Gustan Cho Associates at Loan Consultants
This BLOG On VA Guidelines for Collections & Charge Offs On VA Home Loans Was UPDATED On January 2nd, 2019 By Gustan Cho of Gustan Cho Associates at Loan Cabin Inc.
Often times, buyers experience a period where their income drops: they can’t find a job to pay for their expenses, suffer from a medical emergency or fall victim to any other adverse event. These kinds of periods can cause different credit issues like charge offs. The declaration by a creditor that debt is unlikely to be collected is called a charge off. A charge off can have a certain balance remaining or it can just be shown as a charge off of zero balance. This is a major issue and often home buyers will find it hard to acquire a home loan if they get a charge off.
However, if you are a veteran, you don’t have to worry about the issue of charge off and collections.
As per the updated VA guidelines for collections and charge offs, veteran borrowers who want to acquire a loan can qualify for a VA loan with outstanding collection accounts and charge offs.
In the United States of America, one major issue that often restricts buyers from qualifying for a home loan is lender overlays.
You should know that just because you are not able to qualify for a VA loan from one lender doesn’t mean that other lenders will reject your application for the loan too.
Typically most lenders set overlays versus VA Guidelines for Collections & Charge Offs on the credit score requirements.
Lenders who follow the guidelines of the U.S. Department for Veteran Affairs (VA) don’t have a requirement for a minimum credit score or any other overlays which make it easy for veteran borrowers to qualify for a VA loan.
Most VA mortgage lenders require a debt-to-income ratio of 41 percent to 50 percent.
Most VA mortgage lenders tell veteran borrowers that they cannot qualify for a VA home loan unless they pay off their outstanding charge offs and collection accounts.
Some lenders require borrowers to pay off their outstanding collection accounts in order to qualify for a VA home loan, but paying off outstanding collection accounts can drop credit scores.
Sometimes credit scores drop by 50 or even more when open collections accounts are paid off by people.
People who experience financial difficulties or lose their job may not be capable of paying minimum payment of debt.
The charge offs and collections accounts have a serious negative effect on credit scores.
Collection agencies are aggressive and ruthless;
Unfortunately, most collection agencies don’t follow the Federal rules.
Veteran borrowers can qualify for a VA loan with charge off accounts under the updated guidelines of VA for collections and charge offs.
For example, if you are a veteran borrower and have a collection accounts balance of $12,000, you are not required to pay off this $12,000 in order to qualify for a VA home loan.
The U.S. Department of Veteran Affairs (VA) has ensured that the veteran borrowers who experience financial hardships don’t experience problems in getting a home loan.
Borrowers are not required by the VA to pay off their open collection accounts.
If you have been denied a home loan or have any questions about real estate or mortgage please contact the author Gustan Cho of Gustan Cho Associates at Loan Cabin Inc. at 262-716-8151 or text us for faster response. Or email us at email@example.com. The Gustan Cho Team at Loan Cabin Inc. works when you work, so feel free to contact him any time. Gustan Cho Associates at Loan Cabin Inc. NMLS 1657322 is a national direct lender with no overlays on government and conventional loans. The Gustan Cho Team at Loan Cabin Inc. is available 7 days a week, evenings, weekends, and holidays.
This BLOG On VA Guidelines for Collections & Charge Offs Was UPDATED On January 2nd, 2019
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