with the process of that but not the term.
Troy: So you are dating me a little bit. You’re aging me a little bit.
Nate: [Laughs] I think so.
CJ: Troy’s an old man.
Troy: CJ, do you want the answer to that? Do you want him to go through what that is?
CJ: Oh yeah, that’s right.
Troy: He can explain it better than I can. I think it’s the same process. . .
CJ: I forgot I asked the question. Go ahead, please, if you could explain that for me Nate.
Nate: What are we talking about. I’m sorry. I missed the question.
CJ: I guess the process or what it is called these days for what Troy is describing as a triple zero.
Nate: In six years, I’ve yet to hear triple zero. Here we just say no money out of pocket and we don’t have any cool hip slang terms for it. I should probably try to implement one of them here after this call.
CJ: Troy’s talking about his first house so this was back when they were mortgaging huts and things like that.
Troy: This was the 90s. I think CJ was . . . I bought this house a year after CJ came in the Army. It is essentially the closing cost that you would typically pay for, back, if I remember correctly, double zero, triple zero was the seller picked them up. So different fees and things like that. I don’t remember all the names of them. You still put an escrow down to secure your honesty, your willingness to buy the house. But there are two or three different fees, and it’s not points, that the seller . . . are usually split between the seller and the buyer when they agree to it what they used to call a double or triple zero down back in the mid 90s. The seller payed for all of it. It was a way for a seller to attract buyers.
Nate: I see.
CJ: Right. We’ll Jeff, your still there right?
Jeff: I’m here.
CJ: I want to plug your website a little bit, GoodFinancialCents.com. Can you kind of tell the audience about what your background is and also about the website? What can they get by going there?
Jeff: I was a finance major in college. I was in the military for nine years. I’m not in the inheritance of some big trust fund. My parents never really invested. They always gave me the advice of ‘You always need to save.’ Every kid has probably heard that from their parents. But they never gave me the direction how. I became a financial advisor when I was 24. I met with folks that twice and three times my age. What I kept hearing was they wished they would have saved more. They wished they would have started earlier. I kept hearing it and kept hearing it. It made me realize that the reason they didn’t start was because they didn’t have the information or the knowhow to do so. That kind inspired me to where locally I was teaching basics like intro to stock market to high school students. I implemented a stock market game, just trying to start with a younger generation because this is all stuff that I didn’t have. It evolved into where I finally learned what a blog was. Never understood the whole concept. I thought wow, what a great platform to get out there and give people the basic investment information they need to make good decisions. So that’s kind of the progress and transition to what Good Financial Cents has become. It a resource for whether you’re the brand new investor that doesn’t know what a mutual fund is and you are soon to be a retiree and you’ve got question on social security or anything for that matter. My goal is to have it all covered in Good Financial Cents.
CJ: Is GFC part of Jeff Rose Financial or is this completely separate?
Jeff: JRF is kind of like my personal business site. My own personal website in regards to the actual business. GFC is just my blog. So two separate websites but they are intertwined.
CJ: I’ve been reading through. There is a lot of good information in there. I came to your site through something you had written for Military Finance . . .
Jeff: Military Finance Network. It’s a blog by the name of Patrick who also runs another blog called Cash Money Life.com. We met in the blogosphere. He served overseas as well. I want to say the Air Force. We found each other. He asked me to write an article on his MFN blog . . . where I wrote about how we were able to pin point our finances as a family and what I saw with my fellow soldiers and some of the mistakes they made.
CJ: . . . Nate, tell us a little about your website, VA Mortgage Center.com
Nate: We have some amazing bloggers and you guys may know some of them. Our website VAMortgageCenter.com was started with the whole idea of helping veterans, getting them into home loans and helping them learn about the financing that was out there that many of them didn’t even know about. And that’s kind of transitioned into lots of different things. Nate Broughton, who’s really in charge of that other stuff could probably tell you a hundred things that I don’t even know about that are on there. Now we solely do VA loans with very few exceptions when a veteran can’t qualify for one reason or another we’ll do a different loan for them. We’ve got tons of information on there, great blogs, we’ve got a scholarship program set up for the children of active duty or veterans. It’s not only a great website, it’s a great place to work.
CJ: And you guys also recently raised money for Project Valor-IT through Soldier’s Angels correct?
Nate: That sounds correct. Nate Broughton knows the stuff. We done a lot with the PVA and things like that that are great programs.
CJ: Well Nate and Jeff we really appreciate your time and thank you guys for coming on. All of you out there please check out their websites. You can check out Jeff Rose’s financial advice at GoodFinancialCents.com and Nate Long [at VAMortgageCenter.com ].
