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How the VA Views Credit Scores

Aug 14
10:04
AM
Category | Blog

The VA doesn’t require a certain credit score. Rather, the VA does task approved lenders to determine the veteran has established a responsible credit history over recent years. However, individual lenders do require a minimum score with few exceptions. The most common minimum credit score is 620.

There are three main credit repositories

  • Experian
  • Equifax
  • TransUnion

 All three use the same FICO algorithm to calculate a credit score. Yet while they all use the same algorithm most often the three scores are different.

 For instance, a veteran submits a loan application for an approval, the lender then pulls a credit report as well as requests credit scores. The three reported scores are 710, 701 and 719. In practice, the lender will throw out the highest and lowest score and use the middle one.

 If there are two people on the loan application the lender will also pull scores from the second borrower and use the lowest middle score of the two applicants. These scores may be different because different merchants report payment activity at different times and may not subscribe to all three agencies.

The five categories that affect a credit score and to what extent are:

  • Payment history contributing 35% to the score
  • Available credit at 30%
  • Length of credit 15%
  • Types of credit 10%
  • Credit inquiries also 10% of the score.
...

While getting a VA loan is similar to getting other types of mortgages, there are a few differences. Here are some insider tips you can use.

 If you aren’t sure if you qualify for a VA loan, start with reading “Who is eligible for a VA loan?

  1. Certificate of Eligibility. You’ll need to provide the lender with a copy of your Certificate of Eligibility in order to obtain a VA loan. The fastest way to get this done in the modern digital world? Online. Visit benefits.va.gov to receive a copy of the certificate.
  2. 30 vs. 15. The longer the loan term the lower your monthly payments will be. Typically, the 30-year loan is the most common term borrowers select. A shorter loan term will provide higher monthly payments but there is much less interest paid over the term of the loan. However, the 15-year term makes the payments too high. However, lenders can also offer VA loan terms in 10, 20 and 25 years. To save on long term interest think about selecting a shorter term.
  3. Points or No Points? A “point” is one percent of the loan amount and is a form of prepaid interest to the lender. Paying points ...

Who is Eligible for the VA Home Loan?

Aug 1
8:49
AM
Category | Blog

For those who qualify, there is no better loan program on the market if someone is looking to conserve as much cash as possible while keeping monthly payments in check.

While many know that active duty members are eligible for a VA Loan, there are many other service members that do qualify.

Who qualifies for a VA home loan?

  • Those who have been honorably discharged from the armed forces (veterans)
  • Those currently servicing in the military.
  • Active duty personnel who have completed at least 181 days of service.
  • Those who have served at least six years in the National Guard or Armed Forces Reserves.
  • Unremarried surviving spouses of those who have died in service or as a result of a service-related injury.
  • Cadets at the United States Military, Air Force or Coast Guard Academy.

Note, this means they are eligible to apply which doesn’t necessarily mean they will be approved. Borrowers are also required to:

  • Have stable income and employment
  • Be employed for at least two years
  • ...

The FHA 203(k) Primer

Jul 12
7:00
AM
Category | Blog

Now a days, homes that are deemed as ‘Fixer Uppers’ are almost as popular as those that are move in ready.  The FHA 203K loan is a way to simultaneously finance the acquisition of a property and the funds to remodel/ renovate the home.

You can finance a 1-4 family, residential, mixed use or condominium (approved by the FHA), which you plan to occupy as your primary residence only.

Once you find a potential property, you will need to select a licensed contractor and make a complete list of the items needing repair or replacement and the associated costs. You will need to break out the cost of labor and material in the scope of work. It is important to note that the must be on the lender’s approved list. If the contractor isn’t approved, they will need to complete a brief application and be thoroughly vetted.

Approved projects can include:

  • Adding a patio or deck
  • Complete bath and kitchen remodels
  • Flooring, plumbing , electrical, roofing and siding
  • HVAC systems, adding a bedroom or even a second story
  • Structural repairs
  • Installing new doors, windows

FAQs on the FHA 203(k) Loan Program

Jul 5
9:25
AM
Category | Blog

The FHA’s 203(k) loan program is perhaps one of the best ways to purchase an existing property that does need a little work. The program is perfect to finance a “fixer-upper” but not all FHA lenders offer the program. Your loan officer can provide you with the general requirements and how the program works, but here are a few Frequently Asked Questions about this special loan program.

What is the FHA 203(k) program?
The 203(k) renovation loan is designed to provide funds needed to buy or refinance a property as well as borrow more money to make designated improvements to the property all in one loan.

What sort of improvements can I finance with a 203(k) loan?
Common improvements to existing properties include:

  • Roof repair or replacement
  • Plumbing and electrical work
  • Heating and air conditioning repair or replace
  • Kitchen and bath remodels
  • Flooring
  • New appliances
  • Outdoor decks and patios
  • Adding additional square footage such as a bedroom or bath
  • Other ...

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