Although the VA loan program has allowed millions of veterans realize their dream of homeownership, there are still many that are not able to avail its benefits owing to several misconceptions doing rounds in the public domain. According to a survey conducted by Veteran Affair, 1 in 3 home buying veterans didn’t know the benefits of VA home loan programs, and believe prevalent myths. In this brief read, we set the record straight regarding three common VA loan myths to help veteran home buyers make an informed decision.
Borrower needs good credit score to avail a VA loan.
Contrary to this myth, VA loans are available under a more lenient program than conventional loan programs when it comes to your credit history. Though there is no set credit limit to avail the loan, most lenders generally look for at least a 620 FICO score, which is still quite low when compared to conventional loan credit score limits i.e. 660. Moreover, to get the best rates and terms for conventional loans, borrowers are required to have a credit score of at least 740. In addition, VA loan help veterans to easily bounce back from bankruptcy and foreclosure, as they are eligible for VA loan one year after filing bankruptcy (chapter 13) and two years following a foreclosure. Whereas with conventional loans, the time frame is four-to-seven years before they are eligible to buy a home.
VA loan is a lousy loan program.
The VA loan program is not lousy, but infact, one of the best loan products available on the market. Qualified veterans can purchase property worth $417,000 in most locations before having to make any down payment, as compared to FHA loans that require a 3.5 percent down payment, and other conventional loans that require at least 5 percent down payment of the total VA loan amount. In addition, the interest rate is generally lower than other home mortgage loan programs. The current fixed rate for a 30 year VA loan is 3.82, against 3.99 percent for FHA loans, and 4.11 for conventional loan.
VA loans take time to close.
There is a widespread misconception about VA loans to the effect that borrowers are pressed under bureaucracy and paperwork, making approval take awfully long. In fact, the VA loan program is automated and the most efficient loan program. The average time it takes to close a VA loan is similar to that of conventional loans i.e. 44 days