I am sure you have heard all the doom and gloom from a million different news reports concerning the lending industry mess, how several loan programs once available are no longer, how zero down loan programs are almost non-existent and how hard it is right now if you have little to zero money available for a down payment.
Are you a military member or a veteran? If you are the news isn’t as bad. With your VA Guaranteed Home Loan benefit you can still obtain a loan with no down payment and a fixed interest rate that is as good as or better than a conventional mortgage rate. This is the time for a VA Loan! What a great benefit to those of you that have served our country!
I want to make sure you understand what a VA Guaranteed Home Loan is and will be writing several articles over the next few weeks covering some important information so please check back. There are still several myths out there about VA Loans and there are still some real estate professionals that don’t understand how it could be the best loan for military members and veterans.
What is a VA Guaranteed Home Loan?
Many have the misconception that the military is the organization loaning the money. No, they are not. Your VA Guaranteed Home Loan will be made by a private lender, such as your bank or a mortgage company of your choosing that has VA lending approval. The guaranty means the lender is protected if you fail to repay the loan. This is also why you will not have to pay private mortgage insurance (PMI) for a zero down loan (if you could find one). Normally a lender would require a down payment and/or PMI to obtain a loan, since the VA Home Loan has a guaranty which replaces these you will be able to obtain your loan without, but with the same financial terms as if you had made a down payment. The risk is removed for the lender when the VA gives them that guaranty.
Of course you still must meet income and debt requirements, your credit reports will be used and if there are items in your history that are derogatory you can be denied a loan even though you have your Certificate of Eligibility. The VA cannot demand a lender make a loan to you that would violate their lending practices. Lenders also must comply with the VA rules and policies when it comes to income and credit standards. Just having the benefit is not enough, you must be credit worthy. I will be writing an article about your credit – good, bad or ugly in a few days. You don’t have to have that perfect FICO score, so check back.
If a lender is unwilling to approve you for a loan the only thing the VA can do is suggest that you try other lenders.
It could just be the perfect time for you to purchase a home with your VA benefits. Where else can a person get a 100% home loan these days?!