Buying first home with VA loan and average credit score?
My Husband and i live in WA and are trying to buy our first house, but ofcourse we are very confused about the whole progress. He was in the NAVY for 5years and now has a VA loan, he is the only one that works, im a full time stay home mom. Have no money for downpayment for the house.
My Q is, Is it the best for us to use the VA loan?
Is average credit score ok for a $250.000 loan? and also how much are usually closing fees? and do we need to have that money with us right away or what? Are realtors free or we have to pay them?
Ok thank you for all your answers and hope to hear good answers :)...
oh yeah also my husband is an IT and gets pay around $45.000 a year and currently is in College.
- 1 decade agoFavorite Answer
A VA loan is great if you have no down payment. There is no mortgage insurance, but there is an upfront lender fee that gets rolled into your loan balance. Interest rates are also comparable to conventional loans. VA loans are also the ONLY loan out there that takes into account that it costs money live once you buy a house. They look at taxes, the cost of child care for any children under 12 (but you stay at home, so that won't be an issue for you) and the cost to maintain the home, lights, heat, food, property taxes, etc. Here is the kicker though, since it is a government loan, even if you do not go on the note as a borrower, any debt that you personally have will be counted in the debt to income ratio. With average credit, I do not think that you guys are buying a $250,000 home on $45,000 of income. Your DTI is going to be well over 40%, which is usually the cut off for VA loan qualification. I would suggest finding a lender and figuring out what you qualify for ahead of time before going shopping with a realtor. Any realtor that is willing you put you in their car without a preapproval from a reputable lender, is not a realtor you should work with.Source(s): Used to be a loan processor
- 1 decade ago
You should buy a book about buying your first home. It can answer a lot of these questions for you. You should also talk to other people you know, preferably older ones who have bought and sold several homes, to ask for their advice and experience with the process.
The way today's economic situation is going, you'll have a hard time getting a lender to give you a loan with nothing down. I have no knowledge of how VA loans work though. You might look into rent to own options, or at the very least, try to save up at least 5% down.
Realtors don't work out of the kindness of their hearts for free. It's their job, so obviously they get paid. Realtors typically take between 5-7% of the purchase price of the home for commission. They don't keep all the money, the person working for you will only get about 1.5%, but the rest of the percentage goes to their office, the seller's agent and their office.
You know if you had asked me all of this a few months ago, I wouldn't have known the answers either. That's why it's important to do as much research as you possibly can by reading books, stuff on the Internet and asking those you trust. Good luck!
- 4 years ago
I don' t know where you get the idea that 620 is "average" let alone "wonderful." It's sub-prime and borders on poor. A FICO score below 620 cuts you out of the mortgage market entirely. Those risky loans that contributed to the economic melt-down are a thing of the past. Anything below 725 or so is going to result in higher interest rates and/or larger down payment requirements for a conventional mortgage. You can go as low as 620 on an FHA or VA loan but you still must meet very strict housing cost to income and total debt to income ratios and have enough income to swing the payments. I've been turned down in the past for missing one of those ratios by less than half a percentage point. I know what it's like being in the potty credit wise with a FICO in the mid 500 range and debt up the wazoo. It takes time to dig out. The only thing that you can repair quickly is getting erroneous derogatory information removed. Legitimate derogatory information stays for 7 to 10 years and nothing but time will lessen the impact. The older that derogatory information is, the less impact it will have. It took me 10 years to go from 550 with $50,000 in credit card debt to 750 and no debt. That was 20 years ago and I've kept it between 750 and 800 since then and have kept total unsecured debt to less than 5% of my gross annual income and total debt service (including mortgage) to less than 25% of my gross income.
- 1 decade ago
You should definitely talk to a loan officer. Or even try myfico.com forums. There you will find better answers to mortgage specifiic questions.