USDA Home Loans-A Comprehensive Overview

You recently got a job in rural areas of Texas and are planning to get a home for yourself. You need a mortgage with reasonable rate of interest as your credit score is around 600. In that case USDA loans is the go to solution for you as you will be offered loan in the rural area of Texas, with your credit score and does not need a down payment. USDA aims at increasing home ownership across US, with the upper limit of $417,000 and no down payment, USDA loans are the go to means of getting loans for many. The eligibility rules are also relaxed as compared to other loans. Here are some basic factors about USDA home loans.

Basics of the Loan
USDA loans started in 1991 with an aim of boosting rural population and home ownership among rural residents. It is given for primary residence and the applicant should have the capability of being able to repay the loan, however, should not be able to take a second loan. Credit score of 640 is the minimum requirement for the application, however, frequent exceptions are made for the applicants based on their income.

Though USDA loans are given for rural area, they are not given to buy a second home, buy agricultural land and for speculation purposes, they are strictly for financing primary residence.

Eligibility for the loan
A USDA loan is for the applicants from rural area and small towns. The definition of small town in given in USDA that is modified as per Census report every few years. Hence, you might have to check whether USDA rules cover your town. Once you have checked about the availability of the rules, here are certain financial checks that you need to go through to get a loan.

Debt to Income Ratio
The combined percentage of PITI (mortgage Principal, Interest, Taxes and Insurance) should not exceed 29 percent of your total monthly income and total mortgage should be less than 41 percent of the monthly income.

Credit Score
You need a minimum score of 640. In case your score is less than 640 because you do not have a FICO recent history; exception can be made. Exceptions are based on your salary, present mortgage and your capability to pay the loan in the future.

Overall Income
While total income is calculated factors such as size of the family, future earnings prospect, disabilities and dependents are taken into consideration along with other factors.

Age and Other Qualification
You need to be minimum 18 years of age and a US citizen or a US national or a qualified alien.

Types of Loans
There are two kinds of loans given by USDA. First is direct loan, that is given directly by USDA and second is the guaranteed loan that is issued by the bank and guaranteed by USDA home loans. The requirement for both varies. Here is a quick reference for both.

Direct loan
Given directly by USDA to low income applicants, whose income is less than 80% of the area median income.

Guaranteed Loan
Given by the banks to applicants with broader income and the income has to be less than 115% of the area median income.

Conclusion
When you are moving to rural Texas and looking for a house USDA home loans can help you in getting the house that you need and help you with the down payment and even with the closure.

VA Home Loans-Ensuring Homes for Veterans in the US

VA loans are home loans available to the veterans of US army. These loans were first approved in 1944, under the guidance of President Roosevelt. Since then, they have benefitted millions of veterans and given them a chance at homeownership and a secure family life.

VA Home Loans: Making Home Ownership a Possibility for Veterans
Every state in the US accommodates the veterans by offering various benefits like easy home loans and special rehabilitation programs including the state of Texas. VA home loans are easily available for them through government as well as VA approved private lenders.

Taking note of the various problems that veterans face such as bankruptcy and poor credit scores, the department of Veteran Affairs designed the rules and regulations for VA loans in such a manner  that it is very easy to qualify for them as compared to other types of loans.

What  makes VA Loans Easier than Others?
1. Zero down payment
2. Easy repayment plans
3. Loan amount upto 100 percent of property value
4. Penalty Free Prepay System
5. Flexible interest rates

As mentioned before, the government policies are very lenient about the VA home loans and there are just a few pointers that decide the qualification of a veteran.

Honorable Discharge
VA home loans’ primary criteria is that a veteran applying for it must be  honorably discharged from the armed forces. Rest all the qualifying criteria such as credit scores, down payment and EMI, are flexible and have easy clause attached to them that makes almost every veteran eligible for a VA loan and also for refinance  of VA loan.

Time Service Record
A veteran who has served before 1980, has to show a war time service record of 90 days to qualify for the loan whereas those  who joined and served post  1981 have to show the service record of 2 years. Anyone below this time limit also qualifies, if the reason behind their discharge is service related disability.

Conclusion
So, this is how easy it is for veterans to qualify for a zero down payment in the state of Texas. VA home loan is definitely the reform that has benefited millions of veterans in the US since 1944.

A Brief Guide on VA Loan Refinancing

VA loans have several advantages over the conventional loans such as lower interest rate, no down payment hassle and lenient credit score terms. Besides these, VA loans are easier to refinance.

Only a few veterans default on their VA mortgage due to which the Department of Veterans Affairs offers a guarantee of 25 percent of the property's value price to the lender in event of a foreclosure. So, for lenders too, a VA loan has lesser risk involved.

VA Loan Makes Home Refinance Easier

Refinancing is the replacement of existing debt obligation with another debt obligation in different terms. There could be several reasons behind debt refinancing such as:

● To take advantage of better interest rate
● To consolidate other debts into one
● To reduce monthly repayment amount (may be for a longer term)
● To free up cash

Refinancing a loan multiple times can negatively impact the financial benefit of the borrower. Nevertheless, if we talk about home refinance for VA loan, the long-term impact might not be that bad. An individual can borrow more of the value of the home (100 percent in some cases) without VA backing. Whether a borrower wants to take another VA loan to reduce the monthly payment amount, wants some cash back from the refinance or has been delinquent on VA loan, there could be different reasons behind filing for a VA loan refinance.

There's no lower or higher limit for refinance with VA loans. In some cases, one can refinance up to 100 percent of the home's appraised value

VA Refinancing Options

Streamline Loan
For those who want to take advantage of low interest rate, streamline loan is the right option. Veterans with a history of timely payments, who want to refinance the existing VA home loan are eligible for the loan. VA doesn't ask the borrower for any certificate of eligibility, income documents or credit report.

If the area where you live or interested in buying a property has a low real estate value, streamline loan might be the only refinancing option suited for you. The reason being, the borrower doesn't need an appraisal for the property. The purpose of streamline loan is to reduce monthly payments, so borrowers can't ask for cash back or consolidate their other loans in any circumstances.

Cash-out Loan
Borrowers who have equity in home and need cash to pay off debts, improve their home or buy a car can opt for cash-out refinance. But, they should be living in their home and obtain a certificate of eligibility to get the loan. Unlike the streamline loan, it might take more time to get the cash-out loan approved and the borrower should also requalify and have the home appraised for the process.

Refinancing Delinquent Mortgage
The borrowers who are finding it difficult to keep up with the mortgage payments and other bills can ask for reduction of interest rate. They need to submit the application for prior approval, go through credit approval and underwriting for the refinancing of loan payment that has been delayed by 30 days or more. If the borrower doesn't have a financial mismanagement history, he might get the refinance loan approved.

Summarizing It Up!
VA wants to benefit the borrowers with the refinancing option. Lenders have to show the interest rate and monthly payments for the new and old loan as well as how much time it will take a borrower to recoup the closing cost with the lower monthly payment on the new low. This is something that other traditional loans lack in; therefore exploring other options won't be of great help if you are already eligible for a VA refinance.

Empowering Veterans with VA Home Loans

A recent market report states that banks have tightened up the lending standards and that is directly impacting the demand of VA home loans. According to Trulia.com, VA home loan is one of the reasons why 79 percent of veterans are able to own a house. In contrast, if we look at the non-veteran population only 63 percent owns a home.

VA loan offers service members, veterans and their families a chance to have the house of their own and is a testament to the nation's commitment to give a better life to those who served the country. The Department of Veteran Affairs (VA) does not lend money for the loan; it partially guarantees the mortgages made through private lenders such as mortgage companies, banks and credit unions.

What Makes VA Loans Lucrative?

• Interest rate is a little lower than that of a conventional loan
• No down payment is required (in case the purchase price is lesser then the appraised value)
• Can be given to individuals with higher debt-to-income ratios and lower credit scores
• No private mortgage insurance is required on loans that have more than 80 percent of a home's appraised value
• No prepayment penalty is imposed if an individual eliminates the mortgage before the schedule
• Negotiable interest rate
• VA assistance provided to the borrowers who default the payment due to a temporary financial difficulty

Who is Eligible for a VA Loan?

Whether you are looking for VA home loans Texas or in any other state, you need to meet the eligibility criteria to get the loan approved. If you fall into any of the categories mentioned below, you are eligible for VA loan:
• Veterans
• Active-duty personnel
• Reservists/National Guard members
• Surviving spouses

Fees

The cost of getting a VA loan is less than other types of mortgages, still, there's a one-time funding fees that varies according to the amount of the down payment and veteran type. For example, if the borrower is with the armed forces and applying for the VA loan for the first time with zero down payments, he would be required to pay a fee of 2.15 percent of the total loan amount. In a scenario where the borrower makes a down payment of 10 percent, he will have to pay 1.25 percent of the loan amount as the fee. For those applying for the VA home loans for the second time without a down payment, they will have to pay 3.3 percent of the total loan amount.

The regional loan centers of VA are across the U.S. in Cleveland, Atlanta, Denver, Phoenix, Texas, St. Paul, and a few more areas. Individuals seeking for VA home loans can visit the website of VA to find out more details of the center that services the state they live in or seek assistance from a loan service company.

Everything You Need to Know about VA Home Loan Limits for 2015

Buying your “Home Sweet Home” may prove to be a tough job. In addition to finding an ideal home that meets your specific needs, you also need to consider your current financial condition. Over the years, many home loan programs have been introduced to help cash-strapped borrowers. Of these various options, a specific type of loan that has proven to be quite beneficial, specifically for veterans, is the VA loan.

Despite the numerous advantages provided by VA loans, out of the 16.4 million service personnel, only 12% take advantage of VA loans. This is because they are not sure about the rules and regulations associated with these loans. This is where mortgage loan experts can help. Mortgage specialists can provide expert information to make your process easier.

Why VA loans?
Home loans guaranteed by the Department of Veteran Affairs have grown in popularity in the recent years. The main advantage of this loan is that the VA agrees to cover up to 25% of the loan amount for lenders, if the borrower defaults in repaying the loan. This proves beneficial for homeowners as the protection allows lenders to offer competitive interest rates compared to conventional loans. If you are planning to apply for a VA loan in 2015, here are some essential loan limits that have been published by the Veteran Administration:

VA Loan Limits for 2015
The VA loan limit is the maximum that you can borrow without a down payment. Beyond the specified limit, borrowers have to pay a 25% down payment on any amount that is above the limit. The new VA loan limits came into effect on January 1, 2015. Depending on where borrowers live, they can expect variances in interest rates ranging from -42.8 percent to 8.1 percent. Though the standard limit for VA loans for most counties has remained the same ($417,000), the VA has established higher loan limits for high-cost areas.

The term “VA loan limit” can be a bit confusing for borrowers. This is because the VA does not limit you on how much you can borrow. It’s the figure that a VA-approved lender will determine depending on the eligibility, credit history and debt-to-income ratio of the borrower. The VA backs 25 percent of the loan limit for the lender in the county, region or a territory.

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.