Is there a VA Home Loan Expert in the house?

2015-02-14T22:04:39-05:00

I have read and reread the "facts and FAQ's" all day long but am still lost in the sauce. In a nutshell, I am looking to use my VA home loan benefit but the divorce did a whammy on my credit. The judge awarded our truck (in my name only) to the ex and it got reposessed before the judge heard motions to have the title transferred to her name (ding on me). Also, I'm 100% service connected/PH recipient. Are there any little known programs out there that might help us into a VA loan-approved home? We are in Tucson and would love to get feedback by veterans who are AZ licensed realtors. Tango Mike! Uncle, Mark

http://www.benefits.va.gov/homeloans/

Response by SSG Private RallyPoint Member made Feb 14 at 2015 10:06 PM

2015-02-14T22:06:02-05:00

I sincerely wish I could help. Good luck!

Response by MAJ Jim Steven made Feb 14 at 2015 10:09 PM

2015-02-14T22:09:12-05:00

I don't know much about much...and... Merino is the RP God...
But...are you dealing with a VA problem, or a credit problem???

Response by SSgt Private RallyPoint Member made Feb 14 at 2015 10:36 PM

2015-02-14T22:36:16-05:00

Just messaged an old family friend who works in banking. He says it could be possible, would depend on the details of your credit.

Response by SFC Private RallyPoint Member made Feb 14 at 2015 10:58 PM

2015-02-14T22:58:11-05:00

SFC Mark Merino Have you talked to the company that reposessed your truck? If you have paper work showing that the judge awarded your truck to your ex, the company may contact the credit bureau to straighten thing out for you. However, don't expect it to happen anytime soon. It is worth a try though, especially if it happened recently.

Response by SSG Private RallyPoint Member made Feb 15 at 2015 12:28 AM

2015-02-15T00:28:08-05:00

The ins and out of a VA home loan:

1. Certificate of Eligibility (COE) - make sure you have this. You will be required in most cases to provide a copy your DD-214

2. Debt to Income Ratio(DTI) - the calculation that looks at your monthly debt payments compared to your income. By dividing all of your monthly liabilities by your gross monthly income, they come up with a percentage. This figure is known as your DTI, and must fall under a certain percent in order to qualify for a mortgage. The maximum debt-to-income ratio will vary by mortgage lender, loan program, and investor, but the number generally ranges between 40-50%. For VA purposes keep it below 41%.

Let’s look at a basic example of debt-to-income ratio:
$120,000 annual gross income as reported on your tax returns/pay stubs
Monthly liabilities: $3,500
Monthly gross income: $10,000
35% debt-to-income ratio
In this example, your debt-to-income ratio would be 35% ($3,500/$10,000).

However, the debt-to-income ratio goes into greater detail and comes up with two separate percentages, one for all of your monthly liabilities divided by income (back-end DTI ratio), and one for just your proposed monthly housing payment (including taxes and insurance) divided by income (front-end DTI ratio).

So in the above example, if your proposed monthly housing payment makes up $2,000 of your $3,500 in monthly liabilities, your front-end DTI ratio would be 20%, and your back-end DTI ratio would be 35%. Many banks and lenders require both numbers to fall under a certain percentage, though the back-end DTI ratio is more important.

You may see a debt-to-income requirement of say 30/45. Using the example from above, your front-end DTI ratio of 20% would be 10% below the 30% limit, and your back-end DTI ratio of 35% would also have 10% clearance, allowing you to qualify for the loan program, at least as far as income is concerned. However, if your loan is manually underwritten then the maximum debt-to-income ratio is 41% (back-end). There is no front-end requirement for VA loans.

3. Calculate your residual income - VA lenders calculate your residual income to make sure you have enough money left over each month for food, healthcare, and other family expenses. It’s an extra protection to ensure veterans have an affordable home buying option.
How to calculate it:
Your monthly gross income is _____
Spouse’s monthly gross income +
Subtract state and federal taxes/Social Sec Taxes* -
Net =
Subtract credit card, auto loan, & student loan payments -
Subtract estimated utilities (14 cents est per square foot based on home you wish to buy)-
Subtract childcare expenses/child support -
Subtract future mortgage payment, property taxes, homeowners insurance, and HOA dues**-
Estimated VA Residual Income =
(Residual income for Arizona for a family of 2 with a loan amount above $80K is $823.00)

As mentioned earlier, the VA is interested in the big-picture ratio, the back-end number. The VA uses a DTI benchmark of 41 percent, which is higher than what you’ll find with conventional and even FHA financing. **See VA Form 26-6393 Loan Analysis

http://benefits.va.gov/warms/pam26_7.asp

4. VA Funding fees - Generally, all Veterans using the VA Home Loan Guaranty benefit must pay a funding fee. This reduces the loan's cost to taxpayers considering that a VA loan requires no down payment and has no monthly mortgage insurance.

You do not have to pay the fee if you are a:
Veteran receiving VA compensation for a service-connected disability, OR
Veteran who would be entitled to receive compensation for a service-connected disability if you did not receive retirement or active duty pay, OR
Surviving spouse of a Veteran who died in service or from a service-connected disability

http://www.benefits.va.gov/homeloans/purchaseco_loan_fee.asp

5. Credit score - with VA the current standard is 620 score. In comparison, the average credit score on an FHA loan denial was 669 in May 2012, according to the National Association
of Realtors. Conventional lenders are looking for even higher credit scores. Borrowers with scores of at least 740 accounted for 53 percent of all loans in August 2011.
In general, credit scores are calculated using a complex web of factors, some 20 in all, broken down into five broad categories that are surprisingly simple and easy to understand.

a. Payment History (35 percent of your score) - The credit agencies have three classes of late payments: 30 days, 60 days and 90 days. On average, a 30-day late payment will knock 40
to 110 points off your score; a 90-day late payment will shave 70 to 135 points.
b. Credit Card Balances (30 percent of your score) - The scoring system looks at how
much you owe and the total amount of credit available to you. Generally, it’s best to keep balances at no more than 30 percent of the credit limit.
c. Credit History (15 percent of your score) - This is also why it’s important to keep old credit cards open whenever you’ve paid the balance.
d. New Credit (10 percent of your score) - This involves opening new accounts and having credit card companies and other entities check your credit, which can damage your score depending upon the frequency.
e. Types of Credit Used (10 percent of your score) - The scoring system rewards consumers with multiple forms of credit, from several credit cards to mortgages, car loans and other consumer finance accounts.

6. Find a realtor well versed in VA loans process. Take this to heart, this is an important investment.

7. Above all, be patient.

Response by SFC Michael Jackson, MBA made Feb 15 at 2015 1:35 AM

2015-02-15T01:35:22-05:00

SFC Merino,
the bottom line is it's up to the lender and how they view your credit worthiness. The VA doesn't have a minimum credit score requirement.
1) However, many lenders are using 620 as a guideline. (some lenders will go lower, search around)
2) debit-to-income ratio is a huge consideration (below 40%)
3) do a credit dispute with all three credit agencies explaining that vehicle was her responsibility and send the legal document to support that. ( With VA, lenders are making a decision based on entire credit profile, having an explanation of your version of events may be helpful)

Response by SrA Andrea West made Feb 15 at 2015 1:52 AM

2015-02-15T01:52:58-05:00

Mark, ask your realtor about HUD/VA loans. Not sure about AZ but they are available in MT, shaves a few percentage points off your interest rates. The catch is you have to sell to a HUD/VA buyer if you sell your property before it's paid off. There are a few more stipulations but for me it was a good deal. Good luck!

Response by SFC Private RallyPoint Member made Feb 15 at 2015 3:25 AM

2015-02-15T03:25:34-05:00

SFC Mark Merino

I am in the process of buying a house with this program as we speak. I am working with a very knowledgeable realtor, who is the mother of a Marine I work with. If you would like to speak to her, message me. Good luck!

Response by SGT Steven Eugene Kuhn MBA made Feb 15 at 2015 3:41 AM

2015-02-15T03:41:07-05:00

My twin is the Head Mortgage Banking Director for Wells Fargo, I have sent a good 10 of my Vet buddies to him and he always finds a way. If you wish, write me and I can set you up.

Response by Cpl Duane Danner made Oct 20 at 2015 12:38 PM

2015-10-20T12:38:12-04:00

when you say VA guaranteed, what does that mean? if you lose a house in bankruptcy or foreclosure, do you as the borrower have to repay the va?

Response by SGT Private RallyPoint Member made Oct 20 at 2015 2:24 PM

2015-10-20T14:24:23-04:00

I can help you, I'm a VA lender in all 50 states. Email me, [login to see] or call, [login to see]

Response by SSgt Alex Robinson made Oct 20 at 2015 9:11 PM

2015-10-20T21:11:20-04:00

SFC Mark Merino VA loans are easier to get than conventional loans.... you should not have as much difficulty getting approval... best wishes..

Response by SGT William Howell made Oct 21 at 2015 1:13 PM

2015-10-21T13:13:44-04:00

SFC Mark Merino The only thing I can add is there are loan experts that are certified to do VA loans. They can guide you. Just make sure they are certified.

Response by PFC Dj Leverton made Oct 21 at 2015 8:51 PM

2015-10-21T20:51:49-04:00

VA loans can be tricky but it's a benefit you earned. It's all up to the lender. I don't know if I'm licensed in the state your buying but one of my team mates will be. I am a veteran and have used the VA loan 3 times myself. I work for Veterans United Home Loans and this is what we do. Look us up on line. We put veterans first!! Email me [login to see] . We will do whatever we can. We work with veterans to build their credit at no charge. 11B Hooay!!

Response by SSgt Michael Johnson made Oct 22 at 2015 11:32 AM

2015-10-22T11:32:07-04:00

I believe at point in time HARP is a better option than a VA loan. You should look into it.

Response by 1SG Private RallyPoint Member made Oct 22 at 2015 2:45 PM

2015-10-22T14:45:41-04:00

This post is a bit dated, but here are a little details I have learned from experience.
VA won't say no if you qualify for the home loan guarantee benefit... the loan itself is up to your chosen lender. Your credit history will be used to determine what interest rate you qualify for. At a minimum you should shop around for the lowest rates, which will change from lender to lender and day to day based on the current market. If your credit needs work then take some time, up to several years, to straighten out errors and get that score back up before making a home buying decision. It could save you tens of thousands in the long run depending on how bad your credit really is. You won't need money for down payment unless you choose to and the VA funding fee can be financed into the loan. You should only need money for closing costs, and sometimes you can get the seller to pay some if not all of those costs leaving you with little to no out of pocket costs. Bottom line...fix the credit and your on the right track.

Response by MCPO Bryant Arnold made Oct 22 at 2015 10:14 PM

2015-10-22T22:14:53-04:00

1. Your post does not address a key issue, in the Court Order were YOU required to continue making payments? If so your done!
2. Were the payments current on the day you turned it over to her? If the Court Order required her in writing to make the payments, as of the date you turned it over to here? Then I would call the nearest military legal office and have them write a letter to the Credit Bureau addressing the legal issues. But, you have to be squeaky clean to win this situation. The only other solution is time and pay all bills on time and don't just pay the minimum even a few extra dollars help. Look at all your credit cards and pay extra on the lowest balance every month, as soon as it's paid off add start on the next one. You can make your credit score rise quicker by lowering your over all debt to income ratio... Good luck