VA Home Loan for Bad Credit Explained: Remember 3 Basic Things before Applying
Did you know that a VA loan makes a handsome financing option for a military borrower dealing with tough credit? Yes, it is a flexible mortgage which has financial benefits along with allowing a low credit score. In the past year, 6,00,000 VA loans were guaranteed and the rate is only likely to go high. No matter how lucrative it sounds, the first loan gets tricky for first-time buyers. Without the proper information on the loan program, you may be left behind.
In the very beginning, it is best to understand that VA loan completely differs from traditional loans with 20% down payment. VA loan programs do not require down payment or private mortgage insurance. There is a funding fee which ranges between 1.25% and 3.30% of the loan. If you receive VA compensation for being the spouse of a veteran died or suffering from a disability while in service, you need not pay the funding fee. The credit qualifications for VA home loan bad credit are better than the conventional loans. After all, you can avail the mortgage with at least 500 credit score.
If you are interested in availing the loan, you need to remember the following things mentioned below.
Understanding how the VA Loan Program Works
The loan is available for the National Guard, active duty, veteran, and reserve service members. When the borrower is applying for the loan in Texas, the person can borrow maximum $417,000 without putting anything for a down payment. Of course, this has to be a primary residence. It is seen that 90% of VA borrowers do not pay down payment and there is no maximum debt-to-income ratio. A buyer can also refinance the current loan with the VA program.
Going through the Application Procedure
In order to successfully get the loan, you need to follow certain steps. In the first step, you have to select a home and sign the contract when you get pre-approved for the loan. If you need to deal with critical financial history, you can ask help from the lender. Then you can submit the application to the lender and proceed with the necessary legal documents. In the end, the lender informs whether you are eligible for the program or not. If you have enough income and established a credit score, you are good to go.
Reusing VA Home Loan Benefit Again
If you pay off the previous loan and sell the primary residence, you can utilize the VA loan benefit again. The borrower can restore the eligibility but needs to send a signed VA Form 26-1880. In any case, you don’t want further delays; you should disclose that the prior loan is already paid off.
In the end, you should remember that the VA loan does not impose a certain amount on the veterans. Additionally, the borrowers can get quick equity in the home when the market value is lower than what you are indebted to. If you need further guidance on making benefit out of VA loan, ask the professional lenders always.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.
