Victor Runkle VA Real Estate Agent

Many Veterans have past outstanding debt that is unpaid on their credit reports.

It's very common that Veterans will go ahead and pay off the debt on their own before consulting with a VA Loan Officer. If you are purchasing a home with your VA Loan in Vancouver Washington or Portland Oregon make sure you consult with a professional mortgage banker who has vast knowledge in VA Loans. I'll explain why.

You may have excess debt to the point where a bankruptcy is needed. There are two types bankruptcies for consumers. Chapter 7 where all of the debt is released and you essentially start out with a clean slate. And a chapter 13 where a payment plan is established that is affordable with your household income. Which one do you qualify for? It's hard to say because there is a calculation that must be done and only bankruptcy attorneys can accurately do this. But, you can always start with a VA Loan Officer. They can at least say if it would be a good idea to speak with one. There are many to speak with in Vancouver, WA and Portland, OR.

Many Veterans believe that if they file bankruptcy they will not be able to purchase a home ever with their VA Loan. This is not true. When you file for a chapter 7 bankruptcy the VA only requires 24 months of time to pass after the discharge date before you can close a loan with your VA benefits. The date of discharge is the 90 day mark after the day you file. Many Veterans think that a bankruptcy will ruin their credit forever which in not true. It only prohibits a VA home loan for 24 months. A chapter 13 bankruptcy only requires 12 months of time after the date of discharge.

Many times a Veteran will qualify for their VA home loan in Vancouver WA or Portland OR area and still have some outstanding debt that needs to be paid before closing. Say for example a collection or credit card that is rather small in amount. Make sure that if you have any debt that is being required to be paid off before closing that you do not pay for it until the actually closing date. Wait until you go to closing and provide the money to the escrow and title company the day you sign your paperwork on closing. They will take the money and send it to who you and will also document the payment on the HUD-1 which will be provided to the underwriter and the VA.

The reason you must do this is because if you were to pay the debt on your own, say a couple weeks before closing, it will normally take four to six weeks for that creditor to update their system and the credit bureaus. Then when you show up to closing the debt will be very difficult to prove it was paid. In order to meet the closing date you will have to pay the debt again and then recover the first payment at a later date, which could take a great deal of time.

Victor Runkle

It is very important to always use a local Lender for VA Loans and FHA Loans in Vancouver, WA and Portland, OR. Every VA and FHA borrower has the right to utilize any VA and FHA Lender that is licensed in that state but there is some risk which I will explain.

Purchasing a home with your VA benefits or FHA loan in Vancouver, WA and Portland, OR is the biggest purchase of your lifetime. It is extremely important that you work with a local professional who thoroughly understands and is educated on the market. It is very difficult for out of state Lenders to fully understand the details of the VA and FHA market in an area they do not reside. In Vancouver, WA and Portland, OR local Lenders understand the VA and FHA market because they have established relationships with local Realtors and local Escrow Companies that provide them with up to date information. Out of state Lenders without those relationships do not have access too this information. While an out of state Lender is capable of closing a VA Loan or FHA loan for you, a local VA and FHA Lender offers expertise that someone out of state most likely does not possess.

Out of state Lenders not only effect you as a VA or FHA borrower but they also effect a purchase transaction in its entirety. Every transaction has the same questions asked buy all parties involved that include the Seller of the property, the listing Agent, the selling Agent, the Escrow Company. When you are conducting a VA loan or FHA loan in Vancouver, WA or Portland, OR and all entities involved are local except for a Lender who is out of state these questions arise;

Who is this Lender?

Where did you hear about them?

Do you know anyone who has used them before now?

Are they easy to get in touch with?

Can you talk to a person directly?

Do they have any recommendations in our area?

When these questions start to be asked by Realtors the seller usually wants some reassurance that the buyer of their home is working with a reputable company. Normally this will include the seller requiring that you get pre-approved with a locally known Lender. Reputation is hard to prove when you are out of state and no one has heard of the Lender, seen the Lender or has ever spoke to anyone who has worked with them in past. There is more to a VA Loan or FHA Loan than just getting it closed. Not every VA Loan or FHA Loan is cut and dry. VA Loans and FHA Loans are not easy to close and require experience to be done correctly. Local Lenders will be known by other Realtors and Escrow Companies and they will be able to verify their experience level.

Issues pop up on every VA Loan or FHA Loan that can potentially end up in a denial. A Lender must have the internal fortitude to work through these problems and not give up because of frustration. A Lender who you have been able to look at eye to eye and establish a personal face to face relationship with will normally not give up on you. Wheras a Lender whom you have never met and have only spoken on the phone with will find it much easier to end a transaction if the VA Loan or FHA Loan shows some difficulty. Today the Lending market is very rigid which means that Lenders must work twice as hard to close a VA Loan or FHA Loan. This is why working with a local Lender is so important because creating that personal relationship usually ensures stronger loyalty and representation. Having a local Lender where you and your Realtor and Escrow Company can go to their office to pick up and drop off important paperwork and talk too in person makes a huge difference to everyone's comfort level. Especially with the individual you are purchasing your home from in Vancouver, WA and Portland, OR.

How to obtain a copy of your DD214

You must have your DD214 if you want to get a VA Loan. Many Veterans have lost their DD214 or simply can't remember where they put it. Here's a tip on a place to look for it, check inside an old Bible you've had for years. Sounds like an odd place but it seems to be one of the most common places Veterans put it when they get out.

If you still can't find it go to the following website; http://www.archives.gov/veterans/military-service-records/ Once you get there go to "Launch the eVetRecs System to start your request Online". Another suggestion would be to print out the SF-180 and mail it in. This is located on the same website right next to the online form. Do both of these processes to ensure that you get it. It does not take months to get a copy. It will normally take about three to four weeks. Believe it or not, it's pretty fast.

Statement of Service in place of a DD214

If you are on active duty you probably don't have a copy of your DD214. In this case you will need a Statement of Service which just needs to signed by your Company Commander. The Statement of Service can be completed on your computer and must have your name, social, rank, date of service and that you are still in the military. Make sure it's printed out on your unit letterhead and have it signed and your Lender can get your Certificate of Eligibility with it.

Victor Runkle

Depending on your past credit history and your current monthly income it is possible to get different answers with each Lender you talk to when it comes to qualifying for a VA Home Loan.

The VA has set requirements in place for the Loans they will guarantee or approve. Those requirements are followed by Lenders and they can be added too by each Lender. This means that if a Lender sells their Loans on the secondary market, which most do, the investors on the secondary market can say "we require more from the Veterans we will lend to so we are going to add more requirements". This is why one Lender may tell you that you qualify and another Lender may say you do not qualify. These requirements are either Lender specific or industry standard.

Lender specific requirements

These requirements are items that a specific Lender needs to qualify you for a VA Loan based on either their own portfolio, their own money, or their investors. This could be something like additional cash in savings to show you handle money well or even something like a 24 month rental history compared to a 12 month rental history. These are just two examples of many that Lenders can require. A Lender can add as many requirements to approving a VA Loan as they want, they just can't reduce or take away from the requirements the VA has in place. They must at least meet the minimum requirements the VA has or the Loan will not be guaranteed by the VA.

Industry standard requirements

An industry standard requirement is one that regardless of which Lender you talk too all Lenders will have the same answer. For example, every Lender requires 30 days of pay stubs and the last 2 years of W-2's to qualify any Veteran for a VA Loan. No matter which Lender you talk too this is required which makes these examples an industry standard.

If you get declined a VA Loan it may be a decline based on an industry standard so no matter how many Lenders you talk too you will not get approved. If you get declined a VA Loan it may be a Lender specific requirement that you may not be able to meet with that Lender so if you continue to shop around you might find a Lender that will approve you.

Conclusion: If you are declined a VA Loan you should ask the Lender if it is because of a Lender specific requirement or an industry standard requirement. Regardless of the answer you get you should always get a second opinion from another Lender.

Victor Runkle

Big Advantage to VA Loans

A very big advantage with a VA loan is that a seller is allowed to pay off some of your debt in order to qualify you for the loan. We're not talking huge numbers here but we are talking numbers that could make a difference between being approved or denied for a VA Loan.

A seller can pay up to a maximum of 4% of the Veterans closing costs including prepaid property taxes and hazard insurance. Most of the time these closing costs amount to about 3.3% of the loan amount. The remaining .7% can be utilized to pay off debt of the Veteran to qualify them for a VA Loan. Most of the time it is usually a smaller collection or credit card with a small balance. This may not seem like a really big deal right now but if you were in a situation where the Underwriter required a debt of say $1,700 for example to be paid off at closing, this option could be a big help if you don't have that extra cash laying around.

Get a Credit Approval first!

In order to utilize this option it is best to get a "credit approval" completed before finding a home. That way your file can go completely through underwriting and any debt that needs to be paid off can be determined before you write up a deal on a home. When you have a deal written up by a Realtor on a home you neet to make sure you get the correct verbiage from your Lender on how it should be written up in the transaction. Every Lender likes to see it written a certain way in the purchase and sell contract as to how the seller who is paying your closing costs and also going to pay off any debt of the Veteran. Normally it's written something like "Seller agrees to pay up to 4% of the Veteran's closing costs, prepaids and consumer debt". Each Lender is different so be sure to find out before writing up an offer.

Not every Lender will do this

Another thing is that your Lender might not allow the seller to pay off any debt so be sure to check that this is allowed. Just because the VA will allow certain things Like this option does not mean the Lender will allow it. If this is the case that your Lender will not allow this option and you need it to qualify for the VA Loan don't give up there! Shop around until you find a Lender that will allow it! This can be done by asking other Lenders via email or over the phone if they will allow this to be done. You don't have to go in and meet with each one and fill out all of the paperwork each time just to find out.

Victor Runkle