Noteboom The Law Firm

VA Loans Will Tighten Up With Lending Environment

December 21, 2010 - In spite of the current economy and the housing crisis which is currently affecting thousands of homeowners across the country, Department of Veterans Affairs (VA) backed home loans have a much smaller foreclosure rate. However, veterans are being affected by stricter lending environments, which have made the VA-backed loans harder to obtain.  

The last 2 years have seen many soldiers denied for VA home loans due to more stringent lending standards. This means not only are fewer soldiers purchasing homes, fewer soldiers are able to refinance. One of the most attractive features of VA home loans is the "no down payment" feature. Although that is still a very much available option, without a credit score of 610 or higher, soldiers are still running into financing issues.  

Very likely gone forever are the days of soldiers being able to get refinancing loans to lower interest rates without credit checks or appraisals. That is not to say the VA Loan Guaranty program is suffering, however. In fact, the program is still very strong and qualified borrowers can still get lower rates and more security in their loan than through a traditional bank loan.

Stricter lending did result in fewer VA loans being awarded, but that will hopefully change in the near future. Most likely, credit restrictions will continue to stay in place as opposed to slipping back to where they were before the sub-prime meltdown. It is on the soldier to make sure they make an attractive borrower so they can qualify for the VA-backed loan they have earned.