VA Loan Questions

[Rick9972]

I have never used my VA loan eligiblity, thou I am on my second house. We were always told we were not allowed to by our Mortgage broker. Even though we quilified for a conventional mortgage.

Here is my situation:

1. Debt to Income: 25 percent

2. No late payments/collections in past 12 months.

3. All unpaid collection accounts are less than $100.00. Except one and that is 550 and am working on it. Total amount owed on 15 collection accounts is @1800. They are mostly old medical.

4. Credit scores are bad bacause of old lates/collection accounts. Have a bunch of them as shown on my signature.

Would I get approved for a VA loan now? Or does my credit score knock me out?

If I received some benefit out of it I would pay the 1800.

I could also say that I am getting a sneaky suspicion that my mortgage broker took us. As stated the present house we live in is a conventional mortgage with a decent 30 year fixed rate.

thanks

All

[morrow]

Did your broker just assume you wouldnt be eligible or did he actually have a basis for not trying?

He/she should have at least tried. As long as you have not used it before and it resulted in foreclosure with a remaining balance in the end you should be fine. Even if you did have a foreclosure, if the balance was taken care of either at the time of selling or by you afterwards, you get your eligibility status back.

[Rick9972]

I sent all my information to VA years ago and got my certificate. and never used it. Used same broker both times we bought and would tell her we had it(even showed it to her) and she would just say you are not eligable and proceed on with some other loan product.

Of course we were being a pain, because we refused to accept the ARM she was trying to get us to take both times. Finally told her if it had to be a ARM, we would not buy and she came up with a 30 year fixed both times.

[Hellard]

I filed BK in 1995 and bought a house with va loan may 98. We paid 14K in med bills for my hubbie before closing on house. We had to have all items paid on report . Of course if i had known about CIC then we would have never paid that much. so 1800 compared to 14 thousand!! Depends on how much you want that house. Plus using the techniques on here you can probably pay much less and take care of your 1800.

[thorice]

So if I have 1 collection of $550 from 2002 on my credit report can I still get approved for a VA loan.

[Hellard]

if paid also along with steady employment/pay, history of i believe 2 years bills paid on time, low debt to income ratio,,maybe other things...you really need to ask a lender that does VA loans.. i am not a loan officer...i plan to use my va loan within one year but havent checked the requirments for "right now."

[momof5]

Actually it is 12 months of bills paid on time.

I just had my CR pulled by BoA for a VA loan. The one medical collection which is on both EX and TU did not show in the tri-merge! Go figure! Anyway, I have 2 other CAs that only show on TU. One is $89 the other $1900+. The LO said I would not have to pay either one.

[Hellard]

Actually it is 12 months of bills paid on time.

I just had my CR pulled by BoA for a VA loan. The one medical collection which is on both EX and TU did not show in the tri-merge! Go figure! Anyway, I have 2 other CAs that only show on TU. One is $89 the other $1900+. The LO said I would not have to pay either one.

Thats good. its been 10 years since i used my va loan so im not "up " with current procedures. What scores did the tri merge pull? Maybe i dont have to wait until my CR is better. I really need a handicapped home for my husband.

[Rick9972]

One last question:

Does Credit score affect your ablility to get a VA loan?

[momof5]

VA is not credit score driven.

My score tanked when I maxed out my cc's when I was unemployed for a couple of months so when they looked, my regular FICO was EQ 628 EX 606 TU 624. I asked the LO what scores she saw but she got sidetracked and didn't answer. I might just ask her again today.

[andrena67]

I have been considering a va loan also, I have spoken to a morg broker, who ran my credit with equifax and even with a low score 567. I could still qualify, but said i would have to pay off collections that are not more than 3yrs old.(sure there are some other guidlines) She said they are less concerned abt the score. VA just want debts paid. So thats why im using this site..

[Rick9972]

Talked to my bank today, and she wanted to run my credit and I would not allow her. She stated that the fact I bank with them, they would give me a discount off the VA rate, if I used my VA with them. Then she followed that by saying we do require a "good" credit score to do a VA loan?

I had to leave then, because of business, but I thought VA was non score driven.

I got out my VA Certificate of Eligibility from 1996. It say that I only have $36000 available for a available entitlement? What does this mean and how does this small amount help with financing a house?

Thanks and sorry for all the questions.

[jaime]

I'm going to apply for a VA loan this week. I spoke to one of my buddies that is a broker and he said that a minimum to qualify for the VA is 630. I was also told that VA loves to see at least 4*(monthly payment) cash in a savings account. I think the recent lates may hurt...but proof of income and job security is huge in the approval process.

this is all the stuff I know...if nobody minds...I was told that for a VA loan, they'll pull both mine and my wife's credit reports. Our scores are 667 & 671. I think that's alright, but my wife has a hefty collection account to pay...I'll have to see if they want it paid.

Any VA advice?

[morrow]

I'm going to apply for a VA loan this week. I spoke to one of my buddies that is a broker and he said that a minimum to qualify for the VA is 630. I was also told that VA loves to see at least 4*(monthly payment) cash in a savings account. I think the recent lates may hurt...but proof of income and job security is huge in the approval process.

this is all the stuff I know...if nobody minds...I was told that for a VA loan, they'll pull both mine and my wife's credit reports. Our scores are 667 & 671. I think that's alright, but my wife has a hefty collection account to pay...I'll have to see if they want it paid.

Any VA advice?

VA is NOT score driven, meaning you could have scores in the 500's and still qualify. They DO however, look at your whole credit worthiness, particularly the past 12 month. If you have recent lates on your credit report, you had better have a reason for them if they ask.

Also, just because people qualify for VA loans, doesnt mean they always use it. If they have excellent credit, income and the cards are laid right, they can qualify for prime rates with little down.

While VA loans are typically $0 down, they do have a funding fee which is tacked onto your loan. This ranges from 2.15-3.3% of the loan amount for $0 down. The percentage is smaller with money down.

[amortgageman]

Talked to my bank today, and she wanted to run my credit and I would not allow her. She stated that the fact I bank with them, they would give me a discount off the VA rate, if I used my VA with them. Then she followed that by saying we do require a "good" credit score to do a VA loan?

I had to leave then, because of business, but I thought VA was non score driven.

I got out my VA Certificate of Eligibility from 1996. It say that I only have $36000 available for a available entitlement? What does this mean and how does this small amount help with financing a house?

Thanks and sorry for all the questions.

The discount for the VA loan is only a reduction in the margin spread that a bank does not have to disclose but a mortgage broker must disclose. This means the bank will make a little less money on the loan.

If they require a credit score, then the bank has tighter lending standards than VA. This is a protection for the bank or lender, in hopes that the loan will perform better. Reality is VA does not require a credit score. Maybe you can enlighten her to a manual underwriting or lose your business to another lender.

The $36,000 entitlement is basically multiplied by 4, to give you $144,000 worth of "insurance." In the case of default the lender is protected by this amount in the sale of a VA home.

Let's say there was a default and the amount owed on the home was $250,000. The bank sells the home at auction for $175,000, leaving a defiency of $75,000. The VA loan guaranty would kick in and pay the remaining $75,000. This is why there is a funding fee on VA loans. The funding fee is insurance for the VA.