The first step a California Veteran will need to complete in securing a VA loan is to obtain your Certificate of Eligibility. The Certificate of Eligibility, also known as the the COE, is a document that the Veterans Adminstration issues, which verifies your eligibility for VA financing. On the COE there is a number listed that is known as the Entitlement Code. The Entitlement Code shows during what period you earned your eligibility, or other alternative ways in which you became eligible for the VA mortgage program. The chart below shows the entitlement codes and what methods of eligibility they represent.
Subsequent Use of VA Eligibility
A common Entitlement Code is “05”. This means that the Veteran has used VA financing previously and signifies to the lender that a subsequent use VA Funding Fee will be required, unless the COE also verifies the Funding Fee is waived (in the case of a service connected disability).
These periods and methods of eligibility have certain minimum service periods that are required to establish your eligibility for the VA loan program. Each time period has different service requirements. This next chart lists out the dates that define each time period of service as well as their minimum service requirement for those periods.
Easiest Method for Obtaining your Certificate of Eligibility
While it is possible for a Veteran to retrieve their Certificate of Eligibility directly from the VA, the easiest way to retrieve the COE is through a VA approved mortgage lender. VA approved lenders have direct access to pull COE’s and in many cases can retrieve your COE within seconds of inputting the information into the VA portal. It seems that 50% of the time the DD214 will need to be uploaded, and depending various circumstances, it can take a few days to retrieve the COE. It so easy for a lender to retrieve your COE that contacting a local VA lender should be your first step in the loan process.
Authored by Tim Storm, a California Loan Officer specializing in VA Loans. MLO 223456. – Please contact my office at the Home Point Financial. My direct line is 949-640-3102. www.CaliforniaVALoanExpert.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 the your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.
Buying a home using VA financing in California after a foreclosure or bankruptcy is possible sooner than many Veterans realize. But it does take some planning in order to make sure the VA loan is approved. Understanding the wait periods that VA requires after a bankruptcy or foreclosure are critical, as is understanding what it takes to reestablish credit and make sure credit your report errors are fixed PRIOR to making an offer on a home.
With most types of home financing, having a bankruptcy or foreclosure is a significant road block that can prevent you from being able to get a mortgage. The good news for California Veterans is that the VA mortgage program is the most flexible and has the shortest timeline for waiting after a bankruptcy or foreclosure compared to other loan programs.
With a Chapter 7 bankruptcy, which seizes and liquidates assets to repay debts, a potential borrower has to wait 2 years before being able to qualify for a VA loan. The clock on the 2 year waiting period starts once the bankruptcy is discharged, not when bankruptcy is filed. With Chapter 13 bankruptcy, which is a debt restructuring plan that is mandated by the court, a borrower may be eligible for a loan just 12 months after their bankruptcy filing date. In this case, good credit and no late payments are critical to being able to qualify. A potential borrower will also need to get permission to take on additional monthly payments from the bankruptcy trustee. The VA program can even be used to payoff a Chapter 13.
Filing for bankruptcy can create a significant hit to a borrowers credit (FICO) score which can potentially delay qualifying for a loan and purchasing a home. Lenders are usually looking for at least a 620 FICO score for a VA mortgage, but there are some lenders who will go as low as 580. A bankruptcy could knock a potential borrower well below that mark. After the discharge of the bankruptcy and during the two year waiting period it is very important to work on repairing your credit score. Working with a credit repair professional can be well worth the money for anyone who has no prior experience with credit repair.
For those California Veterans with a foreclosure you will be happy to know that the wait period is also only 2 years. ( A Conventional loan requires a 7 year wait period which is one reason why the VA program is so awesome).The combination of both a bankruptcy and a foreclosure does not necessarily lengthen the time table before getting a VA loan. In most cases this scenario is viewed on a case by case basis so it is important to consult a VA lender to ensure you are following the proper steps toward future qualification.It also important to understand that when you include a mortgage in a bankruptcy which results in a foreclosure of the home, that means you had a foreclosure. Again, to make sure you understand the timeline before being able to qualify for VA financing, talk to a California VA Loan Expert.
Authored by Tim Storm, an California Loan Officer specializing in the VA Loan Program. MLO 223456. – Please contact my office at the Home Point Financial. My direct line is 949-640-3102. www.CaliforniaVaLoanExpert.com.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 the your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.