Posts Tagged ‘VA loan’

Using government loans after a derogatory credit event

February 21, 2017

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Last week, we focused on using conventional loans to purchase a home after a major derogatory credit event such as a bankruptcy, short sale, foreclosure, etc. This week, we will focus on VA and FHA loans offered by the government.

In every instance, a government loan has a shorter waiting period after one of these events. It is the loan of choice to use if it will fit your needs. Let’s discuss the waiting periods:

  • Chapter 7 bankruptcy: requires a 2-year wait
  • Chapter 13 bankruptcy: requires a 1-year wait from the beginning of the payout period
  • Multiple bankruptcy filings: VA requires only 2 years, but FHA is a case-by-case basis
  • Foreclosure: VA once again is only 2 years, but FHA is 3 years.
  • VA Specific: in order the qualify for a VA loan (in addition to being a veteran), there must be a 1 year minimum of re-established after the judgement dates and other derogatory events paid/resolved
  • FHA Specific: If HUD has a claim against a borrower for a foreclosed/short sold home (and that home was financed using an FHA loan), a borrower isn’t eligible for a new FHA loan until after 3 years from the date of the claim being paid.

As anyone can read here, government loans have a much shorter waiting period than conventional loans. As low as one year, but mostly just a 2-year wait. An FHA or VA loan would be the preferred method for buying a home after one of these major events. That said, there a couple of situations that make conventional loans the way to go:

  • the borrower is not eligible for a VA loan (so you go FHA unless….)
  • the loan needed to purchase a home will exceed the maximum FHA allowed loan amount
  • there is a claim against the borrower from HUD
  • a borrower is not eligible for an FHA loan due to CAIVRS (a government credit monitoring tool to ensure people who take out government loans pay them back)

The last two on the list are not that common, so buying a home within the FHA maximum loan limits would be the way to go. In addition to a shorter waiting period, the interest rate tends to be better than conventional loans, the borrower only needs a 3.5% down payment, and the monthly mortgage insurance rate is lower. A borrower’s credit score will confirm those items, but in general, those are all reasons why FHA loans are the best way to go after a derogatory credit event.

Completed a bankruptcy two years ago, and ready to buy a home in Georgia? If so, we can get started today in the process. Contact me and we’ll make sure you qualify for a loan, and then send you out looking for your next home.

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VA Loans: How to qualify

August 9, 2016

blog-author-clayjeffreys3

VA loans are loan programs designed for those who have served our country as part of the Armed Forces. VA loans require no down payment, a 620 credit score, and one can purchase a home up to $417,000 without putting any money down.

VA loan applicants can purchase a home above $417,000, but must make a down payment of 25% of the money over $417,000. For example, let’s say someone is buying a $500,000 home. The first $417,00o doesn’t require anything for a down payment. The only money down would be 25% of the remaining $83,000, or $20,750. If you qualify, a half million dollar home could be purchased with just over $20,000 down… less than a total 5% down payment!

Who exactly qualifies for a VA loan? It is more people than you’d think.

  • Active service for at least 90 days during wartime
  • Active service for at least 181 during peacetime
  • 6+ years in the national guard
  • Spouse of a soldier who has died in combat OR died as a result of a service related disability
  • Also some personnel of Public Health Service officers and coast guard

Qualifying for a VA loan isn’t restricted to only to veterans. In fact, I closed a loan for someone earlier this year who was never in the service, reserves, ROTC or anything… he worked for the CDC in the Public Health Core of officers.

I know what you may be thinking… “Great, I qualify, no what?”

There are lots of reasons to use a VA loan if you qualify for one.

  • VA loans do not require a down payment
  • Even at 100% financing, there is no monthly mortgage insurance payment
  • The interest rate is better than a conventional loan

That is why I’ve yet to have a client not use a VA loan if they qualified for a VA loan. The only potential drawback to an FHA loan is the funding fee. More on that next time.

How do you know if you qualify for a VA loan? If you are buying in the state of Georgia, contact me today. Provide a copy of your DD214, and we’ll order your Certificate of Eligibility and get the loan process started!

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Discussing mortgage options

December 3, 2014

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Now that we’ve talked about the aspects of a mortgage payment, let’s focus on the mortgage options. There are so many mortgage options from which to choose – how do you decide which loan is best for you?

To contact any of us at Dunwoody Mortgage Services, click here!

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