Lonestar Financing

On the Rise – Texas VA Home Loans

Christine AndreskiHave you been affiliated with the military and are you looking to buy a home or refinance in Texas? The VA Home Loan Program is receiving $6 billion in funding this year so this is an excellent time for you to consider a VA home loan. VA home loans are ideal for young families and first time home buyers since the borrower can finance 100% of the home’s value and purchase with $0 down. Is there any other loan program available that can offer these benefits? The answer is no.

With a military service background you owe it to yourself to consider a VA home loan. Compared to a conventional loan, a VA home loan’s qualifying criteria is uncomplicated with more lenient credit and income standards. VA home loans are guaranteed and written at a lower interest rate. There is no down payment requirement and the need for mortgage insurance is eliminated. VA Home Loans often are the focus for first time homebuyers. Nevertheless, in today’s market they also benefit repeat buyers or Veterans who are considering refinancing at a lower rate or refinancing to take cash out.

Backed by the Department of Veterans Affairs, there is a broad spectrum of Veterans who should be taking advantage of these loans. In 2006, the loan limit for VA Loans was fixed at $729,000. No money down, a substantial loan limit, and no high rate second mortgage are almost unheard of in the conventional loan world. With as many as 80% of approved VA home loan borrowers not qualifying for a conventional loan, it’s no surprise the recession-proof qualities of VA loans has put Texas VA home loans in the spotlight. The VA Home Loan Guaranty Program makes it conceivable for VA-eligible borrowers to fare very well in these harsh economic times. It’s more important than ever for Veterans and their families to investigate the benefits afforded by the Texas VA Home Loan Program. And, again, no down payment is required if the eligible Veteran has full guaranty benefits and the loan amount does not exceed $417,000 (larger loans are available with specific guidelines).

So… do you qualify for a Texas VA Loan? As with all loans, there are qualifying requirements. Before you apply you need to understand these pre-requisites. A Texas VA loan requires both service and eligibility requirements. Here’s a quick look at what’s necessary:

Service Requirements
• Veterans must have been honorably discharged and have served at least 90 days of active duty during wartime or 181 days on active duty during peacetime.
• Service of at least six years is required for members of the Military Reserves and the National Guard. The Reserve branches eligible for the VA Home Loan Program are Army National Guard, Army Reserve, Air National Guard, Coast Guard Reserve, Navy Reserve, Marine Corps Reserve, and Air Force Reserve.

The following are also considered eligible for the VA Home Loan Program:
• Spouses of deceased Veterans who died as a result of their active service or a service-related injury as long as they are not remarried
• Spouses of members of the US Armed Forces who are missing in action or prisoners of war for over 90 days
• US citizens who served with an allied country during WWII may be eligible

Veterans who are eligible for the VA Home Loan Program have a maximum loan entitlement of currently $36,000 that can be increased to $60,000 for loans that exceed $144,000. This is the entitlement and NOT the maximum loan amount, which is actually $729,000. This entitlement is the amount of your loan that the VA guarantees to the bank thus alleviating your mortgage insurance expenses. As a bonus, the entitlement never expires.

Eligibility Requirements
• You must obtain a Certificate of Eligibility (COE) as proof from the Military that service requirements have been met and qualify for a VA Home Loan.
• The VA will determine your eligibility for a Texas VA Home Loan when you submit VA Form 26-1880. If qualified, the Department of Veterans Affairs issues a Certificate of Eligibility to use when applying for your VA Home Loan. You must submit VA Form 26-1880 to the VA to guarantee your VA Home Loan. The form must be filled out entirely in order for the VA to determine your eligibility. You will be asked to submit some of the following information when requesting your Certificate of Eligibility:
• Name, address, phone number, etc.
• Social Security number
• Branch of the Military in which you serve or served
• Service number, separation of service, or statement of service papers
• Any previous VA Loans that you may have had, including the VA Loan number

What else is required? Although your credit score is not a decisive factor, your credit history for the previous twelve months is evaluated to ensure a satisfactory history of making timely payments. Be aware, a negative mortgage payment history does carry a significant impact for the borrower’s approval.

Bankruptcy is not an immediate disqualification. You may still qualify for a Texas VA Home Loan if the bankruptcy occurred within the past two years due to verified circumstances beyond the control of you or your spouse. Falling into that category would be circumstances such as unemployment, long-term strikes, or medical bills not covered by your insurance. However, the bankruptcy must be discharged in order for the borrower to qualify.

Qualified borrowers must show a stable employment history. If the Veteran’s spouse is to be included on the loan, both the Veteran and their spouse’s employment history should indicate two years of stable employment, which is expected to continue for the foreseeable future, and all employment gaps must be explained. And borrowers must be able to show a residual amount of income following their mortgage payment each month.

The benefits of Texas VA Home Loans are deep and broad and we’ve just scratched the surface. Stay tuned for more information regarding Texas VA Loans. If you qualify, you need to have all the facts and I’ll be providing them over the next few weeks.

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