VA Loans: A Forgotten Resource

With all the news about mortgages being harder to obtain, and rates going up and down and requiring different amounts of down payment to qualify, one of the seemingly forgotten resources for financing that new home purchase is the VA Loan to qualified veterans.

VA guaranteed loans are made by private lenders to eligible veterans for the purchase of a home which must be for their own personal occupancy. The guaranty means the lender is sheltered against loss if you or a later holder neglect to pay back the mortgage.

The guaranty replaces the protection the lender typically receives by requiring a down payment allowing you to get favorable financing terms.

You do still have to qualify to achieve a VA mortgage. VA uses two methods for income qualification purposes. The primary approach of evaluating a veteran's earnings is the residual income method. Under this method, the underwriter determines that a veteran has sufficient wages to cover day-to-day living expenses after paying housing expenses, taxes, and other debts such as car payments and credit card payments.

VA also uses a debt-to-income ratio method like many programs. However, VA uses only one ratio (41%) which is the ratio of whole debt (both housing and other debt) to income. Your credit background will be fairly considered. At least a 620 FICO credit mark is needed to attain VA approval.

One of the biggest advantages of an VA mortgage is the ability for the mortgage to be assumed. This gives a buyer a significant benefit in a high interest rate market. VA loans are eligible for streamlined refinance, a plan that allows the borrower to easily refinance the mortgage to reduce their interest rate and lessen their monthly payment.

Did you know you can refinance your present mortgage to a VA home mortgage to drop your monthly payments, get cash out of your home, consolidate debt and achieve a fixed-rate mortgage? Compare your VA refinance mortgage options today to see if you qualify. If you are a veteran of the military, it may just surprise you at how affordable a VA Mortgage can be.