Have you served for the country? Or, are you a spouse of an ex-active military service member? If you need to build a primary residence, VA home loan is a boon. However, you have heard about several stories that never highlighted the actual perks of the loan. For instance, you must have heard that you need to have at least 720 credit score to prove eligibility, right? This is absolutely false and there are similar myths swirling around this government-backed loan.
VA loan is one of the useful loan programs because it does not require private mortgage insurance and money down. If you go through statistics, you can find that there are millions of loans backed by VA. When the myths have been deterring you for a long-term, you should look at the positive side. Here we made an attempt to debunk the myths revolving around VA Home Loan Bad Credit, take a look.
Myth 1: You can Use VA Loan Only Once
This is completely untrue because VA loan can benefit the eligible borrowers multiple times in life. They can opt for the mortgage product for financing house needs. If you wish to build your first home or upgrade the old one, the loan is beneficial. On top of it, the borrowers can always refinance the property for a low interest rate or use the cash of equity. Based on the property value, you can keep the entitlement to utilize the benefit again. Make sure that you have entitlement so that your loan gets backed in a hassle-free way. It is safe to say, the VA loan can be at your service throughout life.
Myth 2: You cannot Get VA Loan due to Past Bankruptcy
VA loans are more lenient than conventional mortgage products. For the traditional home loans, bankruptcy calls for two-year wait and foreclosure for the three-year wait. On the contrary, you can bounce back with VA loan within a shorter period. When you are paying on Chapter 13 bankruptcy, you can obtain VA loan with a 12-month record of timely payments. However, borrowers with past foreclosure may have to wait a little longer. They need to start from scratch; hence, they have to repair payment history, credit report, and even employment status.
Myth 3: Every Veteran is Guaranteed a VA Loan
It is important to remember that every veteran is not entitled to VA loan. Moreover, it is a common assumption that the active service directs the members to ‘no strings attached’ loans. When it is VA loan guaranty concerned, the government backs the amount of VA mortgage. However, only 25% of the loan is backed. When there is a loan default, the government pays back the money to the lender. However, there is a huge difference between guarantee and guaranty. Every person is not guaranteed a loan but every loan falls into the guaranty category.
Similar to other house loans, you need to meet standards and criteria. You can always seek help from the professional lenders to deal with such confusions or get yourself on board.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.