3 Best Practices For Acquiring VA Loans

While many aspects of the finance/lending world seem to abide by very strict, unavoidable, guidelines, the VA (Department of Veterans Affairs) home loan program has more flexibility than what is initially apparent. Although complying with the eligibility details can be cumbersome, millions of veterans, active military members and spouses can participate in the program.

These mortgages, backed by the government, have helped above 20 million veterans to attain home financing since 6 decades. VA loans are also forgiving and flexible in nature; this loan program is on the rise because recently, veterans are finding it difficult to score conventional or even Federal Housing Administration (FHA) loans. The U.S. Department of Veterans Affairs also recently updated the VA loan limits for 2014, and the details show loan limits are up for the year.

Veterans looking for a home in 2014 can reap the several benefits of VA loans, but the unique requirements can be a sticking point for them and the real estate agents. Luckily the following best practices can make the acquisition of these loans a smooth process:

Meet the residual income requirement

According to Low va rates, VA loans require no down-payments or mortgage insurance at all, meaning that veterans are left with more money than in any other loan programs. And despite the no money down requirement, they are considered to be one of the most secured mortgages in the market. One of the reasons for this consideration is the residual income requirement for VA.

The standard has to be meet by veterans as it is used to make sure they are buying affordable homes. More specifically, the VA wants to measure if the applicant has enough money to cover major monthly bills for gas, electricity and other necessities that may not be listed on the loan application. The residual income is based on the family size and geography. For instance, a single veteran from the Midwest must have minimum $441 in residual income to meet the requirement.

Keep a minimum credit score

VA might not have minimum credit requirements, but they aren’t also the ones making these loans. Most VA lenders look for a minimum of 620 credit score, which is below the conventional financing score benchmark, but can still be difficult for service members and veterans to maintain.

It is always possible for military home buyers to improve their credit profile to put themselves in an ideal position for obtaining VA loans. For example, paying bills on time can have a significant impact on the credit score as the overall payment history makes up 35 percent of it. Financially strained veterans can also take help from support networks and laws created for their protection. Vets can also consider managing their line of credit before seeking a preapproval; paying off a vehicle before a loan can improve credit score.

Obtain official eligibility certification

An applicant applying for a lean has to receive a Certificate of Eligibility from VA. This can be done through the Automated ACE (Automated Certificate of Eligibility) on the web for instant online certification (the process only requires a few seconds). Applications without ACE access can obtain and submit the VA Form 26-1880 from VA’s website or VA regional center.

Through it is possible in case for the VA to determine eligibility without proof of military service, vets should always provide some evidence to avoid any delays.