In the past, when an ex-military service member or the surviving spouse applied for the VA loan benefit, the administration would approve the loan application. Along with giving the green signal, the VA would fix the interest rate and ask for an appraisal. Therefore, the time taken for approving the loan would be too long. For this very reason, many veterans would even turn down the offer on purchasing a home by using a VA loan. At present, the approval process has changed and how. The administration does not follow the lenient guidelines but issues the requirements for credit score as well. Along with the credit score, the debt ratios and employment history are also under scrutiny.
So, VA home loan is designed to provide sufficient help to the military veterans and other qualifying members to purchase a home with no private mortgage insurance, low-interest rates, and zero percent down payment. Now, the VA does not impose the credit score requirement on the borrowers but the government does not make home loans either. Therefore, the credit score for VA loan in Houston is a serious matter to consider. Many lenders are setting a certain requirement for credit score and many veterans are unaware of the fact.
Let us go through the much-needed information regarding credit score and VA home loan here.
Getting through the Credit Score Evolution
Before going over the VA home loan, the lender checks the credit report. The credit history has information about a trade line. Hence, the information on how much is owed or how late the payment is in the credit report. Additionally, the report indicates the paid or outstanding collection items and other change-offs. When the underwriter finds out poor credit or missed payments, there is a chance that the VA loan application would be turned down. FICO is in charge of analyzing the payment pattern only to come up with a three-digit number ranging between 300 and 850. The higher the credit score, the better the chances to get approved. As the administration does not set a limit, the lenders approve a minimum credit score of 500.
Applying for VA Loan with Poor Credit
If you have been bothered with bad credit, you can still apply for a VA loan. Apart from the credit score, the lender considers other requirements. So, the lender starts to look at your credit history and checks whether you have cleared the housing costs per month. When your credit history carries proof of credit card debt, you can be in trouble. In order to overcome this situation, you need to monitor the credit score. Additionally, you can look for mistakes and pay down credit card debt on a regular basis. Don’t forget to keep track of the bills too!
So, you can guess the process is not as complex as you thought it might be. Of course, a lender can navigate the process when you have had a past history of foreclosure or bankruptcy. So, get in touch with the lender for getting help with credit score now.
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.