VA Loan Misconceptions

For American veterans, military members or their surviving spouses, the VA loan program is incredibly beneficial. It makes it easier for veterans and those that are currently serving to purchase property at extremely good terms, including low to no down payment and low interest rates. However, there are a few misconceptions about VA loans that may be preventing you from attempting to take out a VA loan.

The following are some of the VA loan misconceptions to watch out for:

You need to have perfect credit

This is nowhere near true. VA loans are way more flexible than traditional loans when it comes to the credit score required to qualify. Most lenders require a minimum FICO score of 620, which is considered a fair credit score that’s just below good. In order to receive the kind of terms that VA loans provide on a traditional loan, you’ve got to have very good to excellent credit.

VA loans take a long time to close

When the VA loan program first started out, this was somewhat true. However, it’s no longer the case. VA loans have become very efficient and VA appraisals tend to come back within ten days on average. For the most part, VA loans take just as long as traditional loans to close.

VA loans will cost more

Some people think that because of the low credit scores and low interest rates that they’ll be charged more for other aspects of the loan, such as the closing costs or the mortgage insurance. The VA actually limits what lenders can charge in closing costs, which takes care of that potential problem.

Then there’s the mortgage insurance – lenders typically require you to pay mortgage insurance if your down payment is less than 20 percent of the home’s cost. However, even the no-down payment VA loans don’t require mortgage insurance.

You won’t qualify if you’ve experienced bankruptcy or foreclosure

If you’ve had to file for bankruptcy in the past or have been foreclosed on in the past, then you probably think that there’s no way that you’ll be approved for a VA mortgage. This isn’t true. VA loans are very forgiving compared to other loan products – and a conventional mortgage only requires a three-year waiting period following a foreclosure and a two-year waiting period following a bankruptcy.

VA loan lenders only require you to wait two years after a foreclosure or a Chapter 7 bankruptcy before you can apply for a VA loan – and only 12 months following Chapter 13 bankruptcy as long as you can prove a history of on-time payments during that period.

VA loans lead to a higher foreclosure rate

The VA actually ensures that applicants can weather financial bumps and stay current on their mortgage. In fact, they have a foreclosure prevention team that reaches out to homeowners at the first signs of danger.

VA Mortgage Loans in Maryland

Avoid these misconceptions and be sure to contact Alex Echeandia today if you need information or advice about applying for a VA mortgage loan in Maryland, Virginia, or Washington, DC.

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