In the event when conventional and FHA financing is becoming difficult for veterans, the popularity of VA loans has increased many fold. Since 2013, as many as 6,30,000 people have applied for mortgages under this housing scheme. The misconceptions, however, are no less, and many homebuyers hold the view that VA financing process is complicated, with too many restrictions involved. To ensure such misconceptions and other petty issues do not drive you away from reaping the benefits of this financing scheme, we not only list 4 common VA loan misconceptions, but the also the way forward to them.
Dearth of Financing a Manufactured Home
You wouldn’t find many VA approved lenders ready to assist you in realizing your dream of purchasing a manufactured or mobile home. There are lenders, however, to facilitate this decision. All you need is some good research. Start with your local credit union, and consult other lenders in your area. You will definitely find VA approved lenders offering financing for buying manufactured homes.
Restriction in Renting the Purchased Property
Though your purchased home must be your primary residence under the VA loan guarantee, it doesn’t restrict you from renting your property at all. Many homeowners who receive a PCS or Permanent Change of Station order, in fact, rent their previous home when they move to a different location. In such a case, owners may even apply for a second mortgage loan, and rent their old house.
Mandatory Credit Check
It is imperative to understand that the VA or the United Department of Veterans Affairs does not require any credit check. VA approved lenders do have pre-set standards on which they judge you as a borrower and decide whether or not to give you a loan. In any case, the credit requirement is flexible than conventional lenders. While most VA lenders, typically, look for a credit score of 620, conventional lenders look for a score of around 740. If your credit score is less than 620, first develop habits that help you build a good credit score.
Residual Income Acting as Barrier
While there’s a misconception that the residual income acts as an impediment in the way of getting your dream home under the VA financing, it is an option to help the veterans. If you are not aware, the residual income requirement–that is different in every state–was established with a view to ensure that homebuying remains affordable, after settling your major bills, and things such as food, gas, and others.
Note: If your state requires a higher residual income than what remains currently in your hands, lower your loan amount.
Financing under the VA scheme brings multiple advantages over conventional and FHA loans. Firstly no down payment is required, and secondly, you can refinance up to 90 percent of the loan when interest rates fall in the market. Moreover, VA approved lenders do not penalise you for late payments, and the refinancing does not require any PMI or Private Mortgage Insurance.