The 2013 military pay chart is considered the bible of all VA lenders. This already includes the 1.7% pay raise after President Obama signed Executive Order 13635 which directs adjustments “of certain rates of pay” effective Jan. 1. The VA home loan lenders will refer to this chart to assess the actual income and the project income of the applicants who are either in active service or retired officers. To make the process easier, make sure you prepare all papers related to your income before contacting VA lending houses.
Not a dole out
The most common misconception about the VA Home Loan program is that the government will be there for you to cover for all your mistakes such as skipped payments, for example. It works exactly like a conventional loan. It doesn’t insulate you from foreclosure or surcharges for any delayed payment. Perhaps the only difference between the VA loan and the conventional loan is the borrower gets to forego the down payment and the private VA Mortgage insurance because of the government guarantee.
The VA loan is also affected by the fluctuations of the market. So when the interest rates of conventional loans go down, so does the VA loan.
Just because it’s there doesn’t mean you should immediately avail it. There’s the upfront fee that you have to pay in cash which typically hovers around 2 per cent of the loan value. Of course, you can avoid this by waiving your right for zero down payments and instead shell out the equivalent of 5 per cent as equity.
Also, the VA housing loan is not as flexible compared to the conventional loan and there’s a cap on the amount you can borrow. So if you are eying that $400,000 home and your salary based on the military chart doesn’t quite make the grade, you will have to raise the rest of the amount not guaranteed by the VA loan.
A good option
However, when money is tight and you have the problem of foreclosure hanging over your head, it’s good that veterans have that option they can hold on to. They can opt for loan refinancing to reduce the interest rates in their mortgage if their current situation doesn’t qualify them to take out conventional loans. Talk to VA home lenders that can lay down all the options for you. Remember to work only with a company with proven track record and the proficiency to handle the complicated process of VA loans.
The Military Pay Chart - Bible of VA Lenders