Busting 4 Misconceptions Surrounding VA Loans

VA loans are provided to members of the armed forces. VA home loans in Texas and other parts of the country are guaranteed by the Department of Veteran Affairs. These loans can be used to purchase different types of properties including single-family homes and condominiums. There are many benefits of  these loans. VA loan rates in Texas and other parts of the country are lower than their conventional counterparts, which helps save more. VA loans have been around for quite some time now, however, there are still some myths about them doing rounds in the market. The purpose of the post is to debunk some of these misconceptions. Keep reading to learn more.

1. VA loan is no better than any other conventional loan on the market 

Many borrowers and critics rubbish VA loans as just any other loan. The fact, however, is that VA loans come with a bundle of benefits. Qualified buyers, for instance, can borrow more than $400,000 in several locations without making a down payment. VA loan borrowers do not have to pay mortgage insurance; a benefit that can help them save up to $200 per month. Other benefits include low interest rates and a cap on lender closing costs.

2. Borrowers with a bad credit score do not qualify

The VA does not have any minimum credit score requirements for borrowers, however, many lenders would be more willing to lend to borrowers with a FICO credit score of 620 or more, which is significantly lower than what many conventional loans require (a credit score of 660 or more). For borrowers who have filed bankruptcy recently, VA loans have a shorter waiting time as compared to conventional loans.

3. VA loans have long closing time

Many borrowers wrongly belief that the moment they apply for a VA loan they would have to wade through bureaucracy and lengthy paperwork, which can result in agonisingly long closing time. The fact, however, is that with a closing time of 40-50 days, VA loans, in many cases close earlier than conventional loans. Studies also show that VA loans are more likely to close than other loans.

4. VA loan can be availed only once 

VA loan is not a one time benefit and qualifying veterans can use the VA Loan Guarantee Program multiple times. Even veterans who are facing foreclosure can be eligible.

Sum up

VA loan was created in 1944 and has been around for quite some time now, however, still one in three veterans do not know about this benefit. Many others do not have full info about the loan. If you are a veteran looking for a home loan, do not let these myths shroud your judgement and talk to a mortgage consultant to know the loan best suited for your situation.

A Guide to Help Understand My First Texas Home Program

Financing is one of the most important considerations when buying a house. Homebuyers need to research about the available home loans to choose one that suits them best. The decision can be difficult, particularly for first time homebuyers, as they have limited knowledge about where they can look for the best deals. To make homeownership more affordable and easy to obtain, the state of Texas runs My First Texas Home Program. To help spread awareness about the program, the post discusses some important info about it. Take a look.

 

Eligibility Criteria  

• Available for households that fall in moderate and low income group.
• The property must be located in Texas or a federally declared disaster area.
• The borrower must be a first time homebuyer. Buyers who have not owned a home in the last three years are also eligible.
• The property must be the buyer's primary residence.

Types of Homes Financed

You can get a first time homebuyer loan to finance a new, existing or under construction house subject to a couple of conditions:

• The price of the home must not exceed $370,379.
• The house must have a permanent base and should comply with FHA guidelines.

Advantages

• Competitive interest rates.
• Down payment assistance available.
• Long repayable mortgage (30 years).

Documents Required

When applying for a My First Texas Home loan, applicants would be required to submit certain documents that the lender will study to determine whether the borrower is in a financial position to afford the mortgage. Some of the common documents required by most lenders are:

• Salary stubs and tax statements for the last three months.
• Copy of the sale contract.
• Recent bank statements of all the accounts held by the borrower.
• Credit report.
• Details about the outstanding amount, account numbers, and the nature of debt owed (in case of long term debts).
• Proof of additional income.

Application Process

My First Texas Home loan program is backed by The Texas Department of Housing and Community Affairs. Loans are provided by private lenders recognized by the body. After the applicant files the application and submits necessary documents, the lender will evaluate different factors such as the individual’s debt obligations, income, employment status, and credit rating to determine whether they’d be able to abide by payment timelines. The lender would also pre-qualify the applicant on the basis of their financial standing.

Summing up

My First Texas Home is one of the most accessible programs for first time homebuyers in Texas. Texas also has other assistance programs for homeowners to help them buy the house of their dreams. Irrespective of the program they choose, it is important for buyers to compare them as this’d help them identify the best option according to their situation.

Answering 4 FAQs about VA Funding Fee

VA loans are one of the most economical home loan programs for veterans, with benefits including no down payment and low interest rates. The veterans, however, need to pay VA funding fee. Unlike closing costs, the VA funding fee is non-negotiable and mandatory for most veterans, besides a few exceptions. It is a one-time fee that the VA lender directly hands over to the United States Department of Veterans Affairs. Veterans can use a VA loan calculator to find out the exact fee they have to pay or contact a VA loan officer for more information. Continuing the discussion further, here are four FAQs related to VA funding fee in the blog post.

1. What factors influence the VA funding fee calculation?

The VA funding fee generally ranges from 1.25 percent to as high as 3.3 percent of the loan amount. The basic fee, in most cases, is usually 2.15 percent. This figure changes as per the loan size and the down payment the borrower pays. If, for instance, you pay a downpayment of 5 percent of the loan amount, the funding fee will reduce to 1.5 percent.

2. Does the VA funding differ from veteran to veteran?

Yes. Reservists and National Guard members have to pay slightly higher amount than regular VA members. The funding fee for a regular military member who does not pay a downpayment is 2.15 percent. This figure increases to 2.4 percent for Reserve or National Guard. Here’s the rest of the breakdown:

Regular Military

Down payment	Funding Fee
5-10 percent	1.5 percent
10 percent and up	1.25 percent

Reserves and the National Guard:

Down payment	Funding Fee
5-10 percent	1.75 percent
10 percent and up	1.5 percent

3. Who can exempt the VA funding fee?

Any veteran receiving compensation for disability due to service-related issues is not required to pay the VA funding fee. You are also not liable to pay the VA funding fee if:

• You are the spouse of a veteran who died during service or due to service-related disability
• You are entitled to receive a compensation for service-related disability (if you are not receiving retirement pay)

4. Why does the VA charge a funding fee?

The VA understands that homeownership is one of the biggest steps in life for most people, and that is why it keeps VA loan rates much lower than conventional loans. The VA department, however, charges the funding fee to make up for the losses, in case borrowers default on the loan. The VA funding fee, in fact, helps VA offer home loans at an affordable interest rate and favorable conditions to veterans.

Conclusion

Although the VA funding fee is an expense, veterans can finance the fee with the rest of the loan, which may be helpful for many borrowers. If you wish to learn what VA funding are entitled to, use a VA loan calculator. Speak to a loan banking officer to get more details about the VA funding fee and other aspects of the home loan. Remember that learning about the VA funding fee and other components of the loan will help you make an informed decision, and secure a loan that best matches your needs and budget.

Top 4 Reasons to Refinance Your Home Loan

Refinancing your existing loan involves taking a new loan to pay off the earlier debt. The terms and conditions of refinancing vary for one state to another. Two major refinancing options are- rate and term refinancing and cash out refinancing. When looking for a  lender to refinance your home loan, use home loan calculators in Texas to compare home loan rates offered by them. Let’s take a quick look at the top four reasons why you must  consider refinancing your existing home loan.

1.Helps Save Money

Refinancing into a loan with lower interest rate lowers the interest payment obligations, which is a significant advantage, especially for homeowners with long-term loan. Many lenders also provide attractive discounts on closing costs to borrowers with a healthy credit score. To arrive at informed decisions, homeowners must use home loan calculators that will help them determine the cost of refinancing.

2. Helps Unlock Your Home’s Equity

Refinancing helps unlock your property’s equity as you can get a new loan on the basis of your home’s value and the payments you have made on the mortgage. You can use the loan amount in different ways such as financing home renovations, and paying for your kids university costs. The rate of interest will be the same as that for the mortgage.

3. Enables you to Shorten Your Loan Term

Refinancing your existing loan into a shorter one can be a prudent option, if your payment capacity has increased (due to an inheritance, or an increase in salary) as compared to when you took the loan. Refinancing into a shorter loan will help save on interest payments and other costs and can be the best choice if your loan does not allow you to pay more on your mortgage. To realize substantial savings, choose a provider with lower closing costs.

4. Other Benefits  

You can club your existing debts together into a single loan and refinance into a new loan to save on interest costs. Consolidating debts  helps keep a track of all your payments, which is important for better finance management. If you expect rates to rise in future, refinance your variable loan into a fixed loan that can help save costs. You can also refinance to pay off existing debts on time, which is a must to maintain a healthy credit score.

Conclusion

Refinancing your existing loan comes with a number of benefits that can help you manage your debt better. Before you refinance, use a home loan calculator to calculate the amount you would save. Refinancing costs can be substantial and it may take years for you to recover them. Therefore, refinance only if you intend to stay in the house for a long period.