FAQ On VA Loans Bad Credit And High Debt To Income Ratio


This BLOG On FAQ On VA Loans Bad Credit And High Debt To Income Ratio Was UPDATED On January 11th, 2019

Common FAQ On VA Loans

There are many FAQ On VA Loans that our viewers often inquiry about. VA Loans are the best mortgage loan program available in the United States where there are no down payment requirements and no monthly insurance requirements. However, only veterans of the U.S. Military with a Certificate Of Eligibility can qualify for VA Loans

  • Mortgage rates on VA Loans are probably the lowest out of all mortgage loan programs
  • This is including lower than Conventional loan mortgage interest rates
  • Unfortunately, VA Loans is only available to Veterans of the United States Armed Services with a Certificate of Eligibility with an honorable discharge
  • Being eligible for VA Loans is one of the greatest benefits that is offered for Veterans who served in the United States Armed Services
  • The Department of Veteran Affairs, VA, is in charge of mortgage lending guidelines on VA Loans

VA does not originate nor fund VA Loans.

What Is The Role And Function Of The VA

The function of VA is to insure private banks and VA approved mortgage lenders who originate and fund VA Loans in the event Veteran defaults on his or her mortgage.

  • The reason that VA mortgage approved lenders can offer such low mortgage rates on VA Loans where the home buyer does not put any money down on his or her home purchase is due to the VA guarantee against default of their VA home loan
  • VA Loans is for owner occupant properties only
  • Veteran home buyers cannot purchase a second home nor an investment property with a VA Loan

In this article on FAQ On VA Loans, we will explain the VA Loan Process and define what a VA Loan is.

FAQ On VA Loans: Choosing VA Lenders

There are many lenders who constantly advertise that they offer VA Loans on television, cable, radio, internet, and even mailers. However, not all Lenders have the same VA Guidelines. Most lenders have lender overlays on VA Loans. Overlays are VA lending requirements that are imposed by individual lenders that above and beyond those of VA Mortgage Guidelines. Gustan Cho Associates Mortgage Group has no overlays on VA Loans.

  • Many lenders who advertise have advertisement that can be misleading where many consumers think that the government is advertising
  • All VA Lenders are private lenders
  • Borrowers need to be careful and realize that the Department of Veteran Affairs does not approve or endorse any specific bank nor VA lenders

All lenders that advertise offering veterans VA Loans are private lenders who are competing with one another for the veteran’s business.

Be Cautious On Bait And Switch Advertisements Of VA Loans

Many advertisements will be offering free appraisal, no closing costs, lowest mortgage rates, and 21-day closings:

  • Many advertisers who are advertising for VA Loans are not even VA approved lenders but marketing companies or lead generation companies who want the veteran to contact them
  • These lead generation companies will take the veteran’s information and sell that information to a mortgage lender who is interested in buying VA borrower leads for a fee
  • There are lists where marketing companies or mortgage companies can buy a list of veterans
  • When a veteran closes on a VA Loan or any other mortgage loan, the mortgage loan will become a public record and veterans who close on a VA Guaranteed Mortgage Loan will have their mortgage recorded 
  • This is how marketing companies or mortgage companies will obtain your information and send you out a mailer in order to get Veteran homeowners to refinance their VA Loan
  • It is not the Department of Veteran Affairs who is releasing Veteran’s information
  • But these mailers are from private marketing companies and mortgage companies

Most of these mailers look like official documents sent out by the federal government but they are private marketing companies trying to get VA Streamline Refinancing business.

Shopping For Direct Lenders With No Overlays On VA Loans

Veterans thinking of getting a VA Home Loan or refinancing their current VA Loans should do their due diligence. Borrowers should contact several lenders. They should talk to the loan officer. They should see what they have to offer. They should choose a lender who they feel most comfortable with.

  • Family members, business associates, friends, and relatives may give you names and numbers of loan officers who had a positive experience with
  • Borrowers can do their own researching
  • Googling the loan officers name and check out their reputation and the number of negative and positive reviews they have on the internet is a good start
  • The internet can be an extremely powerful tool in doing your due diligence
  • A rogue loan officer will not last long in the mortgage business
  • This is because consumers use the power of the internet to voice their dissatisfaction of their experiences

Several bad testimonials and reviews can ruin the career of any professional.

FAQ On VA Loans: Refinancing VA Loan

Homeowners refinance to reduce their monthly housing payments or to get a cash-refinance mortgage.

  • Homeowners refinance to reduce their monthly mortgage payment by getting a lower mortgage rate
  • In order to be allowed to refinance current VA Loan, the homeowner needs a net tangible benefit where it benefits the homeowner by refinancing
  • The right-hand rule of thumb is that most homeowners will benefit from refinancing their current VA Loan if they are offered at least a 1.0% reduction from their new mortgage rates
  • When refinancing, the homeowner should also go over the closing costs associated with refinancing their VA Loan
  • All closing costs can be rolled into the balance of their VA Loan or by lender credit
  • The veteran homeowner can also pay the closing costs outside closing
  • Make sure that the VA Loan Officer will explain what the break-even period will be
  • Veteran borrowers need to decide on how long they plan on staying in their home prior to refinancing
  • Homeowners who are only planning in staying in their home a short term may not benefit from refinancing

The break-even period is important and that will be the deciding factor whether refinancing the current home loan offers a net tangible benefit to the homeowner.

VA Cash-Out Mortgage Guidelines

VA, unlike other mortgage loan programs, offers a 100% loan to value on a VA Loan Cash-Out Refinance Mortgage.

  • Real estate values throughout the United States are increasing
  • Many folks who once had their mortgage loan balances higher than the value of their properties are no longer underwater
  • They have seen growth in their home equity

Many veterans who had their VA Loans underwater can now consider getting some cash-out of their home equity and using that cash to pay off their bills, go on vacation, or do home improvement to their home.

FAQ On VA Loans: Requirements To Get A VA Loan

FAQ On VA Loans is how can a veteran become eligible for a VA Loan.

  • A Veteran who has an honorable discharge from a branch of the United States Armed Services and has served a certain amount of time in the United States Military with a Certificate of Eligibility should qualify for a VA Loan
  • VA mortgage loan officer will be able to help the borrower in determining the entitlement borrower has on a VA Loan
  • Borrowers can log in to eBenefits  and sign up for access where they can request the Certificate of Eligibility that is entitled to them

The Department of Veteran Affairs will be notifying the veteran in the even if there is an issue with the request because of using entitlements on a prior VA Loan.

FAQ On VA Loans: Interest Rate Reduction Refinance Loan

Homeowners with a current VA Home Loan can do an Interest Rate Reduction Refinance Loan, also called IRRRL.

  • It is a VA Streamline Loan which is commonly referred to as IRRRL
  • A current homeowner with a VA Loan can do a rate and term refinance, or Interest Rate Reduction Refinance Loan, IRRRL
  • The VA IRRRL requires very little paperwork with no income documentation, with no appraisal, and no credit score check
  • There are no closing costs for a better interest rate VA Streamline Refinance Loan

Gustan Cho Associates can close VA IRRRL in less than 30 days.

VA Loans Are For Owner Occupant Homes Only

Purchasing home with a VA Loan, home buyer needs to certify it that they will be an owner occupant.

  • It is not against VA mortgage regulations to occupy home with a VA Loan indefinitely
  • Borrowers can eventually rent out the home that they have a VA Loan and purchase another owner occupant property
  • But not with a VA Loan
  • Veteran Homeowners who are doing an Interest Rate Reduction Refinance Loan, IRRRL or VA Streamline Refinance Mortgage do not have to be an owner-occupant of the property

All they need to do is that document that they were an owner occupant on the subject property at one time.

VA Refinance Guidelines And Streamlines

The VA Streamline Refinance Mortgage Loan, IRRRL, cannot be higher than the current outstanding VA mortgage loan balance.

  • Closing costs and the funding fee of VA Loan can be rolled into the VA mortgage loan balance

Veterans are allowed to get up to $6,000 of energy-efficient improvement funding rolled into the IRRRL VA Streamline Loan.

FAQ On VA Loans: Qualifying For VA Loan After Bankruptcy Or Housing Event

Veterans who had a prior short sale on a VA Loan can qualify for a VA Loan after two years from the date of a short sale.

  • The waiting period after a short sale to qualify for a VA Loan starts from the short sale date which is reflected from the HUD Settlement Statement
  • There is no waiting period to qualify for a VA Loan with a prior short sale if the veteran was timely on all of his or her mortgage payments up to the time of the short sale and the veteran did not do a short sale due to the real estate declining market conditions
  • There is a two-year waiting period to qualify for a VA Loan after a Chapter 7 Bankruptcy discharged date
  • There is a two-year waiting period to qualify for a VA Loan after foreclosure and deed in lieu of foreclosure
  • The two year waiting period after foreclosure and/or deed in lieu of foreclosure
  • The waiting period start clock starts from the recorded date of the foreclosure and/or deed in lieu of foreclosure

Or the date of the sheriff’s sale and not the date that the homeowner has surrendered the property.

VA Loan During And After Chapter 13 Bankruptcy

Veteran Home Buyers who are in a current Chapter 13 Bankruptcy can qualify one year into a Chapter 13 Bankruptcy Repayment Plan. There is no waiting period to qualify for VA Loans after Chapter 13 Bankruptcy discharged date.

A veteran can get another VA mortgage loan if a prior VA mortgage loan has been paid in full.

  • The veteran needs to file a request that the certificate of eligibility be reinstated by visiting  https://vip.vba.va.gov and registering for access and applying for a restoration of your VA Mortgage Loan Entitlement

Veteran Home Buyers who need to qualify for a VA Loan with a direct VA mortgage lender with no overlays on VA Loans, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at gcho@gustancho.com. We have no lender overlays on VA mortgage loans and are available to take your calls 7 days a week including evenings, weekends, and holidays.

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