Obtaining a VA Mortgage
Where to Start?
We are interested in purchasing a home and would be happy to hear from anyone who has gone through a VA loan. We haven't a clue where to start. I called one person who handles VA loans in NY but do not want to be limited to living there.
We do, however, have a past history of bad credit, which has been very good for over 2 years now. I would appreciate any help where to start on this as we want to buy a house and have about 30K to put down. I want a relatively new house.
Try a Foreclosure
I have no experience with VA mortgages, but I can recommend VA foreclosures, especially for somebody whose problems are credit related. We bought our house through a VA foreclosure program. Our house selection was excellent (although we were restricted to the homes on the list) and the down payment was very reasonable. More importantly for us, the credit and paperwork requirements were minimal. We had some outstanding debts, and we had to reach an agreement with our creditors that was satisfactory to them and then have the creditors inform the VA of that fact. That was all. We were approved for a mortgage the same day we spoke to the realtor.
The actual house-choosing process can be something of a pain. Our realtor provided us with a list, we checked out what looked promising, and then we bid on the house we liked. It took about a week, maybe a week and a half, before we heard that our bid had been accepted (i.e. was highest). The down payment depends on how high your bid is. Each house has a minimum bid amount set by the VA. I believe the down payment starts at $1000 (for the minimum bid) and then is increased based on how many thousands of dollars above the minimum your bid is. Minimum bids tend to be below market value, so you can go higher and still get an excellent deal.
I think any realtor can help you with VA foreclosures or refer you to somebody who can. Usually somebody in town specializes in them, and runs real estate ads that mention specific homes that are government foreclosures.
Find Lender First
Look around for a mortgage lender who will work with VA loans. You should be able to call any lender who has a mortgage rate that looks good to you and ask if they handle VA loans. Most do. Ask the lender for the rate on a VA loan. With the amount of money that you have for a down payment, I would recommend that you buy down the loan instead of putting all of it as a down payment. A VA loan does not require a down so if you can use some of the money as a down and some as a way to buy down the loan it will go a long way towards reducing your overall loan payments.
Another thing, check out your local newspaper for the mortgage rates. They can change daily and the paper will let you know what they are for all different kinds of loans, including a VA loan. Have some idea about what the rates are before you go into the mortgage lender. We bought our first home with a VA loan and went into it without a clue about the current interest rates..I have a feeling we would have done much better if we had educated ourselves a bit before we signed on the bottom line.
Ours Was Easy
My husband and I got a VA loan 2 1/2 years ago, and it was really easy. We didn't even have to put any money down. If you can, it's always better, of course, but we didn't have the cash at the time. My advice is to get pre-approved. Go to a mortgage company and apply for the loan. They'll need to know your current salary and some other financial info. They will then tell you how much house (they think) you can afford.
Keep in mind, however, that you still need to stay in your comfort zone. My husband and I were "qualified" for a monthly payment of $1201/month (yeah right!). Our comfort zone was about $300 less.
Second, for the VA loan, you will need the discharge papers of the Veteran. These will be sent in to the Veteran's Affairs office. They will be returned to you along with a letter/form qualifying you for the VA guarantee. The Mortgage company should be able to walk you through all you need to do. Just remember to go to a reputable mortgage company, and you should be fine.
We were able to obtain a VA mortgage for our first home this past summer in IL. The first step is getting a certificate of eligibility from your VA office. I believe you can just walk in (or call first) with your 214 (discharge form). They will give you the certificate and some information on VA loans and home-hunting. Next we went to our bank to see how much we could qualify for. We called for an appointment and were told what to bring (income stubs, etc.). After that we contacted a realtor with our list of requirements and started looking.
Being able to get the VA loan was great for us because we had no down payment. The interest rate was about .25% higher than conventional loans, but we don`t have to pay mortgage insurance. Also VA loans won`t help you get a "fixer-upper". They have a list of requirements the house has to meet, mostly concerning the condition of the basic structure of the house. We had to have our home inspected (which is a good idea anyway). In our case, there was termite damage to the garage which needed to be treated before the VA would approve our loan.
If your down payment is equal to or higher than 20% of the homes you`re interested in, you might want to look into conventional mortgages or other financing options (some communities have special incentives for buying in a certain area or for first time buyers). VA loans are great if you need them, but if you can go with another option, you can save yourself some hassle.
My husband and I got a VA-guaranteed loan when we bought our first house way back in 1979. The government site for VA-guaranteed loans is at http://www.va.gov. There is a great FAQ section.
Are You Sure?
My husband and I purchased our home in 1994 through VA. If I could do it over again, I would have just done a regular mortgage. Not only could we have afforded more doing a normal loan (as VA tends to tell you how much they will give you), they are very picky about what type of home they will give you money for and things have to be in tip top shape.
For instance, when we purchased our home, the front steps didn't have a handrail, the sidewalks were a little uneven, the back porch paint was chipping (just a tiny bit) and the downstairs bathroom was off the kitchen.
We had to fix the sidewalk and also put up railing on the front steps. Plus we had to re-paint the back porch.
Normally the sellers would do this if they are willing to sell VA. However, if it cost a lot of money, they may ask you to help. We ended up fixing everything and splitting the cost. We also took care of the lawn until we moved in.
Like I said VA is a stickler. We did get the sellers to pay 1/2 of the closing though, and afterward, I found out that through VA it was mandatory that sellers pay 1/2.
Take the Next Step
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