Is a Certificate of Eligibility for a VA loan better to acquire before a credit check at mortgage office?
My husband and I wanted to buy a house probably the end of this year or early next year and have been repairing our credit. In the past when we told lenders we wanted to use our VA loan they never even contacted the Dept of VA verifying that we were approved for the VA loan and instead declined us on the spot [January 2009 we were approved for a VA home, but declined due to strapped finances, then when we reapplied in April 2009 we learned that most lenders & the VA raised their qualification credit score limit]. However, I was reading that as long as we have the COE (Certificate of Eligibility) from the VA then we are set to proceed with receiving a home loan, as long as the mortgage company offered VA Loans. Is this the case, or did I misread it?
A VA loan does not guarantee that your loan will be paid. The government instead “guarantees” a portion of the loan. The part the government guarantees is known as your entitlement.
An entitlement amount is what the government guarantees the lenders they will pay in the event that you cannot repay your mortgage. Currently, for loan amounts under $144,000, the entitlement is $36,000. For loan amounts between $144,000 and $240,000, the entitlement is $60,000.
This is somewhat like having a down-payment because the lender knows that they will get that amount even if you default on the loan and they have to foreclose and take the house back.
VA loans are subject to the same terms as conventional loans, as they are provided by private lenders. The necessary income requirements and credit status still must be met by the borrower.
So you are never “set to proceed with receiving a home loan”. It is always up to the bank or other lender and your credit history. Having the VA guarantee SOMETIMES makes it easier to secure the loan especially if you additionally have a good down payment.
Who is the “Lending Club”? Are they a legitmate company? Does combining your checking with mortgage good?
The Lending Club will provide you with a mortgage loan that you use also as your checking account. The loan is like an equity loan. Borrow $200,000 and each month you add your paycheck to the account. That amount is deducted from your loan. Say I get paid $4000 a month. I put that into my account and now my loan is $196,000. My loan payment is $1500, so that raises the total to $197,500. From there I also pay my regular monthly bills [ food, gas, phone, etc.]. This also raises my loan up. The idea, I believe is by putting more into the account, it reduces the loan amount and therefore reduces the interest charged. Since loans are calculated daily, this might make the long term affect to be less overall interest paid and the loan paid off sooner. Is this correct? What are the negatives about this?
Which company are you referring to? Does it have a website?
Don’t listen blindly to the answers without doing some research yourself. Ignorance of new financial products isn’t unusual. Wait until someone asks about an equity finance mortgage.
My understanding is that this type of mortgage first began in Australia where they wanted to help people pay down their mortgages faster and save on interest. Here’s a link from a legitimate newspaper (SF Chronicle that talks about a product like that): http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2004/07/04/REG2R7G65K1.DTL
So your understanding of the product is correct. As the article pointed out, this mortgage has many pluses, but also downsides. The positives include that it fully utilizes your available cash against your loan so that your money works that much harder. For example, if you have $2,000 in a no interest checking account, but pay 6% for your mortgage, you essentially lost money with the cash in the checking account. This product deducts the cash of your checking account and essentially saves you a 6% interest on the $2,000 (assuming this is for 12 months). Yet you don’t lose any liquidity, in case you need some emergency use of your cash. Proper use of this type of mortgage can shorten your mortgage also.
However, this should NOT be used as a personal line of credit and is suitable only for the financially-disciplined. It is easy to be tempted to spend the “equity” you have on the line and end up owing more money than when you started. Also, this works only for people who actually have the cash to earn interest. If you have very little cash, it doesn’t help you much. Lastly and maybe most importantly, you need to realize that this is a VARIABLE RATE mortgage. Which means that the interest rate may become higher over time and you end up paying 8% or 10% interest when you could’ve had a 6% fixed rate.
Hope this answer helps.
How hard would it be to get a student loan in Manitoba if I have a mortgage?
I graduated school two years ago, and now am obviously looking to go back to school full time. I do however have a common law husband, two cars, and a mortgage. How hard would it be for me to actually get a student loan? I checked with the estimation tool on the government website, it gave me a grand total of ABSOLUTELY NOTHING because of my common law status/income. How do I get the money I need to take the courses??? Please help!!
Canada Student loans are virtually guaranteed if you have never had one before. Plus you can get a Millenium scholarship as well. MB Government is bad for asking for income. Do what you can, but the Canada loan and Millennium scholarship will pay for your tuition.
When applying for a mortgage loan does it matter that you checking account is Joint account?
I’m applying for a mortgage loan on my own but currently have joint checking accounts with my fiance. Does it matter that on my statements it also has her name or do I need to have her removed from the account?
If your fiance is going to be on the deed it won’t matter at all, even if only you are on the loan. If not what we do is use only 1/2 of the ending balance on the account statement as your assets. If you do take her off keep in mind that lender will ask for 2 months (minimum) statements.
The reason for only using 1/2 is since it’s a joint account we assume 1/2 is the other persons. One final note: The reason for requesting the bank statements is to make sure you have the required amount for down payment, closing costs & reserves. Make sure to have no NSF charges or overdrafts- this can cause loan to be declined. Also any large/unusual deposits will be questioned- be prepared to document.
Will my credit score be checked after a final approval for a mortgage loan?
I’m buying my first home and I wonder if they will check my credit score again after i’ve already been finally approved. A lot of people i have talked to said they won’t, and if they check it again, wouldn’t they have to do the whole process again?
If you did something really stupid like open another account or charge something to a credit card these can lower your scores by many points and cost you that new home when the report is pulled right before closing.
No it is not always done but just as many times it is done as part of the whole loan process.
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