VA Mortgages
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Taking out a new mortgage for a home is exciting and stressful at the same time. Owning your own home is a proud accomplishment and credit is a key issue for every person trying to buy a home. When you first talk to a lender they will ask you for personal and financial information, and they will run your credit report to see if you are eligible for a loan. That is why your credit history and current credit score is an important component in obtaining a VA home loan.
Anytime someone takes a new loan, opens a new credit account, obtains a mortgage or refinances a mortgage, a credit check is run. In a standard credit check, your name and social security number are used, with your approval, to look at your credit history and see how well you pay your credit cards, car loans, personal loans, and any other bills. Your credit report also may include:
- Any late payments
- How much you currently owe to credit card companies, student loans, car loans, etc.
- Your credit score, which is a number that indicates how worthy of credit you are depending on how responsible you are and have been in the past when making payments and borrowing money
- Bankruptcies
To get a VA loan, you must go to a VA approved lender and supply them with all the information they need. Then, if your loan is approved and you are eligible, the VA Home Loan Program will guarantee your loan. This makes your credit score very important because all lenders look at credit to determine if you are eligible for a mortgage loan and at what percentage rate. The better your credit rating, the better interest rate you can get.
This does not mean that you need perfect credit to get a VA home loan. Interest rates on your mortgage may vary depending on your credit history, but you can still use the VA Home Loan Program with "not so great" credit. You can even qualify for a VA home loan if you have declared bankruptcy before. There are certain general rules if you have had a bankruptcy in the past:
- If it has been less than 12 months since your bankruptcy was discharged, the VA will NOT let you participate in the Home Loan Program
- If it has been more than 2 years since your bankruptcy has been discharged, you may use the VA Home Loan Program
- If it has been between 12 months and 2 years since your bankruptcy was discharged, they will let you use the VA Home Loan Program if you have reestablished good credit AND the reason for the bankruptcy was not your fault in the first place. For example, you lost your job or were ill or temporarily disabled.
To fully understand how your credit history will affect your chances of obtaining a mortgage loan and using the VA Home Loan Program, you should contact a lender and let them check your credit report. They can tell you if your credit history is good enough and if it is not they can help you clean up your credit so that you can take advantage of the program in the future. Go here to find a VA approved home lender and get more information on how your credit history affects your eligibility in the program.
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