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How to Manage Bad Credit VA Home Loan

A VA home loan is a Military guarantee program that was introduced in 1944 by the US Government. This program was begun to help returning service members to buy homes. The VA loans are also available to the American veterans’ spouses provided they do not remarry. The VA loans are given by specified lenders and normally guaranteed by the federal government. This program has helped to get over 20 million veterans in affordable homes with fair financing and safe. It was also a thank you package for workers returning home from world war 11.

The VA loans come with numerous benefits which without, most of the military families would struggle to get financing.

How to Manage Bad Credit

The VA loans do not require any down payment or insurance. Conventional lenders require a down payment of up to 20% at times which is tasking for military veterans since they are always on the move. It’s also required that they do private mortgage insurance in order for the lenders to get protected in the event of borrowers default. With VA loans, one is not required to do private mortgage insurance because the federal government assumes risk in case of borrowers default.

With VA loans borrowers can use (BAH) which is Basic Allowance Housing to pay their monthly mortgage costs. BAH is usually a benefit given to active military members, and is counted as income by lenders.

Moreover,  VA loan borrowers enjoys the benefit of no pre-payment penalty; a penalty that come as a result of paying off  a home loan before it has matured, hence borrowers can plan for their future home purchases .

Most of the men and women in the armed forces do not have good access to conventional loans. This is because they normally have a bad credit score, hence while borrowing conventional loans they receive poor lending rates. The poor credit score for those in the armed forces is caused by the fact that they lack assumed loans in their lifetime. This is because they have programs in the armed forces covering most of their expenses. Also if they join the army at an early age they escape much debt.

Veterans working abroad often encounter the challenge of clearing bills back home, especially when unexpected bills come their way or overdue debts while still in service abroad.

In conclusion, even with VA loans, buying a house requires much diligence, budgeting and planning. It is therefore important to consider a few factors before finally going for the VA loans. For instance it’s overly argued that a couple who saves up to 20% to buy a home is much more likely to be committed in the investment compared to those that go for VA loans.