How to Determine Your Home Loan Eligibility

home loan eligibility

Are you looking to take that next step in your life? Have you finished browsing the net looking for that perfect place to call home?

Are you ready to become a homeowner?

Before you can actively start looking to purchase a property, the first sensible thing to do would be to check out your home loan eligibility.

Why?

Because knowing how much you can borrow not only helps you understand your own financial situation but also it stops you from getting your heart set on a place, only to find it out of your budget.

Let’s take a look at the best ways to check on your maximum home loan potential.

Calculate your Home Loan Eligibility Early To Set Your Search In the Right Area

When it comes to a home loan, the math is actually quite simple. You look at what you have coming in – your income – and you deduct your outgoings each month – your expenditure. The rest is just a matter of seeing how much you can realistically afford to pay back each month.

There are plenty of home loan calculators out there that can help you get a ballpark figure.

The main criteria that get looked at when applying for a home loan are:

Age – As harsh as it sounds, age plays a role in your home loan calculations.

Employment Status – if you are in a stable full-time job, then that is a big check in the plus column because a regular income shows the bank that you are in good standing to make your payments every month. The amount you are earning will also directly influence the amount you can borrow.

Credit Rating / Credit Card History –  If you have been living a debt free life, or at least maintaining your credit card by paying off your purchases in a simple large lump sum each month, then you score maximum points. The better managed your credit card history, the better image you produce for the banks looking to lend you money.

Choosing the Right Home Loan for You

There is more to finding a home loan than just understanding your home loan eligibility. Loan types and duration are also deciding factors.

The core loan types you should be looking at:

Fixed Interest –  The simplest loan. All you need to do is set your interest rate for 15-30 years and simply let your payments run. A great loan for those that are buying with the intention of staying put, and want to know exactly how much they will be paying for the foreseeable future.

Adjustable Rate Mortgages – If your credit rating is working against you, then you can counter balance this to some degree by taking a flexible interest rate loan. Here, the rate is set for a shorter period of time and will then be adjusted.

Federal Housing Administration Loan – For many people, being able to save the average 20% needed for a downpayment on a home, can be tough. With FHA home loans, you can put down as little as 3.5% on a down payment and move on with a fixed interest rate.

The only caveat with this is that you need to take out mortgage insurance, which you can spread over the life of the loan. This totals to approximately 1% of the full loan value.

Buying a Home is the Biggest Decision You Will Make

Making the decision to buy a home is one of the biggest things you will do in your life. To do so without due care and attention can be problematic.

By first understanding your home loan eligibility you can get yourself started on the next phase of your life with a clean conscience, knowing that you are not getting yourself into financial trouble.

If you need help with arranging your home loan or are looking for a quote, get in touch with us today. We are here to help.

A Complete Guide to VA Loans For Veterans

loans for veterans

I’m sure it comes to no surprise to you that today’s economic climate is difficult to navigate when looking to buy a home, perhaps especially for veterans.

It can be overwhelming considering that many types of loans for veterans that are out there.

We know what to do and what not to do when buying a home. A VA mortgage loan can be a great option for veterans and their families, and we’ll help explain why.

What are VA Loans for veterans?

A VA (Veterans Administration) Loan is a mortgage loan provided to American veterans of the armed forces.

This loan is popular amongst other types of loans for veterans because there is no required down payment as well as no private monthly mortgage insurance.

This loan can be used towards:

  • purchasing a home
  • building a home
  • refinancing an existing mortgage

Benefits of a VA Loan

I’ve briefly mentioned a couple of the benefits of VA loans, but let’s look at those benefits a little more in depth.

No required down payment

Down payments can often amount to 5% of the loan, which can be extremely costly to provide upfront.

No required down payment is a great option for veterans and military families who cannot afford to provide a down payment on a mortgage, or who might want to save that cash for something else.

This doesn’t mean that you can’t provide a down payment (in fact, if you do anyway it could decrease the funding fee), but it’s a great option for those looking to own without a lot of cash on hand.

No required mortgage insurance

Many conventional loans require borrowers to have expensive private mortgage insurance.

Instead of this, VA loans have an upfront funding fee that goes to supporting the VA Loan program.

Low interest rates

VA loans have a lower average interest rate than other types of loans, which will save you money in the long run.

Limited closing costs

“Closing costs” is a general term for a myriad of extra charges you can face as a loan borrower as you are finalizing a loan.

The great thing about VA loans is that the VA loan program actually limits the amount of closing costs you as the buyer would have to pay (even not allowing certain fees to be paid by VA loan borrowers).

Getting Approval

Once you’ve reviewed all the information and have decided this is the loan for you, it’s important that you are both eligible and are able to get approval for the loan.

First, you should get a certificate of eligibility from the VA. You should also have a sufficient, steady income as well.

Finally, they will check your credit score.

Be careful to not spend too much right before you apply for the loan, as this can negatively affect your credit: stay away from other large purchases (like a car for example) until after you’ve secured the loan.

Conclusion

VA loans can be an excellent option for veterans looking to own a home, especially considering this program’s success.

We understand that loans and mortgages can be daunting and overwhelming.

Hopefully this information has helped you to understand one option for you and your family.

Share this article if you found the information helpful, and if you have any questions, feel free to reach out to us!

Four Quick Tips To Buying Your Next Colorado Springs Home

Buying a home doesn’t have to be stressful! Here are four quick tips to make the process stress free!

1. Find a reputable, experienced real estate pro. Today’s Realtor will not only help you find a home, but also guide you correctly through the whole buying process.

2. Understand the process. Research as much as possible and know what to expect from beginning to end.

3. Know how much you can afford – Eliminate surprises by establishing a budget.

4. Don’t wait to buy real estate…. buy real estate and wait. Real estate is a long-term investment so take your time and find the right home for you and your family!

More information

FHA/VA What You Need to Know about Financing Rural Homes

Rural property guidelines that must be followed when financing with an FHA or VA mortgage home loan.

Rural Home Guidelines 1

Courtesy of Mortgage Currentcy

Rural Home Guidelines 2

Courtesy of Mortgage Currentcy

Rural, FHA and VA Home Loan Guidelines

Colorado VA Loan Requirements And Eligibility

Colorado Veterans with active duty service (who were not dishonorably discharged) during World War II and later periods are eligible for VA loan benefits. World War II (September 16, 1940 to July 25, 1947), Korean conflict (June 27, 1950 to January 31, 1955), and Vietnam era (August 5, 1964 to May 7, 1975) veterans must have at least 90 days of service.

Colorado Veterans and active duty military personnel who served during peacetime must have had more than 180 days of active service. Veterans of enlisted service starting after September 7, 1980, or officers with service beginning after October 16,1981, must in most cases have served at least 2 years.

The VA does not require that Colorado Veterans have a certain credit score in order for approval. The actual mortgage lenders, however, are allowed to set their own standards for VA loan requirements.

Changing economic conditions and increased losses due to loan defaults have motivated lenders to limit who they will lend to.

Since early 2010, most VA lenders in the U.S. have tightened their lending and credit score requirements, making home financing harder to come by for those with credit issues or other criteria that makes their loan more risky.

As a result, getting a loan without a down payment is more difficult, though one of the few remaining options for 100% financing is a VA loan. Major lending groups have generally resolved to set the minimum credit score requirement at 620.

To learn more about this, our article Credit Score Requirements For VA Mortgages is a great place to start.

There are three specific pieces of documentation a lender will need to determine your eligibility:

  • A DD214 for discharged veterans.
  • A statement of service for active military personnel.
  • A certificate of eligibility (COE) to determine you have VA entitlement.

Because each lender has different qualifying guidelines, the next step is to contact your lender to find out if you meet their VA loan requirements such as minimum FICO/credit scores, debt-to-income (DTI) ratios, and find out what your county’s maximum loan amount is.

Your VA lender can help you attain your certificate of eligibility on your behalf.

Lastly, if you have either had a divorce, filed bankruptcy, or had a previous home go into foreclosure, you are not immediately disqualified from a VA loan, although there are some additional restrictions.

You can find more information regarding these topics in our articles titled Divorce And VA Loan Eligibility, Does A Bankruptcy Mean I Can’t Get A VA Loan? and Can I Get A VA Loan If I’ve Had A Recent Foreclosure?

 

Colorado Va Loan Requirements and Eligibility

FHA vs VA: What Are the Benefits

FHA home loan programs and VA home loan programs are very similar; they both attempt to give access to affordable home loans to the American people. The biggest difference between the two is that VA home loan programs have been created for America’s veterans of the armed forces. But between the two, would-be home buyers are served. Where one program may not be the best for a borrower, the other program fills in.

VA Home Loan Facts

VA home loan programs are made for qualified veterans as part of the benefits extended after serving in the military. But in order to qualify for a VA home loan programs, a veteran must meet specific criteria:

•A veteran must have a Certificate of Eligibility from the Department of Veterans Affairs.

• A veteran must have good credit (usually for the past two years) and an adequate credit score.

• A veteran must have enough income to repay the loan.

• A veteran must meet debt-to-income requirements as outlined by the VA home loan programs.

• The home must be used as a residence after closing or renovations are complete

Some other individuals also have VA home loan programs available to them, including:

National Guard or Reserve members who meet specific requirements. Widowed spouses of servicemen who died in duty, who have not remarried. U.S. citizens and their spouses who served with an Allied country during World War II.

VA Home Loan Benefits

• No down payment loans

•Good fixed and adjustable interest rates, regardless of credit history

• Lengthened and flexible terms of 15-30 years or more

• No prepayment penalty

• Assistance during financial hardship

•Protection and warranty against discrimination and poor buildings

But some who have just limited time in the armed forces or who cannot qualify for VA home loan programs may still be able to work with the FHA home loan programs. Also, those with no military experience can work with the FHA home loan programs.

FHA Home Loan Facts

For those who can’t take advantage of the VA home loan programs, there are FHA home loan programs available. While the FHA home loan programs do not have many advantages over the VA process, there are some. With the FHA programs, more than half of the loan is insured, a benefit not available in the VA, which should be considered by veterans.

FHA home loan programs are similar to VA loans in many other ways, aside from the insured benefit.

FHA Home Loan Benefits:

• Low down payment

• Federal security, which can mean better terms from lenders

• Flexible terms

•Adjustable payment options

• Good interest rates and affordable payments

• Refinance options for existing loans

Qualifying borrowers can benefit from either the VA home loan programs or the FHA home loan programs. By meeting the requirements of each program, borrowers can make their home ownership goals a reality with good terms and through these good programs.

 

 

 

Colorado Fha Loan,colorado Va Loan,fha Mortgage,va Mortgage, Benefits, Faq

What Are My VA Guaranteed Mortgage Benefits

A VA (Veterans Administration) guaranteed home loan is the preferred loan program for active, non-active, Reserve, National Guard, and retired military of the armed forces because there is no down payment needed and no private monthly mortgage insurance required.

VA mortgage loans can be used towards purchasing a home, building a home, or refinancing an existing mortgage.

We will discuss what role the VA plays in a VA guaranteed mortgage, the benefits of a VA home loan, who is eligible for a VA loan, and the documentation you will need to present to your lender in order to apply.

Did you know that more than 27 million veterans and service personnel are eligible for VA financing, yet many aren’t aware it may be possible for them to buy homes again with VA financing using remaining or restored loan entitlement?

VA Does Not Offer Loans Directly and Does Not Guaranty You Will Qualify.

The VA does not actually lend the money to you directly. They offer a guaranty to a lender that if you should default on the loan, they will pay the lender a percentage of the loan balance.

*The word GUARANTY does not actually guarantee the veteran will qualify for a VA home loan.

Primary Benefits of a VA Mortgage:

  • 100% financing
  • No monthly private mortgage insurance is required
  • There is a limitation on buyers’ closing costs
  • The loan is assumable, subject to VA approval of the assumer’s credit
  • 30 year fixed loan
  • Seller can pay up to 4% of the veterans closing costs and even pay down they buyer’s debt to help lower their debt-to-income ratio
  • Interest rates are similar to FHA rates
  • You don’t need perfect credit

Frequently Asked Questions:

Q: My parent is a veteran. Can I obtain a VA loan if I have not served in the military myself?

No, the VA loan benefit does not extend to a veteran’s children.

Q: What is required to prove my record of military service?

You will be required to us Standard Form 180, Request Pertaining to Military Records, to apply for proof of military service.

Q: My spouse who has passed away was an eligible veteran. I am eligible for the home loan benefit myself?

A surviving spouse is eligible if they have not remarried, and the eligible veteran died during active duty service or as a result of a service-related disability.

Q: Is a VA loan better than a conventional mortgage?

In many cases, yes. VA guaranteed loans often offer a lower interest rate than conventional mortgages, they do not require monthly private mortgage insurance when borrowing more than 80% of a home’s value, and they can be easier to get approved for.

Q: How long does it take to get approved for a VA loan?

It varies depending on the current workload of your lender, but it is typically the same as for conventional mortgages – 3 weeks to 45 days.

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