Since its inception in 1944, the VA Home Loan program has proudly served more than 18 million veterans and active duty service members. These military members have been able to achieve home ownership through one of the most progressive lending programs on the market which provides a variety of benefits not found with conventional home loan programs.

Why Choose a VA Loan?

The Department of Veterans Affairs insures part of the each VA loan which makes the loan option highly beneficial to eligible borrowers. Because the VA’s guarantee grants VA-approved lenders additional confidence in their borrowers, VA-lenders are able to offer qualified borrowers competitive benefits such as low interest rates and flexible loan terms. Other money saving benefits likely to be offered by VA-approved lenders through a VA loan include:

• zero down payment
• no mortgage insurance required
• regulated closing costs

The VA’s guarantee also allows VA loans to have higher loan limits. Eligible borrowers in most areas of the United States are able to secure loans up to $417,000, while borrowers wishing to buy homes in more expensive real estate markets are able to receive loans up to $1,094,625. To further determine the loan limit a military member may be able to receive, he or she can use the VA’s loan calculator. The VA loan calculator not only provides users with insight into the current loan amount they may be eligible to receive, but it will also help them determine what actions can be taken to increase their loan limit.

Who Qualifies for a VA Loan?

The VA Home Loan program was designed to make home ownership accessible to all veterans and active duty service members. The program has been so successful that nearly 80% of all military members who have qualified for a VA loan would not have been able to secure a conventional loan. Military members wishing to purchase a home with a VA home loan must meet one following initial qualification requirements in order to apply:

• Have served 181 days on active duty or 3 months during war time
• Or have served 6 years in the National Guard or Reserves
• Or be the spouse of a service member killed in action

All military members who meet one of the initial prerequisites must also submit a Certificate of Eligibility to apply, and VA-approved lenders may help borrowers obtain their COE if they do not currently have it.

Although the VA home loan program has no income or credit requirements, VA-approved lenders will most likely require a credit score of at least 620 to secure financing. Those interested in obtaining a VA home loan with less than perfect credit are still encouraged to apply as even those with a history of bankruptcy or foreclosure have been approved in the past.

(photo provided by Flickr)

It’s last call for those who want to take advantage of the home buyer tax credit. You don’t have to go home, but you can’t stay on the fence any longer. Per the tax credit’s conditions, buyers need to be under contract by April 30.

That’s a tight squeeze for buyers still considering their options. But there’s a deserving demographic that has a little more time to make a decision — our nation’s military men and women.

Active-duty service members who are serving outside of the U.S. on extended duty have an additional year to qualify for this tax credit. Qualified military members must be under contract on a purchase by April 30, 2011 and close on the deal by June 30, 2011.

For all interested buyers, the tax credit has general requirements:

-The maximum purchase price of a home is $800,000.

-To be considered a first-time home buyer, you or your spouse cannot have owned a home in the last three years.

-Individuals with an annual income that meets or exceeds $125,000 are not eligible. Neither are married couples who file jointly and have an income greater than $250,000.

There’s also a tax credit opportunity for non first-timers. This $6,500 tax credit is for homeowners who have lived in their current residence for five out of the last eight years. All other requirements are the same as the $8,000 credit.

Military buyers can combine the tax credit with the significant financial benefits of a home loan guaranteed by the Department of Veterans Affairs. VA guidelines allow qualified borrowers to purchase with no money down and no private mortgage insurance, signature benefits only enhanced by the unique tax credit opportunities.

To learn more about the tax credit, check out this informative page at the IRS website.

Veterans struggling with their conventional home loans can now refinance their mortgage for up to 100 percent of the property’s value using a VA loan.

Part of a new federal regulation, the change gives veterans greater incentive to apply for a VA refinance. Before, eligible veterans could only refinance up to 90 percent of their home’s value.

The VA guarantees more than 18 million home loans worth more than $900 billion. Veterans don’t need a VA loan to utilize the administration’s refinance program.

“These changes will allow VA to assist a substantial number of veterans with subprime mortgages refinance into a safer, more affordable, VA guaranteed loan,” former Secretary of Veterans Affairs Dr. James B. Peake said when the regulation passed in 2008. “Veterans in financial distress due to high rate subprime mortgages are potentially the greatest beneficiaries.”

The valuation increase was included in the Veterans’ Benefits Improvement Act of 2008, which President Bush signed into law in October.

Beyond that, VA refinance loans can now extend to $729,750 depending on geographic location. That far outpaces the previous maximum loan amount of $144,000. The new regulation also extended the VA’s ability to guaranty adjustable rate mortgages and hybrid adjustable rate mortgages through September 2012. Another benefit of VA loans, the administration curbs interest rates on ARM and hybrid ARM loans.

The Veterans Administration guarantees loans but does not issue them. That guarantee typically means eligible borrowers obtain favorable loan terms.

VA loans come with a host of benefits, from no down payment or monthly private mortgage insurance to caps on interest rates for active-duty members. Veterans with poor or no credit can qualify for a VA loan.

Any military member who has served 181 days on active duty during peace time or 90 days during war time may be eligible, along with those who have served at least six years in the Reserves or National Guard. Spouses of service members killed in the line of duty may also be eligible.

Veterans Administration (VA) mortgage loans in Wisconsin are becoming very popular. Mainly, because of the lack of no down payment mortgages available. Home buyers are facing the reality that qualifying for home loans are becoming more difficult. This specific government mortgage loan program provides home buyers with another option.

Just to recap, a person that is currently active in the military or is a veteran of the military, is eligible for a VA mortgage loan.

Here are the benefits for a VA mortgage loan in Wisconsin:

1. No Down Payment Is Allowed - Yes, this is a true no down payment mortgage loan that allows you to finance 100% of the purchase price.

2. No PMI (Private Mortgage Insurance)Payment - With just about any other mortgage loan, if you don’t have a 20% down payment, you are required to pay PMI as part of your total monthly payment. Combined with no down payment, not having to pay PMI allows many home buyers to qualify for a larger VA mortgage loan.

3. Not Credit Score Driven - Credit scores are normally a major factor in determining whether or not you are approved for a mortgage loan. VA mortgage loans are approved based on the ability to repay the mortgage payment. Along with this, compensating factors are used to help strengthen your loan application, which helps in getting you approved with lower credit scores. There is no particular credit score that will or will not approve your VA mortgage loan, so don’t let this hold you back.

4. Favorable Fixed Interest Rates - Now, interest rates are determined on a variety of factors, so every situation will be different. What to remember is how favorable a VA mortgage loans fixed interest rates are. These fixed interest rates can rage anywhere from only 0.25% – 1% higher than regular conforming fixed rates. So, a veteran or active military borrower will be approved for rates that are not much higher than some one that has great credit and a large down payment.

5. Multiple VA Mortgage Loans - This program is well know for first time home buyers, but what many don’t know is that this program can be used a second and sometimes a third time by the same borrower. Whether it is a refinance or the purchase of another home in the future, the VA mortgage loan in Wisconsin, can be used multiple time. This is determined by your certificate of eligibility. Once your certificate of eligibility is received, it will state if you are eligible for another VA mortgage loan in Wisconsin.

Whether you, your family, friends, or co-workers are active in the military or are a military veteran, please share this valuable information. Many people do not understand the benefits of a VA mortgage loan. Education is important when deciding what mortgage loan best fits your situation.

Here are the three options you have when looking for a true no down payment mortgage loan. I’ve also laid out some details of each program, so you can get an idea of what they are all about.

1. VA (Veterans Affairs) Mortgage Loan - Whether you or your spouse are currently in active duty or a military veteran, you can be eligible to obtain a VA mortgage loan. No down payment is required with this loan program. A VA loan has many benefits for military personal, that is should be taken advantage of. Here are the list of benefits that come with a VA mortgage loan…

- No down payment.
- Less of a PMI (private mortgage payment) payment.
- Favorable and secure 30 year fixed interest rates.
- No minimum credit score to qualify. Even if you have bad credit, a VA loan is approved based on your ability to show you can afford the mortgage payments.

You have two ways to be approved:

1. Approval through an automated underwriting engine.
2. A manual underwrite. Sometimes, the automated engine doesn’t approve your application, but that’s OK. It still allows your application to be underwritten manually by an underwriter. Basically, if you can show ability to pay the mortgage with good employment history, you will most likely be approved.

You may be able to obtain a VA loan multiple times. A form called the, Certificate of Eligibility, is required when applying for a VA loan and this determines whether or not you have enough “eligibility” left to qualify for another VA loan. Sometimes, a borrower doesn’t use all of his/her eligibility, which can be used again for a future purchase on a new home.

2. Rural Housing Mortgage Loan - If you find a home in a rural area and your adjusted annual gross income doesn’t exceed the moderate income limits for the area, you can qualify for a rural housing mortgage loan. No down payment is required with this loan program. A rural mortgage loan has many benefits for a borrower that is looking to purchase a home in a rural area. Here are the list of benefits that come with a rural mortgage loan…

- No down payment.
- No PMI. (private mortgage insurance)
- Favorable and secure 30 year fixed interest rates.
- Seller can pay up to 6% of the purchase price, to the buyer, for closing costs and prepaids. This allows the buyer to truly not have to bring money to closing, since there is no down payment.

You may finance up to 102% of the appraised value or purchase price, whichever is lower. The 2% is meant to finance the closing costs and prepaid items like the escrow account, so you truly do not have to bring money to closing.

3. FHA Mortgage Loan With A Down Payment Assistance Program - If the seller agrees to participate in a down payment assistance program, the buyer can use these funds towards his 3% down payment when applying for a FHA loan. This is how you can truly do a no down payment FHA mortgage loan. A down payment assistance program allows the seller to gift 3% of the purchase price to a 3rd party service, which in turn the buyer can use the 3rd party service and it’s funds for the down payment. Here are the list of benefits that come with a FHA loan…

- No down payment, when using a down payment assistance program.
- Less of a PMI (private mortgage insurance) payment.
- Favorable and secure 30 year fixed interest rates.
- No minimum credit score to qualify. Even if you have bad credit, a FHA loan is approved based on your ability to show you can afford the mortgage payments.

You have two ways to be approved:

1. Approval through an automated underwriting engine.
2. A manual underwrite. Sometimes, the automated engine doesn’t approve your application, but that’s OK. It still allows your application to be underwritten manually by an underwriter. Basically, if you can show ability to pay the mortgage with good employment history, you will most likely be approved.

These are the only 3 options that are available in this current lending environment. Fortunately, there are no down payment options available and I’m glad to say I specialize in working with first time home buyers to help them obtain these types of mortgage programs.

If you are not that familiar with FHA or VA mortgage loans, well, they allow approvals with borrowers that have bad credit. Now, the key to getting an approval with bad credit on a FHA loan are compensating factors. Some of the most powerful compensating factors are listed below.

So, if you are looking to buy a home or refinance your current mortgage and believe you have bad credit, consider these compensating factors that help in getting you approved.

1. The borrower has successfully demonstrated the ability to pay housing expenses equal to or greater than the proposed monthly housing expense over the last 12-24 months.

2. The borrower makes a large down payment (ten percent or more) toward the purchase of the property.

3. The borrower has demonstrated an ability to accumulate savings and a conservative attitude toward the use of credit.

4. Previous credit history shows that the borrower has the ability to devote a great portion of income to housing expenses.

5. The borrower receives documented compensation or income not reflected in the effective income, but directly affecting the ability to pay the mortgage.

6. There is only a minimal increase in the borrower’s housing expense.

7. The borrower has substantial documented cash reserves.

8. The borrower has substantial non-taxable income.

9. The borrower has a potential for increased earnings, as indicated by job training or education in the Borrower’s profession.

10. The home is being purchased as a result of relocation of the primary wage earner, and the secondary wage earner has an established history of employment, is expected to return to work, and reasonable prospects exist for securing employment in a similar occupation in the new area.

If you feel you don’t fully understand one or more of these factors, please feel free to contact me, jbucio@hmcdirect.com, and I will help you with explanation.