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Questions about a VA loan


ybrew
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First the question -

If we go VA, do we really need to shop around or is a VA loan a VA loan regardless of where you go? I know they're not necessarily score driven. I'd prefer to go with the preferred lender because of a few incentives (title insurance, earnest money due).

Those aren't huge incentives, but it's still something. And if all VA loans are pretty much equal, then I'll go with the preferred guy. But if I need to shop around I will.

Here's our situation now:

Spoke with the broker yesterday.

Based on my scores, the broker thinks I should be able to go VA. I've got a couple of baddies. One I've got enough ammo to get off and another one that is due to be removed in Dec (we'll probably close in December).

those are both relatively big baddies (about 9K total).

Aside from those 2, there's a few smaller ones I'm fighting ($159, $61, $650) that I won't pay without pay for delete or pay at closing.

Anyway, the guy says based on my midscore of 618 now, we should be able to go VA. I expect my midscore to be over 640 in 6 months simply by paying on time on the good tradelines I do have and by getting my utilization down from 85-90% to under 3%. Actually I'll have that utilization down in about a month.

My wife's midscore is 678. She's got one baddie I've already done a paid for delete for that should show up next month. Utilization for her is also 85-90%, but will be down to 3% next month or so. Plus 6 additional months of on-time payments - she should hopefully have midscore of 700+.

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VA is VA wherever you go. It's just a loan guarantee that will help you get into the home of your choice with 0 down. Inspections are more stringent, credit is more stringent, interest rate is not necessarily better and your payment will be higher because you paid no money down. I bought a house with my VA guarantee back in the 90's and can't say that it really saved me much of anything.

You could save your money towards down payment instead of paying collectors, get a conventional loan (with your scores, probably 5% or less down) and probably have a much smoother home buying experience when all is said and done.

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VA is VA wherever you go. It's just a loan guarantee that will help you get into the home of your choice with 0 down. Inspections are more stringent, credit is more stringent, interest rate is not necessarily better and your payment will be higher because you paid no money down. I bought a house with my VA guarantee back in the 90's and can't say that it really saved me much of anything.

You could save your money towards down payment instead of paying collectors, get a conventional loan (with your scores, probably 5% or less down) and probably have a much smoother home buying experience when all is said and done.

I don't have 5% down. I could scrape up 3% down, but I wouldn't have enough for reserves.

I thought credit was less stringent since it wsan't score driven.

i also was told interest would usually be the same as a conventional loan with great credit. (Basically I thought a VA Loan interest rate would be about the same as a conv loan for someone with a 720+ credit score)

Is that not the case?

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I had to clean up EVERYTHING to get my loan, and the rate was only about 1/4 point better. The VA inspector was a pain and almost cost me the deal. He wanted everything in perfect shape.

Don't let my bad experience discourage you. This was, after all, several year ago.

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I had to clean up EVERYTHING to get my loan, and the rate was only about 1/4 point better. The VA inspector was a pain and almost cost me the deal. He wanted everything in perfect shape.

Don't let my bad experience discourage you. This was, after all, several year ago.

Ok, not discouraged at all...

First - this is brand new construction. I want everything in perfect shape too!

Second - Credit wise - I've been working on this for awhile. I've been told my credit is Ok. I don't frankly believe that 100%. I've got about 9K in collections. 4200 I expect to get off this week (their lawyer liked the proof I provided saying I paid. Another 4400 is due to expire (7 year reporting period) around the time I close. Timing could be important but I think we're ok. Rapid rescore would probably fix that if need be.

The other 600 or so - I can pay that at closing.

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My only real concern - I got a real quick estimate from a broker yesterday. The quoted rate was 8%, but I'm almost positive he started that loan out as subprime and didn't change the rates for VA. If I can get 1/4 point better, great. But as long as I get a good rate (sub 7%) the wife and I will be happy (and can afford what we're getting).

How far out can I lock in the rate for a VA? I'd love to lock in a rate in the next few weeks if possible (closing around December).

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See if there are any State programs you can qualify for in addition to VA. I did joint VA and Montana Board of Housing for my mortage, and got 5.25% fixed APR with that, which was lower close to a point lower than the going rate at the time. I also used this New Homeowners Service, at least I think that's what NHS stands for, can't remember, to cover my closing costs. All I had to do for that was take a 1 hour class. I got my house with almost no money down. I had to put $250 into escrow, and that was it. I couldn't believe how easy it was. The bank pre-approved me for the amount I was offering to purchase the house for within minutes, and it took less than an hour to fill out the paperwork and actually get approved once the seller accepted my offer.

I don't know what my score was at the time, but I do know that I didn't have any negatives on my CR at the time. The only credit I had at that time, was 1 paid off auto loan, a $600 Best Buy charge card, and an auto loan that was a little over a year old.

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Texas does have a Veteran's Housing program in addition to VA, but one of the requirements for new construction is the home needs to be energy star certified. Our builder is no-nonsense, doesn't pay a cent for marketing, etc, and doesn't pay for this rating. The quality is as good as any builder and the insulation ratings, AC SEER value, etc, are all in line with other builders - but they don't have the certification.

I may see if I can get our house certified. That'd save me 1/4 point, but if not, not the end of the world.

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Ok - spoke to the loan officer that initially quoted me 8%. He stated if I closed today,it'd be between 6.5-6.8%.

That feels MUCH better than the 8% originally quoted.

Now the question becomes - when to lock in the rate.

He says I can only lock in for 60 days. Any further out and there will be a charge (he's gonna get back to me with the specific charge.

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So if anyone has a crystal ball and can predict rates over the next 6 months, please let me know :)

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