Can the Missed Payments in the Past affect your VA Eligibility?

VA loans have gained in popularity in recent years. According to a report by The Huffington Post, the Department of Veteran Affairs backed 630,000 mortgages for veterans and military personnel in 2013. Unique features and unmatched buying power make VA loans a preferred choice among military personnel.

VA approved lenders can help veterans understand the specifications including the eligibility criteria to obtain a mortgage. They can assist borrowers to find the right property, and also negotiate the purchase agreement. However, when veterans apply for a VA loan, lenders will analyze their past credit performance in order to determine whether or not to approve a loan. A borrower who has a history of making timely payments is considered safe. On the contrary, a borrower with a history of slow payments and delinquent accounts may find it difficult to get a loan approval. Here are some of the factors that are considered when you apply for a VA loan:

• Late Payments

When you apply for a VA loan, the underwriter will analyze your past credit behavior. A borrower who has faced some financial difficulties for a specific time period, but has maintained a good payment history, will not be disqualified for a VA loan. If you make regular and timely payments for 12 months after the date of your last defaulted payment, then the lenders consider that your credit has been re-established.

• Credit History

When it comes to VA loans, the absence of established credit history will not disqualify you from getting a mortgage. A satisfactory history of payments is preferred as it helps establish a positive credit history.

• Unpaid Judgment

If a borrower has an unpaid judgment, then his mortgage will not be approved. However, a borrower who is on a repayment plan and has an acceptable payment history may be approved for a loan.

• Foreclosure

A borrower whose previous residence was foreclosed within the last two years from the disposition date is not eligible to get a VA loan. If the foreclosure was on a VA loan, then the applicant may not have full entitlement that is available for the new loan.

According to the rules laid down for a VA loan, a borrower can’t be disqualified for missed payments during a period of financial crisis. However, in such situations, a borrower will have to provide relevant proof to show that the circumstances were beyond their control. The applicant is also required to submit a proof to confirm that the situation has been resolved.

Confused between VA loans and Conventional Loans? Here’s Some Help

Buying a home in Texas may top your list of New Year resolutions. The colorful culture, mouthwatering food, the plethora of employment opportunities and of course attractive homes, makes this state a dream destination to settle down in for many Americans. However, one of the major hurdles that prospective homeowners face is financing the entire investment, especially if you are an active military member or veteran.

This is where VA home mortgage loans play a crucial role. Despite the numerous advantages that VA loans offer, it has been shown that many veterans don’t apply for one. In 2004, VA loans accounted for only 2% of all mortgage loans in the U.S. The scenario improved in 2014, as the number increased to 8%.

One of the key features of VA loans is that it doesn’t require any down payment. Also, the VA loan rates in Texas are quite competitive as compared to conventional home loan programs. For instance, you may get a conventional loan with a low down payment, but the interest rate will be higher due to the higher risks involved.

Why VA Loans?
Here are just a few reasons you might want to choose a VA loan over a conventional loan:

No Downpayment - In recent times, lenders are asking for 10%-20% down payment for a conventional loan. VA loans are backed by the federal government, as a result, banks don’t require a down payment.

No PMI – A VA loan is backed by the government so that lenders don’t need private Mortgage Insurance (PMI) in the loan amount. This is an added expense that is required for conventional loans.

Lenient Qualification Standards - The qualification standards vary for different loans. The government-backed VA loans have less stringent qualification standards as the banks assume less risk.

Assigning an Interest Rate
There are several factors that are evaluated when assigning an interest rate for VA loans. Credit score, loan amount and lender’s fee charged to the veteran and the tenure for which you need the loan are some of the essential factors that are considered. VA loans don’t require a specific credit score but most lenders ensure that it is not lower than 620. A higher credit score ensures a better loan interest rate.

The lock-in period also plays an important role in determining the loan rate. The rates on the loan can vary from day-to-day, and at times even intra-day. This is the reason why it is essential to get the rate quotes on the same day and time.

A Bank Home Loan is Not Your Only Option

Most people, who want to buy a new home in a state like Texas usually consult a mortgage company that can help them find the most suitable property in the competitive housing market. If you too are looking to buy a home in this state, a bank loan is likely to be the first place you think of going. However, it is not your only option. Depending on your financial situation and preferences, you can also consider one of the following options for securing home loans in Texas.

Conventional Loan
These mortgages are offered by private lenders unlike others that are offered by government-sponsored ones. The two major types are –

Fixed rate mortgages -  Interest rates remain non-fluctuating for a determined time
Jumbo mortgages - even for borrowers with low credit scores; however, the down payment for Jumbo mortgages is larger than other mortgages.

Due to stringent lending regulations in the U.S, getting conventional mortgages has become increasingly difficult. Lending institutes are likely to reject loan applications if the borrower's’ monthly income and credit score are low.

FHA Home Mortgage Loan
The United States Federal Housing Administration (FHA) makes provisions for people who have less household income to be able to secure a home loan easily. Only approved mortgage companies can provide such loans. While the interest rate and other terms are favorable for people with lower cash reserves, they need to pay a minimum down payment of 3.5%. However, there is a 1.75% percent premium that is to be paid to the FHA upfront. This amount is usually adjusted in the loan. It means the burden falls on the shoulders of the lender. The overall amount paid by the borrower for an FHA loan is higher than other types of loans.

VA Mortgage Loan
This mortgage is for veterans, which can be sanctioned by approved lenders only. Veterans and their spouses (in the event of their death) can buy homes without a down payment if they can’t secure a private loan. There may be funding fees from zero (0) to 3.15%. The limit for this loan without a down payment can’t go beyond $625,500.

Loan for the First Time Homebuyers
In Texas, there’s the My First Texas Home Loan Program or TMP 79. Another program is known as the Texas Department of Housing & Community Affairs or TMP 77. These programs help people who have low to moderate incomes who have never owned a home (or at least not in the past three years). It helps borrowers get a competitive interest rate with a 30 year repayable mortgage. The amount may cover the down payment and the closing costs as well.

You may not be able to decide which program suits you the best. Keep in mind that the above-mentioned programs are not the only ones that exists. In order to make a smart and informed decision, contact an expert mortgage consultancy firm and learn about your options.

All About VA Loans and How You Can Apply for Them

Do you often hear about VA loans and are you interested in learning what they’re all about? To begin with, a VA loan is a mortgage whose guarantee is given by the United States Department of Veterans Affairs. VA loans are meant to offer long-term financing to veterans who have worked in the American armed services or their spouses whose partners lost their lives in a service-related cause. Those who are eligible for this loan can apply for it. They can go for this loan even when they fail to get private financing. One of the major USP’s of this loan is that a borrower doesn’t have to make a down payment.

Let suppose that you are a resident of Texas. Before you go looking here and there to secure a loan, you must know that VA loans in Texas are made available to eligible and qualified veterans through direct lenders, mortgage brokers and banks. As far as the interest charged on a VA loan, it can be similar to that which is charged in a conventional mortgage.

To secure a VA loan, you need to follow certain steps. First and foremost, you must become pre-qualified to purchase a home or get a loan refinanced. For this, you have to get a pre-approval letter before you make an offer on a home. If you are buying a home and not getting a loan refinanced, you can go for a house whose closing costs don’t exceed 4% of the total amount and can be incorporated in the contract.

For a formal loan application, you will be required to furnish a copy of your purchase contract and there will be other disclosures that will require your signature. In the end, as you show some personal documents, your loan should be approved. Post the approval of your loan, you can go ahead and start closing on your new house. What will happen in the end is that you will again be signing some final loan documents and the purchase transaction as well as the transfer of ownership will be finalized. Then your new home will be all yours.

Why Choose a VA Home Loan?

When it comes to home ownership, everyone wants to put in their best effort to find the best deal. Aspiring home buyers are always on the lookout for ways to make the most out of their investment. This includes obtaining a home mortgage loan at the best possible terms.

For example, VA home loans in Texas are a preferred option for veterans in the region. These mortgages are guaranteed by the US Department of Veterans’ Affairs. VA mortgages are in place to help veterans of the American armed services or their qualifying spouses benefit from long-term financing to buy their own home.

Let’s talk about why a VA loan is the best mortgage option for those who qualify:

One of the best features of a VA loan is that it offers 100% financing. While in the current lending environment, it’s very tough to get a loan without a down payment. These loans help qualifying buyers purchase their home without making a down payment. Some FHA loans come with the lower down payment option of 3.5%, but even this figure may be unattainable for some buyers.

When opting for a VA home loan in Texas, buyers are able to free themselves from having to pay for Private Mortgage Insurance (PMI). This is because VA loans are backed by the federal government. This means huge savings for home buyers, which could amount to 0.5% to 1% of the complete loan amount on an annual basis.

Relaxed credit requirements are another highlight of VA loans. Potential buyers with less than perfect credit scores may qualify for these loans. Most VA lenders ask for a credit score of 620, which is a blessing for military home buyers. Moreover, the interest rates fluctuate based on the market and individual borrowers, and they may even fall below conventional loan rates.

Last but not the least, VA loans come with no prepayment penalty. In some cases, paying off a conventional home loan within the first five years may cause you to incur a prepayment penalty equal to about 6 months of interest. VA loan borrowers don’t have to deal with any such penalty, which makes these loans even more of a lucrative option.

In case you think that you might qualify for a VA loan, get in touch with a reputed lender in your area; someone who has rich experience in this domain. The right guidance from a VA approved lender can take you closer to home ownership.

Determining Eligibility for Texas Veteran’s Home Loans

Texas veterans home loans offer the military veterans in Texas an opportunity to own a home. The best thing about these loans is the fact that veterans don’t need to make a down payment. Also, they can receive up to 103.15% of the sale price of the property as a loan. Out of this 3.15% includes the funding fee that can be financed with the total loan amount. In order to qualify for such loans, veterans need to fulfill certain conditions.

When you choose to apply for a mortgage, the best decision you can make is to consult a respected mortgage company with qualified loan officers who can evaluate your current financial condition, assist you in understanding various loan programs and apply for a loan. They can also assist you in finding a qualified real estate agent.

When working with a loan officer on a home mortgage, they will help you through the requirements process, including proof of service and income. Here are some of the documentation requirements for veterans home loans:

1. Certificate of Release or Discharge (DD214): This form is available for retired veterans, reservists and those serving in the National Guard. The form is proof of discharge from active duty. A loan officer can assist you in filling out this form and submitting it to the lender who can help you get approved for a VA mortgage so you can begin the process of owning a home.

2. Certificate of Eligibility (COE): You will need this when applying for a loan. You can get a COE from the VA or your mortgage company can assist you in obtaining one. This certificate ensures that you meet the minimum VA loan standards.

3. Statement of Service: Active duty service members need to submit this document. This document is evidence of their active service that specifies the start date of their duty and their end date. This contains the signature of a senior officer.

Especially for Texas, there are specific mortgage programs for veterans such as the Texas Veterans Land Program being offered by the Texas Veterans Land Board. A leading company in the state assists you in choosing the best Texas veterans home loans. These experts can help you determine the best and most affordable price range based on interest rates and other costs. This is especially for veterans who have financial constraints. The mortgage company will walk you through the entire process and ensure that you make an informed decision.

Qualified Mortgages and Its Impact on the VA Loan Borrowers

There’s a new type of loan called the ‘Qualified Mortgage’. Most of us have heard of it, especially prospective homebuyers who question the impact that it will have on their home mortgages. For example, retired or active duty military servicemen are speculating about the impact that these changes will have on their ability to get the benefits of a VA home loan.

The financial slowdown of 2008 led to the introduction of numerous stringent rules and regulations. This was done to put restrictions on giving away easy loans and to reduce the possibility of loan defaults. However, such restrictions have made life difficult for borrowers who are looking to buy a home. At the same time, the government has been implementing and modifying new mortgage policies to provide relief to these borrowers, and a Qualified Mortgage is one of them. There are some specific policies that have been implemented by certain U.S states. The perfect example would be the various programs and initiatives being taken by the government in Texas; especially its impact on the veteran home loan in Texas.

What is a Qualified Mortgage?
Qualified mortgages mainly focus on the safety and affordability of prospective homebuyers. During the 2000’s, many lenders provided mortgages to a large number of borrowers who had poor credit scores and who were not in the situation to pay back the loan. These subprime loans were the main reason that contributed to the financial meltdown and led to the collapse of the housing market.

The scenario mentioned above eventually led to the introduction of the qualified mortgage. The qualified mortgage does not have the risky features of other mortgages and it ensures that the borrowers can afford to repay the loans that have been sanctioned. Regulators have also laid down eight credit and underwriting requirements that must be met to obtain Qualified Mortgage status. Mortgage companies can still provide loans that do not meet the standards of a qualified mortgage, but those loans will not get protection as per this regulation.

The Effect on VA home loans
People who are worried about the impact that qualified mortgages will have on VA loans have a reason to smile. The good news is that it will not have much impact on the VA loans. These underwriting guidelines have been followed by most of the lenders over the years. Hence, no additional action needs to be taken to comply with these underwriting requirements.

In fact, VA loan borrowers will get some added advantages as it will limit the costs involved in obtaining a mortgage. It has been estimated that around 92% of the loans that have been taken out meet the requirements of a qualified mortgage. The other 8% of the loans either exceed or have a higher annual percentage rate (APR) than allowed. This shows that the new guidelines will not have much impact on a majority of home loans.