by Tim Storm | Dec 7, 2011 | Bankruptcy, Blog
If you’re wondering whether or not you can get a VA loan in California after a recent bankruptcy, you’re not alone.
With the recent economic recession just barely behind us, many veterans and military personnel are now in the position of looking for a new mortgage after having gone through a bankruptcy.
Some of the most common questions asked regarding bankruptcies and VA loans in California are:
- Can I even get a California VA loan after a bankruptcy?
- If so, how long do I have to wait?
- What can I do to increase the likelihood of getting Preapproved for a new VA loan after a bankruptcy?
The good news is that as of today, the VA underwriting guidelines are more flexible than the guidelines for conventional or FHA loans.
With that said, let’s now go ahead and take a look at the different types of bankruptcies and how they impact VA loans…
Chapter 7
Chapter 7 bankruptcies are essentially when the borrower is freed of all liability from creditors. VA loan guidelines typically call for a 2 year waiting period after a Chapter 7 bankruptcy before you can receive VA financing again.
We say “typically” because there are extremely rare circumstances in which the 2 year waiting period will be reduced to 1 instead. You would have to be able to show that circumstances beyond your control (such as losing a job or medical problems) were the driving force behind your financial hardship.
This 2 year requirement may seem harsh, but compared to the guidelines for conventional loans that call for a 4 year waiting period, it really is quite reasonable.
Chapter 13
Chapter 13 bankruptcies involve the establishment of a repayment plan instead of being cleared of liability.
California Veterans and military personnel can qualify with VA loan guidelines even when they are still in Chapter 13 bankruptcy. However, you will have to show that you have made a minimum of 12 payments on-time and be approved by the court trustee for the loan.
Please note that once the Chapter 13 bankruptcy is complete, veterans are instantly eligible for VA loans again, whereas conventional loan guidelines still require a 2 year waiting period.
Even after you have finished the bankruptcy process, there are still actions you can take to increase your likelihood of qualifying for a VA loan after bankruptcy.
For example:
- Reestablish your credit as soon as possible if you do not have any creditors after the bankruptcy process. Remember, approving a potential borrower with no credit can be just as difficult as approving a borrower with bad credit!
- Once you reestablish credit, be sure to always make payments on time.
- Get in the habit of checking your credit at a minimum of once a year. This will give you an idea of where you stand, especially when you begin shopping for a VA mortgage.
- Upon the discharge of your bankruptcy, send a copy of all your discharge paperwork (including all applicable schedules) to the three credit bureaus: Equifax, Experian, and TransUnion.
Talk to a California VA lender to learn more about qualifying for a VA loan after a bankruptcy.
Authored by Tim Storm, a California VA Loan Officer specializing in VA Loans. MLO 223456. – Please contact my office at the Home Point Financial. My direct line is 949-640-3102. I will prepare custom VA loan scenarios which will be matched up to your financial goals, both long and short term. I also prepare a Video Explanation of the your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.
by Tim Storm | Dec 5, 2011 | Blog, Foreclosure, VA Loan Information
Many California veterans today wonder whether or not they can get a VA loan if they have recently been through a foreclosure.
Fortunately, the VA qualifying guidelines do allow for veterans and military personnel to qualify for a VA loan after a foreclosure, but with some restrictions. VA guidelines after a foreclosure are actually more flexible than other types of financing, including FHA and Fannie Mae/Freddie Mac.
For starters, veterans are not eligible for a VA loan for 2 full years after their foreclosure. After this time veterans are allowed to apply for a loan again, but will face increased scrutiny and will likely have to respond to more questions during the application process.
Remember, while you are eligible to apply for a VA loan after 2 years, there are additional requirements that must be met which may vary by lender. Simply waiting out the recovery period does not guarantee your loan approval. Your credit needs to be re-established and your FICO score must still meet the minimum required by the lender, in most cases 620. Also, most California VA lenders also need an Automated approval.
Also, keep in mind that this rule does not only apply to veterans who previously had a VA loan. Even veterans who have had Conventional mortgage foreclosures are subject to the same regulations.
For California veterans who do have a recent foreclosure that involved a VA loan, there are additional restrictions.
First, to restore full entitlement after a VA loan foreclosure, the borrower has to completely pay back the VA the loss of the previously guaranteed amount.
It is possible to use partial-entitlement to get a VA loan, but without full entitlement, a down payment will probably be required. Borrowers with past foreclosures will also be asked to provide details regarding the circumstances. If you can show that the cause of your financial trouble and foreclosure were largely out of your control, you may be able to increase your chances for approval.
Some examples of extenuating circumstances include:
- Unforeseen medical bills.
Examples of circumstances which probably won’t be considered to be extenuating are:
- Bankruptcy because of an entrepreneurial business venture.
Regardless of the scenario, there is no guarantee of approval or denial as decisions are made on a case-by-case basis.
Lastly, even though the VA does not disqualify veterans from VA loans after a foreclosure, it can definitely make the application process take longer than it normally would. After a foreclosure, it is more important than ever to talk to a California VA lender who can help with VA Loan PreApproval. The lender should also prepare custom loan scenarios showing a detail of the purchase price, payment, and closing costs.
Authored by Tim Storm, a California VA Loan Officer specializing in VA Loans. MLO 223456. – Please contact my office at the Home Point Financial. My direct line is 949-640-3102. I will prepare custom VA loan scenarios which will be matched up to your financial goals, both long and short-term. I also prepare a Video Explanation of the your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.
by Tim Storm | Dec 4, 2011 | Blog, Divorce
There are many ways in which a getting a divorce can have an impact on California VA loans.
Let’s go ahead and start off with the basics.
First, let’s look at a scenario where the California VA loan is only applied for under the veteran’s name.
The VA loan guaranty is only available due to the veteran’s eligibility for the loan.
After the VA loan is processed, the guaranty will remain with the mortgage even if the borrowing veteran or member of the armed forces stops living there. The only way the VA loan guaranty will be removed is if the loan is refinanced by the former spouse into a Conventional mortgage, which will then make the military borrower again eligible for a new VA mortgage.
Jointly held mortgages are a little different from the above process.
The name of each spouse is on the mortgage, and if they both work the couple may qualify for a higher loan amount with their combined income than either would individually.
Only one spouse needs to be a veteran or military service member and eligible in order to get qualified for a VA loan. After the VA guaranty is committed to a mortgage, it is no longer attached only to the veteran borrower.
This is what makes joint mortgages a little tricky when it comes to divorce, especially since few ex-spouses will want to maintain a joint mortgage together. With this in mind, there are a few potential situations that can arise:
- The ex-spouses can sell their property and divide the equity or debt.
- They can designate sole-ownership of the property to one person and then refinance the mortgage into the name of just one borrower.
- If neither ex-spouse can qualify for a loan on their own, the original mortgage will remain until the property is sold. In this case, the veteran will not be eligible for another VA loan as long as the original mortgage remains.
After the mortgage is terminated, the veteran can apply for a new loan guaranty. Normally, there will not be any change from the original eligibility.
It is critically important that after the divorce a complete copy of the divorce decree and any payments to the ex-spouse are documented.
If you have a California VA loan and you’d like to get a VA IRRRL loan (also known as a VA Streamline Refinance), there are also some things you should keep in mind if you are going to get divorced, married, or re-married.
During your regular VA loan application process, each of the borrowers whose names appeared on the loan was reviewed by the VA. Since VA IRRRL loans do not require a credit check, you are required to keep each borrower from the original loan on your VA Streamline Refinance.
Unfortunately, there is no way to remove a borrower for a VA Streamline Refinance.
In order to get a new California VA loan during or after getting a divorce, you will be required to follow the steps of your first VA loan.
However, if you are getting married, already have a VA loan and decide to get a VA Streamline Refinance, you are allowed to add your new partner to the loan.
To get help in determining VA loan eligibility, contact a local California VA lender.
Authored by Tim Storm, a California VA Loan Officer specializing in VA Loans. MLO 223456. – Please contact my office at the Home Point Financial. My direct line is 949-640-3102. I will prepare custom VA loan scenarios which will be matched up to your financial goals, both long and short term. I also prepare a Video Explanation of the your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.
by Tim Storm | Dec 3, 2011 | Blog
DD 214 forms are required of California veterans when applying for a VA mortgage loan, and, unfortunately, are commonly misplaced over time.
The good news is that losing or misplacing your DD 214 is an easily solved problem!
For starters, let’s go ahead and define what a DD 214 is and what it is used for:
A DD 214 (short for Defense Department 214) form is issued to military members upon retirement, separation, or discharge from active duty. Also called a Certificate of Release or Discharge from Active Duty, this paperwork lists the details of the veteran’s status during the time they changed to inactive and if they left honorably or dishonorably.
DD 214 forms are a vital part of getting a California VA loan for those applicants who are no longer in the military. They are required by the federal government in order to prove you are eligible for a VA loan.
Remember that a Certificate of Release is not just for getting approved for a VA loan, so it’s generally a good idea to have yours accessible. You can use this paperwork to qualify for a variety of additional veteran benefits.
There are different ways you can acquire this paperwork:
- Veterans receive a copy of their DD 214 when they leave active duty. They get their form regardless of the circumstances behind their leaving.
- If you are a spouse(note: you can’t be re-married), a parent, or a child or sibling of a veteran, you can get a copy of from either the National Archives or the U.S. Department of Defense.
If you did receive your DD 214 when you left active duty but have misplaced or lost it, you can also get a copy of it through the National Archives or the U.S. Department of Defense.
For veterans, Certificate of Release copies are typically free of charge, although spouses and family might have to pay a nominal fee.
To request a copy, you will first need to fill out Standard Form 180 (also known as SF 180). You can download a copy of it HERE.
After you have filled out both sides of SF 180 you can then either fax or mail it to the address listed on the bottom. Simple enough!
Once you have your DD 214, be sure to confirm that it has the following information:
- Your complete name during your time of service.
- Your specific service branch.
- The dates of your service.
- Your social security number.
As we already mentioned earlier in the article, having a DD 214 form is absolutely essential in applying for and getting approved for a VA loan. If you do not currently have yours, you should request a copy of it as soon as possible, even if you are not currently shopping for a new mortgage or refinance.
This will ensure that when you do begin the VA loan process your approval won’t be held up waiting for the form to arrive.
Once you have your DD214 in hand, you can provide it to a California VA lender who can help to quickly retrieve your Certificate of Eligibility, a necessary step to closing a VA loan on a California home.
Authored by Tim Storm, a California VA Loan Officer specializing in VA Loans. MLO 223456. – Please contact my office at the Home Point Financial. My direct line is 949-640-3102. I will prepare custom VA loan scenarios which will be matched up to your financial goals, both long and short term. I also prepare a Video Explanation of the your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.
by Tim Storm | Dec 1, 2011 | Blog
A VA loan pre-approval letter is a document granted by a California VA mortgage lender that states that based on preliminary information such as the potential borrower’s credit, assets, and income, that they qualify for a VA loan of a specified amount.
It is different from a pre-qualification in that some or all of the submitted information is reviewed for accuracy before the letter is issued.
Having a pre-approval letter from your California VA lender will show home sellers that you are a qualified buyer and may lead to your offer being more seriously considered.
Once you have obtained your VA loan pre-approval letter, you will then be able to begin making offers on homes you are interested in purchasing.
In order to get your California VA loan pre-approval letter, your lender may require the following:
- At least one months pay stubs or LES (if still active duty).
- W-2’s and Tax Returns for the past two years.
- Two months bank statements for any/all assets.
- Your DD 214 form (if no longer on active duty).
- Statement of Service from S1 (if still active duty)
Your pay stub is needed to show that you are currently employed, as well as your current income. W-2 statements (for the past two years) then show how much you normally earn in a year.
If you are currently still on active duty, your Statement of Service must show a minimum of 12 months remaining on your contract.
Finally, your DD 214 form will enable your VA lender to decrease the amount of time necessary for processing your Certificate of Eligibility. Once again, this is not required, but it is generally a smart idea.
The reason why this is a smart idea is that the majority of direct lenders with the VA can put in an order for your Certificate of Eligibility, which determines whether or not you are eligible for a VA loan.
The process can be very quick as long as you turn in all these documents as soon as possible to your loan officer.
After your VA loan officer or lender has the described documents, he can submit your information in the VA loan analysis software to determine your eligibility. The calculation that will determine your eligibility is:
(Monthly Income) – (Proposed Mortgage Payment + Insurance + Taxes + Utilities for the house + Monthly Credit Card Payments Due) = Residual Income
Residual income is the amount of money that you have after you have paid the sum of your monthly bills. The VA will use their judgment after they have calculated your residual income to decide if you will have a satisfactory amount of money left over after you have paid your bills.
The VA has established various requirements for what your minimum residual income will have to be, such as what part of the country you live in, the size of your family, how old your children are, and various other factors.
When obtaining VA pre-approval letter, be aware that simply getting the letter does not commit the lender to giving you a loan. It just means the initial information has been reviewed. In order for the mortgage application to be approved additional information and documentation about both the borrower(s) and the property must be reviewed to be sure that all of the guidelines are met.
For more information on getting PreApproved for a VA loan in California, be sure to contact a local lender who can prepare custom loan scenarios based on your goals and qualifications.
Authored by Tim Storm, an Orange County VA Loan Officer specializing in VA Loan. MLO 223456. – Please contact my office at the Home Point Financial. My direct line is 949-640-3102. www.OrangeCountyVALoans.com. I will prepare custom VA loan scenarios which will be matched up to your financial goals, both long and short term. I also prepare a Video Explanation of your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.
If you’re wondering whether or not you can get a VA loan in California after a recent bankruptcy, you’re not alone.
