VA LOANS GUIDELINES
What is a VA Loan?
VA loans are home mortgages for veterans guaranteed by the Department of Veterans Affairs (VA) and designed to offset common financial challenges faced by military families and veterans, and to simplify the approval process with a VA home loan. Eligible service-members and veterans can buy a home with little or no down payment. The VA home loans typically have lower interest rates than conventional mortgages, allow for higher debt-to-income ratios and lower credit scores, and they don’t require private mortgage insurance, because the VA home loan guarantees a portion of your loan, This mean a significant monthly savings. The VA loans guidelines also offer limitations on buyer’s closing costs, and an appraisal that informs the buyer of the property value. For most loans on new houses, construction is inspected at appropriate stages, and a one year warranty is required from the builder. VA loans guidelines also perform personal loans servicing and offers financial counseling to help veterans having temporary financial difficulties. VA Loans Guidelines
How Can I Get a VA Loan?
To get a VA loan, you need to be part of the Veteran’s active military personnel or military families, and make sure that you are eligible for a VA loan. Second you need to Shopping around to Find the best lender who participates in the VA mortgage loan program, and offer you great mortgage terms and lower closing cost. Third get your Certificate of Eligibility from the VA to prove that you are eligible for a VA mortgage loan. And finally apply for your VA mortgage loan; your VA lender will work with you to complete your financial process.
Who is Eligible?
In order to qualify for a VA Loan, you must be an active-duty or retired member of the armed forces with at least have served 181 days during peacetime, 90 days during war time, or 6 years in the Reserves or National Guard, or have a discharge other than dishonorable. The spouse of a service member who was killed in the line of duty or as the result of a service-related disability, may also qualify.
Note: you are not eligible for a VA financing only based upon Active Duty for Training in the Reserves or National Guard. You must had been activated under the authority of title 10 U.S code as was the case for the Iraq/Afghanistan. If you have served for less than two years, then you are not going to qualify. During periods of war, active personnel must have served for at least 90 days to qualify
How I Get my Certificate of Eligibility (CEO)?
VA applicants must present a certificate of eligibility, which establishes their record of military service, to the lender. VA loans, FHA loans and other loans insured by departments of the United States government are securitized by the Government National Mortgage Association. VA Loans Guidelines
To get your CEO you have to check the web page of the Department of Veterans Affairs, and find according to your military status the evidence that you need to gather for apply for you CEO. You can apply for the CEO in several ways, the first one is applying online, for that you have to register in the web page of the Department of Veterans Affairs, and logging your credentials. The portal will indicated the steps to follow. The second way is applying through a lender who has access to the Web LGY system. This Internet-based application can establish eligibility and issue an online COE in a matter of seconds. Not all cases can be processed through Web LGY, only those for which VA has sufficient data in their records. However, Veterans are encouraged to ask their lenders about this method of obtaining a certificate. And the third one is applying by mail, all the formats are in the web page of the Department of Veterans Affairs (VA). VA Loans Guidelines
Limits of VA Loan?
VA loans guidelines offer up to 100% financing the value of a home and will guarantee a maximum of 25 % of a VA home loan amount upto $104,250, which limits the maximum loan amount to $417,000. usually, the reasonable value of the property or the purchase price, whichever is less, plus the funding fee may be borrowed. All veterans must qualify for. they’re not automatically eligible for the program.
What are The Benefits?
- VA loan guarantees a portion of the loan, enabling the lender to provide you with more favorable terms and with no down payment.
- VA loans offer you other housing-related programs to help you buy, build, repair, retain, or adapt your own home for your personal occupancy.
- For Native American veterans the program Native American Direct Loan (NADL) program reduce the interest rate on a VA loan.
- After you obtain a VA loan, you can apply for different refinance plans or the Adapted Housing Grants program (for Veterans with a permanent and total service-connected disability purchase), which allow you to lower your current interest rate, or to remodel and modify your house.
What is VA Loan Cost?
The VA defines allowable fees and charges that the veteran applicant can pay or closing costs that may be charged to the applicant. These costs are determined as reasonable and customary by each local VA office. All other costs in the transaction are considered non-allowable and generally paid by the seller when you are purchasing a new home or by the lender when you are refinancing your current VA mortgage.
Between the cost that you have to consider, are the VA Funding fee which is paid to the VA to help fund the program and varies depending on type of service, loan amount, down payment and subsequent VA Loan usage (This fee can be paid in cash at closing, but most applicants choose to add this cost into their monthly payments), property taxes which generally are estimated to be 1.2% of the home’s value, but may vary based on your location, and annual homeowners insurance is roughly 0.35% of the home’s value but can change based on insurer.
VA loans guidelines offer you lower closing cost than other loans, because VA limits closing cost for veterans and allows seller to pay most or all of those expenses. Many of our borrowers purchase a home with no money due at closing. VA Loans Guidelines
How to Choose a Lender?
Choose a VA lending institution that can manage your VA home loan. A lender can help you review your credit history and determine how much of a VA loan you can qualify for. Be aware that different lenders have different closing costs and other fees, so it pays to shopping around. Also seek for a lender who cares and connect with your own real needs and your family’s. As we know VA loan guidelines is flexible with the requirements and have their own unique suite of approval guidelines, even though private lenders who finance the home purchases have an additional set of criteria that a potential applicant must qualify, including debt, income and credit requirements, as well as examine your debt-to-income ratio. Here are described some financial definitions that would help you to understand more what lenders ask for.
Credit Limit: VA home loans have their own rules and guarantee which lenders like. VA loans guidelines also require the lender to verify the applicant has a responsible, stable credit history with reliable income that will cover monthly expenses, including their new loan payments, but does not require a minimum credit score. Lenders however, do use credit scores when approving VA loan applications. Most lenders require a minimum score of 620 to 640.
Additionally, the VA requires that applicants maintain a certain amount of income left over each month after all main expenses are paid. The excess is meant to cover typical family needs, such as food, transportation and so forth and is referred to as residual income. By enforcing residual income requirements, the VA increases the chances of its applicants earning sufficient income to meet all financial obligations, and also ensures applicants have a cushion in the event of an emergency.
Debt-to-Income Ratio: Your debt-to-income ratio is all your monthly debt payments divided by your gross monthly income. This number is one way lenders measure your ability to manage the payments you make every month to repay the money you have borrowed. To calculate your debt-to-income ratio, you add up all your monthly debt payments and divide them by your gross monthly income. Your gross monthly income is generally the amount of money you have earned before your taxes and other deductions are taken out. For example, if you pay $1000 a month for your mortgage and another $150 a month for an auto loan and $350 a month for the rest of your debts, your monthly debt payments are $1500. ($1000 + $150 + $350 = $1500) If your gross monthly income is $5000, then your debt-to-income ratio is 30 percent. ($1500 is 30% of $5000.)
Evidence from studies of mortgage loans suggest that borrowers with a higher debt-to-income ratio are more likely to run into trouble making monthly payments. The 43 percent debt-to-income ratio is important because, in most cases, that is the highest ratio a borrower can have and still get a qualified mortgage.
How long is VA Home Loan Process?
The duration of a VA home loan buying process take no longer to close than FHA or conventional loans, and should not take more than 30-45 days from start to finish. For the last eight months of 2014, the average conventional purchase loan closed in 38.9 days for regular loans, compared to 39.6 days for VA loans, there’s not much difference between then. So “Why did the lender say that VA loans take 45-60 days? the reason is that specific lending company use this extra days to close the loan not VA. VA Loans Guidelines
The truth is the VA really has limited involvement (really none) so saying that VA Loans take longer is really not fair to the VA or the Veteran for that matter. Having said all of that if you are currently working with a lender that has quoted you 45-60 days, or is just lagging altogether, you may want to look for another mortgage company that can close on your loan sooner than that saving you time, energy, and of course, money. VA Loans Guidelines