Mortgages – VA loans on the rise during the year
Borrowers must also demonstrate that they will have enough monthly income left over after paying off personal debts and housing costs to meet ministry-set levels for “residual income.” In the Northeast, for loan amounts over $ 80,000, the residual income level for a family of four is $ 1,025.
These underwriting standards, while exclusive to the Department of Veterans Affairs, have kept the foreclosure rate on its loans much lower than on other types of loans, Long said.
Grant Moon, an Army Reserve captain who served in Iraq, used a VA loan to buy his first home, a three-family home in Massachusetts, in 2008. He didn’t put any money in. and used the rental income to cover his mortgage.
“I moved in and was only paying about $ 300 a month to have my own house,” he said.
Mr. Moon (who has since purchased another VA-backed home in New Jersey) is now the president of VA Loan Captain, an online service that allows veterans to compare interest rates and terms between lenders.
“We screen the lenders and make sure they don’t try to take advantage of the veterans,” he said.
While VA loans can be beneficial for military personnel with few assets, they are not always the best option. Although the VA does not require mortgage insurance, it does charge a financing fee, which can cost more than 3% of the loan amount. Paying these fees might not be prudent for a borrower who plans to stay in the house for a short time, Moon said.
Disabled veterans may be exempt from these fees.
With the growing popularity of VA loans, the department expects to take a big step forward this month, when it will most likely guarantee its 20 millionth veteran.