The Birth of the VA Home Loan
VA Loans have been available since 1944 when they were put into practice by the SRA or Servicemen’s Readjustment Act also known as the GI Bill of Rights. It ensured that veterans could purchase a home without having to make a down payment and provided and still provides to this day much needed assistance for veterans and their families.
Benefits of VA Home Loans
There is a plethora of benefits that come with the acquisition of a VA home loan, such as:
VA loans offer equal opportunities for all veterans who qualify to acquire a VA loan.
VA loans typically do not require any sort of down payment for veterans to purchase a home.
VA loans allow for veterans to finance the VA funding fee and can offer a reduced funding fee if a down payment is made of at least 5% as well complete exemption for those veterans who receive some sort of compensation from the VA.
VA loans do entail a closing cost in most every case but it is often on par with other financing costs and is sometimes even lower in price.
VA loans will never subject a person to mortgage insurance premiums; instead there is an assumable mortgage in place.
VA loans give you the flexibility and freedom to pre-pay without any sort of penalties or fees.
If you instructed in a home that is still being built, then the VA will inspect the home and then make sure you have a warranty from the builder. They will also provide assistance to ensure that the builder will cooperate.
VA loans do not discriminate against veterans who are in default and can offer them temporary financial assistance.
Common Guidelines and Limitations of VA Home Loans
Here are some limitations and strict guidelines that VA Home loans must adhere to:
Guidelines Regarding Chapter 7 Bankruptcy
Official VA guidelines state that a minimum of 2 years must pass since the discharge of the veteran or their partner before they can be approved after having filed Chapter 7 Bankruptcy. They also must prove that they have established good credit and show that they financially qualify for the loan and have a steady job and source of income.
Guidelines Regarding Borrowers in Debt
VA guidelines clearly state that if a debt owed is of a minor amount then it usually does not have to be paid off before the loan can be approved. Judgments however must be paid in full before the closing of the deal.
A prospective borrower is deemed ineligible if they have shown delinquency on any kind of federal debts i.e. tax liens and student loans and the like. If this is the case though there are programs offered that help borrowers to get up to date with their payments and then they can be considered once more for the loan.
Guidelines Regarding Foreclosure
Guidelines state that borrowers whose current or past property was foreclosed upon or who was given a deed in lieu of absolute foreclosure in the past 2 years since the date of disposition are typically ineligible to receive a mortgage that is VA insured. However if the foreclosure took place while on a VA loan then they are due an entitlement towards application of a new loan.
Maximum Allowable VA Home Loan
The maximum amount of an available VA Home loan is limited to about $417,000 dollars.
Resources for Borrowers with Bad Credit
If a veteran or a veteran as well as their partner are found to have prior bad credit they can participate in a Consumer Credit Counseling Plan and after a period of time usually 12 months. If they are shown to have provided 12 months of acceptable and timely payments, they can then be reconsidered for a VA home loan.
Requirements for Obtaining a VA Home Loan
Some basic requirements for the obtainment of a VA Home loan are:
A valid social security card as well as any past names you have gone by as well as previous addresses that you resided in.
Your current exactly monthly salary as well as detailed information about all checking and saving accounts you may possess.
Information on any other real estate that you may own as well as any other valuable assets you may possess.
The estimated market value of your furniture and other valuable personal belongings that may be helpful if you need to put up some form of collateral.
Documentation of both your DD214 discharge papers as well as a Certificate of Eligibility from the VA.
Recent check stubs as well as W2’s for the past two years.
You will be expected to pay for both a credit report as well as appraisal of the property that you wish to purchase.
How the Process of VA Home Loans Works
The first step is that you must obtain a Certificate of Eligibility. You can do this either by going online or a VA approved lender can procure one for you.
Second step is that you should then gather all your pertinent information mainly personal and financial information that will give them a basic idea of your general economic standing. They need this vital information to be able to process the loan.
Third you should prepare yourself for lots of writing as you will be filling out quite a lot of paperwork. Make sure that you do not lie and are completely honest about your bills, level of debt and overall income so that they can then calculate your specific income-to-debt ratio to determine how high of a monthly mortgage you can reasonably afford.
Fourth step is that you should perform a credit check on yourself so that you will know what to expect and better know what your chances are of being approved.
Above all be informed, and professional with all the necessary documents to ensure loan approval. Your loan advisor will be much more apt to move your loan along if they feel that you have done your part in the process.
You may be interested in: Get a VA Home Loan
You can also visit the VA's official site.