5 Possible Hurdles You May Need to Cross When Obtaining a VA Loan

Though obtaining a VA loan is one of the easiest ways for veterans to secure their dream home in Texas and elsewhere in the US, some applications don’t go through. The reason is that some veteran applicants fall short of the qualifying requirements laid by the Department of Veteran Affairs. From a typo in the loan paperwork to misrepresentation of facts in the loan application, there can be several other reasons for the rejection of your VA loan application. To make sure your VA loan application is not rejected it is important to first know about the possible roadblocks in obtaining a VA loan. Continuing the discussion, the blog post discusses five hurdles you should know about before applying for a VA loan in Texas and elsewhere in the US.

va-home-loans

1. Low Income

The Department of Veteran Affairs require the applicants to have the “minimum residual income” to qualify for a VA loan in Texas and elsewhere. The minimum residual income, as the name suggests, is the amount left after incurring monthly expenses and the limit differs across states. Income is kept as one of the parameters to assess VA loan suitability, just to make sure the applicant has the financial bandwidth to comfortably pay monthly mortgages after getting done with fixed monthly expenses.

2. Low Property Appraisal

Qualified VA appraisers conduct property appraisal to determine the “fair market value” of the property before deciding an appropriate loan amount. Simply put, the VA appraisal is an assessment of the property’s value and habitable conditions. Though the appraisal process is a win-win proposition for the lender and the loan applicant, it can impact the loan amount if the property comes out to be undervalued. Most VA lenders are willing to sanction a loan amount equivalent to the “appraised value” and not the one quoted by the seller.

3. Bad Credit Score

Though the VA loan program has no minimum credit score requirements to apply, applicants shouldn’t underestimate the value of a sound credit score. The VA loan program is federally backed; however, the government needs to protect the interests of both the lender and borrower. That said, you should focus on improving your credit score before even thinking about applying for a VA loan in Texas. Most lenders prefer a 620 credit score; however, it doesn’t mean that securing a VA loan is impossible beyond 620. Improve the credit score as much as you can to increase the odds of securing VA finance in one go.

4. Unacceptable Property Purpose

If you are thinking to buy a holiday home for staying once in a while, the VA loan is probably not the option. You can secure a VA loan to buy a property in Texas or elsewhere in the US, provided it’s going to be your primary residence. Remember that you can still rent a portion of your primary residence as it’s not against the VA guidelines, however, VA loans can’t be used to finance holiday homes or rental properties.

5. High Debt-to-Income Ratio

If your monthly income is already tied up in other debts, it may hamper your chances of getting a VA loan approval. VA lenders give weightage to an individual’s debt-to-income ratio for assessing suitability. The best way to solve this problem is to wait until a debt is completely paid off before applying for a mortgage or better, try consolidating the debt to the loan amount to reduce the size of monthly payments. You can also find a co-borrower to get away with a high debt-to-income ratio.

Wrapping Up

The VA loan program has several guidelines, and therefore, it’s essential to get acquainted with the process before applying for a loan. The roadblocks mentioned in this post are avoidable, if you do your homework to fulfill the eligibility criteria. Spend some time researching the intricacies of the program, or even better, seek professional assistance from a reputable mortgage firm to increase the odds of getting your loan application accepted.

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Texas Veterans Land Loans: All You Need to Know

The Veterans Land Board was formed in 1946 after the  World War II, through the creation of Texas Legislature. The purpose of the program has been to help war veterans purchase a land or home in Texas, allowing loans of up to $100,000 at lower rates compared to other types of mortgages. In addition, The Department of Veterans Affairs guarantees the loan, so that if borrowers default on their payment, lenders don’t end up losing money. This guarantee also encourages lenders to offer more competitive interest rates to borrowers.

Eligibility Requirements

The basic eligibility criteria to receive a loan through the Texas Veterans Land Loans Program, applicants need to be minimum 18 years of age, and on the date of application, an applicant should be a bona fide and legal resident of Texas.

They also need to meet one of the following service criteria:

  • The applicants need to be active duty military member.
  • A Texas National Guard member.
  • A member of the reserve component military who has completed 20 years that qualify them for retirement.
  • Applicants should have served at least 90 days of active duty days. The only exception would be the veterans who were discharged because of a service-related disability.
  • A surviving spouse of a Veteran whose death was service-connected or a veteran who is missing in action.

It is also important to remember that, applicants need to pay upfront appraisal and application fees. The loan interest rate may vary, which is regularly published. There are additional reductions in interest rates for veterans with disability or spouses who lost a husband or wife while on service.

Land Requirements

Texas Veterans Land Loans are available for any piece of land that qualifies the following requirements:

  • The land must be within the state of Texas.
  • The land must have at least one acre of area, excluding any area that is subject to frequent inundation, dedicated to a public roadway, or falls beneath a navigable waterway.
  • The land must have legal, usable* access to a public road that meets the minimum requirement of 60 feet or the road width requirement of a public county road, whichever is greater.
  • The land must not fall into “Strictly for commercial use” category.
  • The land must not have been owned by veterans or their spouse within the last three years.

*The term “usable” implies that the access road must be commutable using any standard passenger vehicle.

All these requirements may seem confusing to the applicants; this is why they need to consult a specialty mortgage company. Such a firm guides and facilitates through the mortgage application process and makes the process seamless for veterans.

Last Few Words

It is true that nothing can repay the sacrifice military veterans make for the nation; however, the Texas Veterans Land Loan Program is one of the nation’s sincere gestures to thank and honor its war heroes for their selfless services. Contact a specialty mortgage consultant to get more information on Texas Veteran Land Loans.

5 Reasons to Refinance Your Mortgage into a VA Home Loan

The VA Home Loan program allows qualified borrowers to take advantage of reduced monthly mortgage payments and lower loan rates, if they refinance their existing mortgages. Depending on the eligibility, veterans can refinance up to 100 percent of their home value. The two key benefits of VA refinance is getting a low-interest rate and cash-in-hand. Veterans who have chosen programs for first time home buyers in Texas or any other state, can reap the benefits of refinancing into a VA home loan. Let’s take a look at some of the key reasons to refinance a mortgage into a VA loan.

1. Lower VA Loan Rates

Refinancing is a great option for those who were not able to negotiate rates earlier when applying for first time home buyer programs. Therefore, whenever the interest rates are low, it can be a great idea to refinance your existing loan and get the benefit of lower interest rates. If you have the time to arrange the required documents and do the necessary paperwork, then it can save you thousands of dollars.

2. Shorter Loan Terms

Let’s say you have a 30-year mortgage running currently. If you want to reduce the term period, then you can do so without having to increase the monthly payments by a substantial amount. To know the exact amount that you are supposed to pay if you decide to reduce the loan term, use a mortgage calculator.

3. Reduced Monthly Mortgage Payment

Refinancing your existing mortgage into a VA loan with lower interest rates means reduced monthly installments. Some of the scenarios in which you may pay reduced monthly installments include refinancing a conventional loan into a VA loan, increasing the term period of your existing loan and more.

4. Home equity cash-out benefit

The VA loan program allows borrowers with equity in their home to get cash back through refinancing. But it only makes sense to get that extra cash if you can manage your debts responsibly. People, usually opt for the cash-out benefit to taking care of some important issues such as home improvement, or paying for a dependent’s education, and more.

5. Fixed rate mortgage

If you already have a mortgage running at variable rates, it makes sense to move to a fixed-rate home loan when you think the interest rates are lower than what they usually are. Locking the interest rates will help you ensure that you don’t have to pay more if the interest rates increase in the future.

Conclusion

VA under its Interest Rate Reduction Refinance Loan ((IRRRL) Program does not require any credit check or any form of appraisal. The documentation requirement for VA loan refinancing programs is also minimal, and therefore, it is beneficial for veterans to take advantage of refinancing whenever the interest rates are historically low. If you don’t want to go through the hassles of the paperwork and other formalities on your own, or simply too busy for that, get in touch with a VA loan expert, and they will take you through the entire process in a seamless manner.

A Handy Guide to VA Cash-out Refinancing

Veterans may use VA cash-out refinance loans to turn their home equity into cash, for expenses such as college tuition, medical bills, car loans, home improvements and family emergencies. The cash-out refinance may also be used to refinance other types of home loans into a VA loan. VA cash-out refinance is a popular program among veterans, if they wish to lower the rate of VA loan, and at the same time, take leverage of their home’s equity.

How VA Cash-out Refinance Functions

The cash-out refinance allows veterans to:

1. Pay off any other type of loan they need to repay
2. Apply for a loan that is of greater value than the current loan and get the proceeds upon its closure

Note: A veteran has the liberty to opt for one or both the options.

If a veteran has a conventional or an FHA loan, but no equity to refinance the loan, he can apply for VA cash out refinancing. There are some cases when a lender allows the applicant to refinance 100% of the value of the house with a VA cash-out refinance.

Eligibility Criteria for VA Cash-out Refinance Loan

The requirements for VA cash-out are similar to VA home loan. The following members are eligible for VA Cash-Out Refinance Loan:

• Veterans with an Honorable Discharge
• Active duty service members
• Unmarried surviving spouses of veterans who are still unmarried
• Commissioned officers of Public Health and National Oceanic and Atmospheric Administration
• Current Reserve and members of National Guard

Things to Know About VA Cash-out Refinance

The VA cash-out program has the same maximum limit as the VA loan. The standard limit for VA cash-out refinance  is $417,000 and the maximum limit of $721,050 in some of the high-cost counties. The limit varies depending upon the cost of living and many more factors.

It is possible to get up to 100% loan-to-value refinanced from a lender without any out-of-pocket costs. The amount of money a veteran receives depends on the current value of the home and the lender approving the loan. If an applicant currently has an FHA, USDA or any conventional loan, they are still eligible for a VA cash-out loan.

It is advisable to get in touch with a VA loan expert to clarify all the doubts related to VA cash-out loan. When an applicant has complete information about the process, it gets easier to make better financial decisions for future.

Securing VA Home Loans in Texas: A Concise Guide

The U.S. government, in 1944, introduced a military loan guarantee program with the aim to help returning service members purchase a home. Guaranteed by the federal government, VA loan is a mortgage program issued by approved lenders. The program has enabled the families of more than 20 million veterans to own a house. The key highlights of VA loans are low or no down payment and lesser interest rate compared to conventional mortgage programs. A veteran, however, needs to meet specific requirements to get a VA loan approved. Whether an individual applies for veteran home loans in Texas or any other state, there are specific eligibility criteria that must be fulfilled.

Eligibility Criteria to Obtain a VA Loan

The veteran needs to have a suitable credit score, sufficient income and Certificate of Eligibility (COE) to get VA home loan. The home purchased from the loan amount needs to be for personal occupancy. Some other eligibility criteria for VA home loan include:

Servicemembers and Veterans

Veterans and servicemembers need to have a COE to qualify for VA loan. A veteran who is honorably discharged gets a COE. Other requirements include:

Spouses

The spouses of veterans may also apply for VA home loan if they fulfill any of the following criteria:

  • The service member is either missing in action or is a prisoner of war
  • Unmarried spouses of veterans who died on duty or from a service-related disability.
  • If the surviving spouse remarries on or after the age 57 or on and after December 16, 2003
  • Surviving spouse of a totally disabled veteran but did not die because of disability

Other Eligible Beneficiaries

Individuals who fall in one of the following categories are also eligible for VA home loan:

  • U.S. citizen who has served the armed forces of government allied with the U.S. in World War II
  • Individuals who served as members in organizations such as Air Force, Public Health Service officers, Coast Guard Army, cadets at U.S. Military and others

VA home loan is more important than ever for service members, since lenders have tightened the lending requirements. VA home loan gives veterans the ease to buy a home with minimum or no down payment and also save more on monthly EMIs because of low-interest rate. VA loan is obviously a better choice over conventional home mortgage, provided the veteran or spouse meets all qualification criteria.

Veteran Home Loan Options and Their Benefits

When it comes to purchasing a residential property, there are numerous home loan options available for veterans. Ironically, due to the variety available, many lenders find it a challenge to make the right decision, especially in the absence of an expert assistance. Even with professional assistance, it is important for veterans to have a basic knowledge about the various types of home loan available in the US. Let’s get into the details of the various types of veteran home loans available in the US.

veteran loan

VA Loan

Introduced in 1944 under the Federal Servicemen’s Readjustment Act, a VA loan is exclusively available to individuals who served the country and some selective military spouses. Some of the advantages of VA loans that make it ideal for veterans, are low-interest rates and zero down-payment. Whether a veteran or an active duty service member is in Texas or any other state, he can apply for the VA loan, if he meets the eligibility criteria.

USDA Loan

Administered by the U.S. Department of Agriculture, the USDA loans are for citizens including the veterans with low income who wish to purchase a house or land in a rural area. It is important that the property is located in the predefined eligibility zone to qualify for a USDA loan.

FHA Loan

Citizens, including veterans, may use Federal Housing Administration (FHA) loans to purchase property or maintenance work on a property. There are other types of FHA loans for senior citizens, first-time home buyers, and the individuals who want to buy a property and introduce energy efficient improvements in the property. The “no down payment” options are not available for FHA loans, and borrowers need to pay mortgage insurance up front and on a monthly basis.

Conventional Loan

If a veteran finds that a VA loan is not an appropriate, he may apply for a conventional loan. These loans are similar to any other conventional mortgage options, but the veteran still needs to meet the military service requirements.

A Few Last Words

VA loans are a profitable option among the multiple loan options available to veterans. The loan is not only useful for purchasing a property, but it is ideal for refinancing too. Veterans do not need to make a down payment if they are applying for a VA home loan and the credit score requirement is also low, as compared to the other loan options available to the borrower. It is advisable to seek the advice of a VA loan expert, to make a better decision because financial condition plays a vital role in improving or lowering the living standard of an individual as well as his family.

VA Loans Refinance Limit – All That You Need To Know

VA loanVA loan is a popular loan program in America with more than 14 million current and ex military personnel leveraging from its benefits. It is a type of mortgage guaranteed by the United States Department of Veterans Affairs and is only accessible to veterans and active members of the US military and their surviving spouses. In addition, the loan can be refinanced and offers relaxed credit requirement for the same, allowing many homeowners suffering from financial crunch to refinance their mortgage.

Benefits of Refinancing VA Loan

  • Limit for refinance with VA loans is up to 90 percent, which is is higher than most conventional loan limits
  • Refinancing do not require any PMI with VA loan
  • No payment penalties
  • Easier Refinancing due to relaxed credit guidelines
  • Quick loan provision for veterans facing financial difficulty
  • Ability to convert the VA funding fee into the refinance amount

2015 VA Loan Limit

As opposed to conventional loans, VA loan provides huge loan without charging its borrowers any extra. A VA buyer, for instance, can borrow up to $350,000 with no down payment, which means a U.S. home sold for $350,000 or less can be financed 100%. Nevertheless, this is just a case of minimum limit, in certain parts of US, VA loan limit may go much higher.

According to the National Association of REALTORS, the average sales price in the last month of the year 2014 for a single family home was $255,800. Yet it is out of question to find a home in New York City, California, and in San Francisco, for even two or three times of that amount. In order to help military personnel borrow loan in such expensive cities, the Department of Veterans Affairs extends its maximum loan limits such cities in which costs are on higher side. For the year 2015 the VA loan limit tops the chart at $721, 050 for home buyers in Honolulu, Hawaii.

How to do it the Right Way

You may think of VA loan to be a time consuming and confusing practice, but finding the right VA loan service provider can help you streamline the process in the right order making things easier. Choose a VA Loan service provider that provide quick and easy refinance services with a VA loan, is a trustworthy name in the market and allow you to follow the progress of your loan from the comfort of your home. Hence to sum up we can say that, these increment in the limits have enabled VA-eligible buyers buy homes under VA loan program.