Let me take you back 60 years—that would have been 1963. In 1963 interest rates for a 30-year fixed home loan dropped below 6 percent. For approximately 40 years—between 1965 and 2005—interest rates stayed above that 6 percent mark, often several points above that mark.
There is no way to know if history will repeat itself, but it is a fair question to ask: if we were to go another 40 years before interest rates returned to the present historic lows, where would YOU be and would you be in a better position to take advantage of that opportunity?
There is no time like the present!
You have many different loan options right now for a VA home mortgage. You can get a fixed loan, an adjustable rate mortgage (ARM), or a refinance—all at historic lows. Just how good is the current VA interest rate? As I said earlier: you may not have a better opportunity for a veteran mortgage loan in your lifetime.
The timing is absolutely wonderful for a VA loan. I’d like to offer some advice, because almost everyone needs a lender to get into a home and everything in the lending industry is about risk assessment.
There are 3 key elements to any mortgage transaction.
- Credit. Your credit score and history are the driving factor in this market. You can find out more about your credit (and even download a free credit report) at any of the “Big Three” credit bureaus’ websites:
- Debt to Income (DTI). This ratio determines how much of a payment you can afford under lending guidelines. The baseline for DTI is usually around 41%. (Calculate the money you spend on house maintenance, tax, insurance premiums, car loans, credit card bills, educational loans, etc. Then, calculate the amount you earn every month. Finally, calculate your debt-to-income ratio by dividing the first number by the second number.)
- Loan to Value (LTV). This ratio determines how much you borrow against the value of the property. VA loan requirements allow for LTV & CLTV on purchases and IRRRL’s to 100%. The LTV & CLTV on cash-out refinances are allowed up to 90% of appraised value.
A VA mortgage loan requires a certificate of eligibility (COE). Getting help to apply for your COE (and get your other questions answered) is really pretty simple.
- Credit Score. The VA insures VA loans and does not require a minimum FICO score. All lenders have their own requirements in addition to those of the VA. Most lenders today require the minimum mid-score in a tri-merge report to be at 620 or better. The credit report must clearly support an applicant’s ability to meet financial obligations in a timely, responsible manner. Lowvarates.com specializes in working with those below that tri-merge number.
- Established Trade Lines. VA loan requirements allow for both traditional and alternative credit trade lines. However, most lenders require that you must have at least two lines of credit that you have maintained for at least two years.
VA loan requirements does not allow for more than one debt payments being more than 30 days late if the incidents have occurred within the last 12 months. This includes more than one late payment on a single account. In addition, individual lenders may have restrictions on late payments made in the last 12 months. No mortgage late payments made in the last 12 months are allowed on purchase and refinance of VA loan. And only a 1×30 mortgage late payment is allowed on a VA streamline (IRRRL).
VA loan requirements specify that most collection accounts outstanding must be paid, no matter what their age as long as they are currently delinquent and/or due and payable. Isolated collection accounts do not necessarily have to be paid off as a condition for loan approval. For example: a credit report may show numerous satisfactory accounts and one or two unpaid medical (or other) collections. In such instances, while it would be preferable to have collections paid, it would not necessarily be a requirement for loan approval.
Chapter 7 must be discharged for at least 2 years with no late payments since the date of discharge. Applicants who filed for Chapter 13 and have satisfactorily made at least 12 months of payments, and the Trustee or the Bankruptcy Judge approves of the new credit, the lender may give favorable consideration.
VA loan requirements will not allow for any delinquent federal debt such as student loans or tax liens or other government debt, no matter what their age as long as they are currently delinquent or due.
VA loan requirements state that an applicant may be eligible if there was no loss of security on a foreclosure or a satisfied judgment that was completed more than 12 months prior to the date of the application. However, if there was loss of security due to a foreclosure, the applicant is ineligible for a VA loan within 36 months after foreclosure.
VA loan requirements state that child support in arrears must be brought current. If a payment schedule has been established with the Court for the past due amount and a history of satisfactory payments is provided, the applicant will not be required to pay the past due amount in full. Both the payment for the past due child support and the regular court ordered support payment will be included in the applicant’s income to total debt ratio.
If you are paying court ordered child support, it is considered a liability payment (even though it may not show up on your credit report or your pay stubs as wage garnishment); it counts against your debt ratio (DTI). Receiving court ordered child support is considered a source of income.
VA loan requirements for a home purchase do not have a minimum down payment. The VA loan is one of the very few loans that can be financed to 100% with $0 down payment.
If you think about it for a minute, the current lending climate is one of the truly unique opportunities of our times. It won’t take long to contact lowvarates.com and get your questions answered as you start the ball rolling toward home ownership.