The VA loan program is no less than a boon for eligible veterans and their surviving spouses looking to secure a home in the United States. There are several benefits of obtaining a VA loan, some of which are - zero down payment, lower mortgage rates, relaxed credit score requirement. Despite the benefits offered by the VA loan program, many veterans do not apply for a VA loan because of the myths associated with VA loans. To clear the smoke screen, in this post we discuss five such myths about the VA loan program. Let’s take a look.
1. Only Applicants With Perfect Credit Score Qualify
Technically speaking, there are no explicit credit requirements for securing a VA loan and you don’t need to have a perfect credit score. Since VA loans are backed by the Department of Veteran Affairs, approving a loan is always a low risk proposition for the lender. In most cases, VA lenders approve loans of borrowers with an average score of 620 or more whereas this limit can go beyond 740, if you apply for conventional loans.
2. Bankruptcy Cases Don’t Qualify
The VA loan program is more flexible as compared to conventional loan programs and it allows borrowers to apply even after bankruptcy. VA lenders require you to wait for two years after a Chapter 7 bankruptcy and one year, if you are making payments for a Chapter 13 bankruptcy registered on your name. Nonetheless, a case of bankruptcy doesn’t kill your chances of getting approved; however, you must work to fix your borrower profile, payment history, bad credit score and pretty much everything that reflects your financial profile.
3. VA Loans Are Expensive
Contrary to common notion, VA loans are not expensive as borrowers don’t need to pay a down payment or a private mortgage insurance, unlike other conventional loans. On top of that, the interest rates and closing costs are quite competitive as compared to other home loans, making them an ideal proposition for the borrowers. Last but not the least, VA loans also let borrowers to refinance, which further helps in slashing the final costs.
4. VA Appraisals Always Spoil the Deal
Most borrowers think VA appraisals as an enemy to the proposed loan amount, which isn’t the case. VA approved appraisers check for habitability of the home to protect the interests of both borrowers and the homebuyers. VA appraisers use the Minimum Property Requirement (MPR) guidelines to check whether a home is safe, structurally sound and in an appropriate sanitary condition. Always choose a home that’s structurally sound and ready to move-in, and VA appraisal won’t seem like a nightmare anymore.
5. VA Loans Can Only be Used Once in a Lifetime
VA loan is not a one-time benefit and qualified veterans can apply time and again, provided they haven’t exhausted their entitlement limit. The entitlement is the loan amount that the VA guarantees and once a borrower exceeds the limit, they might need to make a down payment to get the loan. Most eligible veterans have a primary entitlement of $36,000 and a secondary entitlement of $68250, that takes the total to $144,000.
The Bottom Line
Many myths mentioned in the blog post hold veterans from applying for a VA loan, which ideally shouldn’t happen. VA loans are one of the most powerful home buying tools for veterans looking to secure a home in Texas and elsewhere in the US. The program, not only offers competitive loan rates, but it also has the lowest closure rates in the mortgage industry. Understanding the guidelines and paperwork can be confusing, and therefore, you must hire a professional mortgage company with dedicated loan officers to assist you through the process.
1. Only Applicants With Perfect Credit Score Qualify
Technically speaking, there are no explicit credit requirements for securing a VA loan and you don’t need to have a perfect credit score. Since VA loans are backed by the Department of Veteran Affairs, approving a loan is always a low risk proposition for the lender. In most cases, VA lenders approve loans of borrowers with an average score of 620 or more whereas this limit can go beyond 740, if you apply for conventional loans.
2. Bankruptcy Cases Don’t Qualify
The VA loan program is more flexible as compared to conventional loan programs and it allows borrowers to apply even after bankruptcy. VA lenders require you to wait for two years after a Chapter 7 bankruptcy and one year, if you are making payments for a Chapter 13 bankruptcy registered on your name. Nonetheless, a case of bankruptcy doesn’t kill your chances of getting approved; however, you must work to fix your borrower profile, payment history, bad credit score and pretty much everything that reflects your financial profile.
3. VA Loans Are Expensive
Contrary to common notion, VA loans are not expensive as borrowers don’t need to pay a down payment or a private mortgage insurance, unlike other conventional loans. On top of that, the interest rates and closing costs are quite competitive as compared to other home loans, making them an ideal proposition for the borrowers. Last but not the least, VA loans also let borrowers to refinance, which further helps in slashing the final costs.
4. VA Appraisals Always Spoil the Deal
Most borrowers think VA appraisals as an enemy to the proposed loan amount, which isn’t the case. VA approved appraisers check for habitability of the home to protect the interests of both borrowers and the homebuyers. VA appraisers use the Minimum Property Requirement (MPR) guidelines to check whether a home is safe, structurally sound and in an appropriate sanitary condition. Always choose a home that’s structurally sound and ready to move-in, and VA appraisal won’t seem like a nightmare anymore.
5. VA Loans Can Only be Used Once in a Lifetime
VA loan is not a one-time benefit and qualified veterans can apply time and again, provided they haven’t exhausted their entitlement limit. The entitlement is the loan amount that the VA guarantees and once a borrower exceeds the limit, they might need to make a down payment to get the loan. Most eligible veterans have a primary entitlement of $36,000 and a secondary entitlement of $68250, that takes the total to $144,000.
The Bottom Line
Many myths mentioned in the blog post hold veterans from applying for a VA loan, which ideally shouldn’t happen. VA loans are one of the most powerful home buying tools for veterans looking to secure a home in Texas and elsewhere in the US. The program, not only offers competitive loan rates, but it also has the lowest closure rates in the mortgage industry. Understanding the guidelines and paperwork can be confusing, and therefore, you must hire a professional mortgage company with dedicated loan officers to assist you through the process.