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.

Doing things right to get a mortgage loan

On May 12, 2014, the Morning News USA published an article regarding the mortgage interest rates in the US. The write-up mentioned how one of the bigger lenders in the nation has been able to retain mortgage interest rates for a 30 year fixed mortgage.

The current interest rate is offered by the lender for trading standard, long term and 30 year fixed rate mortgage loans at 4.5%, whereas the annual percentage rate is 4.673%. This is just an example that shows a trend in the lending market. These rates may marginally vary from one state to another.

Determining your loan requirement
Before you actually decide to apply for a mortgage, determine how much loan you can afford, and what kind of monthly payment is comfortable for you. There are various loan options that can fulfill your requirement. For example, if you are interested in taking a short term loan, you might opt for a 15 year fixed rate loan. Some borrowers even choose 10 year fixed rate mortgage loans. There are also loans based on adjustable interest rates. However, the loan types that fall under the conventional loan can be difficult for many borrowers to qualify.

The best solution to this issue is to find a lender that can guide you about the more flexible options with lower interest rates and lesser down payment requirements.

Doing these can make your mortgage process easier
Due to several reasons, you may find securing a mortgage loan a little difficult. The reasons could be fluctuating interest rates, low credit score, tight inventories in the housing market, or change in lending regulations. Regardless of the situation in the lending market or borrowers’ limited eligibility for receiving loans, the following tips could be helpful:

Get a Home Appraisal done
Getting the home appraised can give you a clear idea whether the property is overpriced or not. Hence, doing the appraisal soon after the offer of acceptance and letting your lender review it can help you renegotiate the pricing if the home price comes down in the future.

Arranging the Down Payment Early
Consult with your loan officer about making early arrangements for the down payment you need to make. In order to do that, try to put together funds in one or two accounts rather than moving them into several accounts. Thinking ahead will help you buy your chosen home without any difficulties.

When Changing Jobs
If you change jobs when the loan processing is in progress, keep your lender updated about your financial situation. You may have to submit the latest pay stubs and new employer information.

Clear your debts
It is suggested to pay off your debts. Pay taxes, insurance, and credit card bills on time. In the case of credit cards, using up your higher credit limits can affect your credit score. Hence, try keep to your debts as low as possible for a good credit report.

Getting a home mortgage loan is a delicate process, and requires detailed consultations, documentation, and evaluations. Hence, hiring an expert lender will always make life easier for you in terms of practical understanding of the entire process and getting a good home buying deal.