October 24, 2014
Better Credit…Better Options
A VA mortgage loan program is provided by the United States Department of Veterans Affairs. It’s used to help veterans and their families get the home financing they need. The rules and requirements are established by the Department of Veterans Affairs, but they don’t originate VA loans. However, they do insure the loans against default.
VA mortgage loans allow up to 100% financing of the value of the home. In order to qualify for this type of loan, the borrower must show a certificate of eligibility showing their military service. Since Ginnie Mae backs these loans, it’s less of a risk for the lender, which makes it easier to obtain a VA loan, if you’re a veteran.
Just like any other mortgage program, VA loans come with pros and cons. The major advantage of this type of loan, it doesn’t require a down payment or mortgage insurance. Closing costs will also be limited and typically the maximum amount of money you can borrow is larger than that of a conventional or FHA loan. Another benefit of this type of loan is the ability to receive forbearance if you run into financial hardship.
Of course, there are tradeoffs with a VA loan compared to a conventional mortgage. You will need to pay an upfront funding fee ranging from 0.5% to 2.8% of the loan amount. Conventional loans can be a better deal if you do plan to put 20% or more down on your new home. A VA loan takes longer to close than most other loans and requires more paperwork.
If you’re a veteran, this could be the right loan program for you. However, if you plan to put a sizable amount down on your home, make sure you look at all the available programs to get the best possible deal.
Before applying for any mortgage program, it’s necessary to understand what your credit report looks like. The assistance of a credit repair company can ensure you apply with the highest possible credit score. This can lead to lower interest rates, more program choices, lower monthly payments and a better mortgage for your home. A reputable credit repair company will work directly with mortgage companies and have an understanding of VA loan guidelines. It is always best to have the best credit score you can which if improvement is needed can be done through a credit repair service. Even though credit guidelines are more relaxed with a VA loan than other mortgage loans, it is still important to have good credit. Getting qualified for a va loan with bad credit can be difficult and will never result at the best possible interest rate. There are many things on a credit report that can be done to improve your scores quickly such as; fixing errors on the credit report, paying down balances, or making sure you have the right types and mix of credit. Start with a consultation from a knowledgable credit repair agency before starting the process of qualifying for any type of mortgage.