Why Did My Credit Score Drop?

If you noticed your credit score has gone down since the last time you reviewed it, there’s probably a good reason. To make sense of it, compare these common reasons for a drop in a credit score to how a new creditor might interpret those actions or behaviors. Read more

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VA Home Loan Approval With Late Payments

A veteran calls me and his question was. Is it possible to get a VA home loan approval with late payments?  The answer is yes. When a veteran applies for a VA home, the lender runs your information through a program called Desktop Underwriting.  DU analyzes the risk of loan for the lender to determine the creditworthiness of the veteran. If the lender receives an approve eligible findings this lets then know that it's okay to move forward with the loan regardless of the late payment reporting on the credit report.

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Bad Credit VA Mortgage Loans

Getting a VA loan approved with manual underwriting.

There are two ways to get a bad credit VA mortgage loans approved. Automated Underwriting and Manual Underwriting.  With AU,  your lender will run your income your credit and assets through a program called desktop underwriting.  From that, you will get back, an approval, denial or a refer. A refer means that the loan qualifies for a VA manual underwrite approval. When qualifying for a bad credit VA home loan manual approval, the VA will look for compensating factors to compensate for your low scores and past negative credit history.  the three main compensating factors that VA looks for is. Those are....

No Late Payments or

• No Late Payments or Collections for 1 year
• Low debt to income ratio (Below 45%)
• Long-term employment
• liquid assets (Stocks, Bonds, 401k, Savings)
• Sizable down payment
• Military benefits
• 1 Year Satisfactory home ownership experience
• High residual income
• Tax credits for child care
• Tax benefits of home ownership

Thank you for reading.

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We need legislation to cover the US Guard and Reserve [Commentary]

It’s time to be honest about the Guard and the Reserve — despite their name and low-commitment reputation, it’s been a long time since serving as a member of the Reserve component, or RC, has truly consisted of one weekend a month and two weeks of training in the summer. 

The RC has been a consistent source of boots on the ground in Iraq and Afghanistan, used to ameliorate the operational tempo and strain on the active-duty force. However, rhetoric surrounding the “total force” concept is only now catching up with reality, and there’s a moral imperative for legislation and policy to do the same. Congress should update the Uniformed Services Employment and Reemployment Rights Act, also know as USERRA, to reflect the increased training commitments of today’s force and consider additional tax benefits such as deductions for hiring reservists and tax exemptions for "differential pay." 

The role of the RC has shifted from “a strategic reserve to an operational force." High-demand Army National Guard units are facing an increase of training days up to 60 a year over the course of four years, while the Air National Guard is trying to negotiate with employers, recognizing that airmen often work 60-80 days a year to meet necessary training demands. As training increases, leaders cite a focus on predictability to try and mitigate the impact on families and employers, yet this may not be enough. 

Though the RC is more operational than ever, there has been no legislative action reflecting this change to ensure the men and women serving in the Guard have the necessary legal protections to do so effectively. A recent memo to the Massachusetts National Guard notes: “We will constantly be challenged by operational demand, the urgency of readiness requirements, and the constraint of time as a reserve component of the Army.” .... Read more

2017 Basic Allowance for Housing Rates

The Basic Allowance for Housing (BAH) is based on geographic duty location, pay grade, and dependency status. The intent of BAH is to provide uniformed service members accurate and equitable housing compensation based on housing costs in local civilian housing markets, and is payable when government quarters are not provided.

For your personalized pay and allowance computation check out our Military Pay Calculator.

Each year the BAH tables are released between December 15 and January 1.

Current BAH Rates:

The overall average military Basic Allowance for Housing rates across the country increased over the last year. As noted above, BAH rates are based on the combination of local costs for rent, utilities and renter’s insurance for various housing types. Any fluctuation of one or more of those factors in a given location will affect BAH rates for that location. 

Any active duty servicemembers who see a drop in BAH for their locality will have their BAH protected, thanks to "individual rate protection," which was adopted by Congress over a decade ago. On the other hand, those who live in an area that sees a BAH increase will enjoy a bump in the paycheck.

View the Current BAH Rates 

According to the DoD, BAH rates now make it possible for servicemembers to have zero out-of-pocket expense -- for servicemembers living in civilian rented housing. Since 2008 the BAH rates are directly related to the cost increases of the local rental housing markets.

Although BAH rates will generally either remain stable or increase, there may be some areas that decrease due to a decreasing local rental market. However, individual rate protection will still apply. Individual rate protection prevents the decrease of a BAH rate as long as the status of a servicemember remains unchanged. The servicemember who is already attached to his or her unit and receiving BAH will receive any published BAH increase, but no decrease. When the new BAH rates go into effect, rate protection assures that the servicemembers typical out-of-pocket costs may be less, but never more, than upon their reporting date.

Must Read Facts About VA Home Loans With Bad Credit

Must Read Facts About VA Home Loans With Bad Credit

That’s how many Veterans have secured home financing since 1944 using the VA Loan Guaranty Program. This benefit has now helped generations achieve part of the American dream they fought to defend.

Today, in an era of tighter mortgage lending requirements, this long-cherished program is arguably more important than ever. So is making sure that Servicemembers and Veterans are aware of the home loan benefits earned by their service.

To that end, here’s a look at seven key facts about VA home loans with bad credit.

No down payment
This is the singular, headline-garnering benefit of the program. Qualified Veterans can purchase up to $417,000 in most parts of the country without having to make a down payment. Buyers in more expensive parts of the country can go even higher. It’s tough to overstate just how significant this is in the current lending environment.

For example, let’s say you want to purchase a $200,000 home. For a conventional mortgage, the minimum down payment would be $10,000, or 5 percent of the purchase price. FHA loans require at least 3.5 percent down, which in this case is $7,000. Saving that kind of lump sum can be a tall order for the average military homebuyer. For some perspective, VA borrowers on average have just under $7,000 in assets.

The no-down-payment benefit helps Veterans get into homes without having to spend years scrimping and saving for a day that might never come.

Government guaranty
VA doesn’t actually make home loans — in all but a few cases. Instead, it provides a financial guaranty to private VA-approved lenders; basically, a promise to repay a portion of the loan should the borrower default. That promise gives lenders a degree of confidence and allows them to extend financing to qualified Veterans without the need for a down payment.

It’s important to understand that VA’s fiscal guaranty doesn’t mean that eligible Veterans automatically get a home loan. Not every Veteran who’s eligible for a VA home loan will get one because prospective borrowers still need to meet requirements set forth by both VA and approved lenders.

Credit requirements
While the VA guaranty breeds confidence, lenders are still on the hook for most of the loss if a Veteran defaults. That’s a big reason why lenders are able to introduce requirements beyond what VA needs to see to determine eligibility. A credit score minimum is probably the most common example of where these two roads diverge.

A credit score is essentially a representation of your ability and willingness to repay debt. Rather than cite a specific score, VA simply wants Veterans to be a “satisfactory credit risk” in order to utilize this program. But lenders go a step further and require that borrowers meet or exceed credit benchmarks. This type of additional requirement is known as an “overlay” and helps lenders better manage their risk.

Right now, most VA lenders are generally looking for a score of at least 620. But if you do your research you can find lenders who offer va home loan with bad credit scores. That’s well below what Veterans will typically need to satisfy conventional and even FHA lenders.

No private mortgage insurance
Loan programs that require a down payment often come with an additional financial drain: mortgage insurance. Unless you can put down a hefty chunk of change (typically 20 percent of the purchase price), conventional borrowers will be on the hook for a monthly mortgage insurance payment until they’ve built sufficient equity.

FHA loans have an upfront mortgage insurance premium along with an annual fee that borrowers now pay for the entirety of the loan term.

VA loans have no mortgage insurance. Because of this benefit, the Veterans who secured VA financing last year will save $19 billion over the life of their loans.

The overall safety of the loan program is rooted in VA’s prudent underwriting requirements, its even-handed appraisal process, and its tremendous commitment to helping Veterans keep their homes.

The Loan Guaranty program has more than 150 loan specialists who work to educate Veterans about foreclosure avoidance and intervene with lenders and servicers. Their efforts have helped more than 300,000 Veterans who became delinquent on their mortgage to fight off foreclosure.

It’s not a one-time benefit
One of the most common misconceptions about this program is that it’s a one-time shot. That’s absolutely untrue. Once you earn this benefit, it’s yours for life. You also don’t necessarily need to repay your original loan in full in order to purchase again with a VA loan. What’s possible will depend in part on how much VA loan entitlement you have remaining.

VA loans are booming
VA loan volume has soared 380 percent since FY07. The program’s recent boom comes as Veterans have struggled to qualify for conventional and even FHA home financing in the wake of the housing market collapse. Veterans are flocking to the safety, security and significant benefits of VA loans.

The federal government created this program nearly 70 years ago to help level the playing field for Veterans and military families. Today, the VA Loan Guaranty program plays the same critical role in helping open the doors of homeownership to those who might otherwise struggle to secure it.

In fact, VA loans may now be more of a lifeline for military borrowers than at any time since World War II.

Can You Use Electronic Signatures For VA Home Loans?

Sometimes it takes a while for concepts to catch on. The use of electronic signatures is one such concept that has taken a while to filter in to the mainstream. There are many who have initiated or closed their VA home loans using a good old fashioned pen and paper, but many lenders are making the switch to electronic documents as much as possible.
In the same way people are able to purchase new cars using electronic forms and digital signatures, you can also get a VA mortgage with bad credit scores
electronically with a participating lender.

To that end, the Department of Veterans Affairs has published some guidelines to help both borrower and lender understand what’s required and acceptable when using a digital or electronic signature. In VA Circular 26-13-13, the VA addresses the issue:
“The purpose of this circular is to clarify that electronic signatures are acceptable for use in conjunction with the VA Home Loan program.”

Simple and direct. But there’s more: any lender who chooses to use electronic signatures is required to comply with applicable federal laws established way back in the year 2000. The Federal Electronic Signatures in Global and National Commerce Act, commonly referred to as the E-sign Act, was signed into law on June 30, 2000. The E-sign Act served to establish baseline rules for internet commerce, including electronic signatures, stating:]

• There should be no discrimination between handwritten and electronic signatures.
• All electronic records should be kept for the same amount of time as a handwritten signature.
• There should be a provision for electronic acknowledgment or notarization of online documents when, and if, necessary.

Additionally, the E-sign Act established that electronic signatures will have the same legal standing, stating in the Act that “No contract or legal document signed online may be denied legal efficacy because it was delivered by an automated program.”

While the VA is quick to point out that the use of electronic signatures is NOT mandatory, those lenders who do employ them must comply with the E-sign Act. Borrowers or lenders who have questions ahttp://www.50stateslending.com/bout what is required in order to remain in compliance with federal laws should contact the Department of Veterans Affairs directly.

VA Rules on Minimum Property Requirements

In the past, we have discussed situations where the Department of Veterans Affairs might waive its minimum property requirements. But some requirements cannot be waived because they directly affect the health or safety of anyone who might live in the home.

House hunters applying for a VA home loan with bad credit won’t be approved for a loan on any property that doesn’t meet basic VA minimum property requirements in these areas.

According to the VA rules, properties evaluated by a VA appraiser must be free of hazards and defects. Any issue that could affect the health of the future owners must be addressed. Below are some of the most common issues that potential home owners may not consider to be factors of minimum property requirements, the issues aren’t as obvious as you might think.

Foundation

Foundation problems are a deciding factor when considering minimum property requirements. Foundation issues can be common in states like Texas, and violate the VA’s minimum property requirements.

Dampness

Excessive dampness is another issue. In Louisiana, some dampness might be expected based on humidity factors and other issues. But too much dampness is a potential structural hazard and won’t pass VA requirements.

Drainage

VA rules state that in order to be approved for a VA home loan, a property must be properly graded so the home has, “positive, rapid drainage away from the perimeter walls of the dwelling, and prevents ponding of water on the site.”