When applying for a loan, it can be difficult to get the information that you need to narrow down your options. Even once you’ve determined the type of loan you need, such as a USDA loan, the questions about qualifications can seem endless. Here at Liberty Lending, we want to make the mortgage process as clear as possible. Our highly-trained consultants are always ready to have a conversation that can help you figure out what works for you. If you’re interested in a USDA loan, here’s how a conversation with us might go:
Homebuyer: So I think I’m finally ready to buy a home. Can you help me figure out this whole loan situation?
Liberty Lending: Congratulations! And of course – it’s something my colleagues and I have years of experience doing.
HB: So I’ve heard a little about USDA loans. What exactly are they?
LL: United States Department of Agriculture loans are loans provided by the federal government for people looking to buy homes in suburban and rural areas.
HB: How do you qualify for one?
LL: First and foremost, the house you’re looking to buy has to be located in a USDA eligible rural area.
HB: Uh, can you help me figure that out?
LL: That’s exactly what we’re here for. You’ll also need to have an income lower than $75,000/year per household that’s also up to 115% of the median income in the area, which we can help you determine. Finally, you’ll need a reliable credit history or credit score of at least 620.
HB: I think all of those apply to me. But why would I want to do a USDA loan instead of a conventional one?
LL: Both loans have their benefits. But if you meet the requirements, a USDA loan is definitely worth it. One reason? No down payments.
HB: Wow, I can’t argue with that. What else is good about a USDA loan?
LL: 100% financing and the ability to roll in your closing costs can be incredibly helpful. Beyond that, awesome 30-year fixed rates mean that you can lock in a low monthly payment that you can budget for, year after year.
HB: This keeps getting and better. I think I might have some friends that could benefit from this too. How can they get in touch?
The post Everything you wanted to know about USDA loans but were afraid to ask appeared first on LL.
St. Louis has become known for its competitive housing market, due to its amenities and affordability of living. Many of its residents are always looking to buy a home in one of the infamous St. Louis communities that are perfect for raising families. Liberty Lending St. Louis mortgage company is such a place that you can go to achieve that goal. Our loan officers help each customer out individually to meet their goal by handing out over $1 billion in loan options. It doesn’t matter if you are refinancing a loan option or buying a new home, our customer service is designed to work directly with you to get the loan you need to get your dream home in St. Louis.
The number one goal of Liberty Lending St. Louis is always to save you money – so our loan officers are trained to give you the lowest, fixed-rate mortgage that you can receive based on your individual needs. We are a unique mortgage company, in that we constantly monitor our rates to make sure that we always provide you with the most updated, low-interest rates we can. The St. Louis housing market is hot and booming, and we understand more than anyone that efficiency and transparency to homeowners is paramount. To that end, we are always open and upfront about our mortgage interest rates to potential customers.
Throughout the entire process – from underwriting to closing – the personal loan officer you are assigned will help you find the best mortgage for your needs. We have streamlined this process to ensure that you receive expert service from someone who knows everything about your situation and can fulfill your needs. Allow Liberty Lending St. Louis to advocate for you while finding the best loan rates for your new home or refinancing your current loan.
Home Buyers – First Time
As housing has become more affordable and with St. Louis providing a great quality of life, enjoy choosing between one of several great neighborhoods to settle down in. If you are a first time home buyer, do not fear – we will provide you with a personal loan officer who will stay with you throughout the entirety of the loan process and ensure that you are with the best loan program that fits your needs. We have sixteen years of experience in the St. Louis housing market, which gives us an edge over our competitors while helping you find the best financial options for your new home.
The interest rates in St. Louis housing are at an all-time low, so if you are thinking about refinancing, you should do it now. If you refinance your loan with us, we will be able to help you lower your monthly payments, receive money for home improvements and/or college loans, or pay off any bills you have. Our loan officers are here to work directly with you in finding the best loan program to meet your needs, and with low-interest rates to boot!
We at Liberty Lending St. Louis know that each client is bound by a unique set of circumstances, so we process each loan individually. We will help you decide the best course of action via lowering your monthly mortgage payment, getting money out of your home, or both! Whether you want to buy a new home or refinance your current home, our main goal is to provide you with the proper information and process to do so.
Liberty Lending Consultants also pledges to help each customer not only achieve their dreams with their house purchase but also save money on their closing costs.
As a mortgage broker in St. Louis who has helped thousands of customers over the years, we have never wavered from our pledge to help find every one of our customers a solution for their residential or commercial lending needs. No matter what the current mortgage rate is, we have always been committed to getting you the rate that you can afford. Because of this commitment, we have seen many first time clients turn into repeat clients – whether they are buying another home, refinancing their loan, or buying an investment or commercial property.
We at Liberty Lending Consultants have pledged to help you meet your financial dreams while also saving money on your closing costs – whether you are buying an investment property or your first home. We will always have many lending options for you to choose from.
Home loans can be granted to you via several different methods. This can include institutions such as credit unions, lenders, and banks – that are more commonly known as direct lenders or St. Louis mortgage lenders. This allows them to make direct loans to individual people. You can also get a residential mortgage loan from a mortgage broker. A (mortgage) broker is someone that acts as a conduit between yourself and a (mortgage) lender – they are not giving you money themselves, but helping you find the best possible loan that fits your budget and needs. They are there to not only make the process of obtaining a loan simpler but also to help you find different types of lenders to choose from.
Regardless, there are two different ways to receive a loan – either by going through a broker or a lender. Each individual method has its own advantages and disadvantages.
Continue reading to learn about the process of working with a (mortgage) broker and see if that is the right step for you.
Mortgage Broker – What is it?
To put it simply, the purpose of a broker is to work not only with you but also for you with other real estate financiers to find a lender and rate that fits your budget and needs. Your broker can be an independent broker, or they can work out of a brokerage firm.
Whether you choose an individual broker or a broker that works from a brokerage firm, they will perform “comparison shopping” for you – something that is easier, as they will have already established a working relationship with several different lenders. Instead of spending several hours researching the different types of loans you can apply for, the broker will do it all for you, finding the best one that suits your needs.
More than likely, they will also be able to access wholesale mortgage lenders – lenders who will work with brokers, not consumers (you). They will offer wholesale rates, not retail rates – which are lower. This is a great reason to go with a broker, as you will more than likely save money.
For their services, brokers charge broker fees and origination – generally due when you close on your new home. These fees are generally a percentage of your loan, not a separate fee. Also, these fees are usually added to the wholesale rate, not the retail rate.
Remember – a broker is not a loan officer. A loan officer is someone that works for a lender, an institution. They are considered to be an official “go-between” for you and the institution.
Brokers are similar to loan officers, as both are licensed and regulated closely. Not every state requires a broker to be licensed, but most of them do, and the requirements are different for every state.
Mortgage Lender – What is it?
The following institutions are considered to be mortgage lenders – banks, mortgage companies (Quicken Loans, Lending Tree, etc), and credit unions. Each sets its own rates and loans.
Some mortgage lenders contain wholesale and retail divisions – but wholesale divisions only work with brokers, not consumers.
It is a quicker, easier process for you to work with a broker, as different lenders have different qualifying standards and loan options, that you as the consumer would have to research and decide between in order to get the best deal.
Advantages of Brokers vs. Lenders
The biggest advantages of working with a broker are:
-use the broker’s knowledge to find the best loans available
-brokers can comparison shop for you
-a broker can apply for several different loans on your behalf
-a broker can access the wholesale mortgage rate for you
The broker you choose should be thorough and ask you about the following – the type of loan and home you want, what your budget is, and your credit. This is an individualized process that needs many different types of information in order to not only find what you are looking for aesthetically but also the best deal that you can afford.
To meet with a broker, you should have your latest pay stub, bank statement, driver’s license and/or bank stub, your most recent tax return, any recent credit card statements, and any other loan statement that you can think of.
Once your broker has this documentation, they can immediately start working on finding the best rates and the best loan for your budget.
Brokers and (Lower) Credit Scores
If you are someone who has a lower credit score, then working with a broker means that they will be able to help you find lenders that are willing to work with you, despite your credit score. Not only that, but your broker will also know which loans and rates to avoid, and which ones that will help your credit score.
This does not mean that without a broker you won’t find a lender, but it will definitely be an easier process – particularly if you are not having any luck finding a lender yourself.
If you do not know what your credit score is, you can view it here at Credit.com.
Which Should I Use – Broker or Lender?
This decision is down to your preferences and needs – if you feel you can (or want to) save time in the process, then use a broker. If you can research the types of loans and rates via each lender on your own, then go directly to a lender.
Always ask your mortgage company if they are a lender or broker – in today’s world, this is not always clear. Also make sure that they are appropriately licensed. You should be able to research the company via the Better Business Bureau, National Association of Mortgage Brokers, Consumer Financial Protection Bureau, NMLS website, and also speak to friends and family about their experiences.
Whichever you choose, make sure to find a lender or broker that you trust, above all.
Finding a Trustworthy Mortgage Professional
To find a lender or broker that you trust, you should first get some referrals from friends and family who have loans. Ask them questions – ask them about how they were treated and their experiences.
Were they treated fairly by the lender? Did the lender make promises that they did not keep regarding their rates? Were there any undisclosed or hidden fees they found out about later? Did the broker or lender respond to questions or problems in an appropriate amount of time?
Check out their loan documents and compare them to see if the Good Faith estimate and the loan document fees match up.
Also – question your broker or lender about their industry experience. It is important for you to be informed about their level of knowledge, integrity, experience, service commitment, and professionalism.
Can your broker provide references? Can they elaborate on their professional experiences as a broker? Can they name some of their top lenders? How long will they take to respond to questions and/or messages? How do they process their fees – upfront or at closing? What makes their services different than other brokers? How much do they make working with a specific lender?
Remember – whether you work with a lender or a broker, you care for the customer and they are there to meet your needs. If they are not meeting your needs, you can always find someone else who will.
If you’ve started looking into getting a mortgage, you’ve probably realized that it’s a lot of work. But that’s no reason to worry—that’s why mortgage brokers exist. Every day they’re helping people just like you make the most of their mortgage. But before picking a partner that can help you do the same, it’s important to get a few answers. Here are some questions to ask any potential mortgage broker before you sign the dotted line.
What is the application process like?
Applying is more than half the battle when it comes to getting a mortgage, so you want to make sure your broker breaks it down in a way that’s easy to understand. Clarify if there are any fees, what important documents you need to fill out, when you need to turn those documents in, and specific requirements for the type of loan you’re looking for. It’s important to understand all of the details before you get too far into the process and it’s hard to turn back.
What is your background in the industry?
Experience is always an asset, especially when it comes to something as complicated as buying a house. Regardless of if you’re a first-time homebuyer or not, partnering with a mortgage broker that has been through the process more than once is a good idea. Don’t be afraid to ask how long they’ve been in business, if they have any references, and the kinds of clients they’ve been able to help.
What are my rate options?
Although you most likely won’t be able to get a solid number until you start the process, good mortgage brokers will be able to give you an estimate based on some basic information. If your mortgage broker has an idea of your ideal rate from the beginning of the process, they’ll be more prepared to help you every step of the way.
What happens if I have bad credit?
It doesn’t mean you won’t be able to get a mortgage. But if you’re honest about your credit history with your mortgage broker from the start, they’ll know what kind of work they need to do moving forward. The more they know, the better they’ll be able to find a mortgage product that really works for you.
What’s in it for you?
Of course, every mortgage broker is part of a business. But for some, their number one goal isn’t to make themselves a lot of money. At Liberty Lending, we’re more concerned about you. That’s because our unrelenting commitment is to help as many mortgage customers as possible achieve their financial dreams while helping them save money on their closing costs.
Over the years, thousands of customers have trusted us to help them work through the home buying process. That’s because we’ll always do everything in our power to make sure you get the rate you deserve. And when you inevitably have more questions, we’ll always be there to answer them. Want more information? Fill out our form or call (314) 336-9111.
The post Where were you on the night of the third?… and other questions to ask your mortgage broker appeared first on LL.
One of the most difficult decisions you’ll possibly make when it comes to your home mortgage is the lender to select. Nowadays, there are numerous mortgage lenders ready and eager to accept your home loan application. However, just because a mortgage lender accepts your loan application doesn’t mean it’s the best for you. Since you will possibly get saddled with the mortgage for many years to come, it’s important to ensure that you look around and pick the right mortgage lender all for your loan needs. Here are several things to assist you in selecting a suitable St. Louis mortgage broker.
Decide on the type of mortgage lender you need
Do you want a large lender or a small lender? If you prefer more customer service at a personal level and a mortgage lender who will know your name, then a smaller lender will be the best option for you. But if you are more careful about getting a good interest rate, then a larger mortgage lender might work for you. Researching the key differences between smaller lenders and larger ones will assist you in deciding which option is right for you.
Ask recommendations for mortgage firms
A real estate broker is not the only method to locate mortgage lenders. You can ask your family members, coworkers or friends who have bought a home in the recent past about their mortgage lenders. Getting referrals and recommendations from those closest to you can assist you in cutting through the numerous prospects to find a lender you can eventually trust.
Research on the reputation of the lender
Regardless of how you get to know a mortgage lender whether from a website or a family member it’s essential to do some background check. Check online for some reviews and do not hesitate to ask your potential lenders any questions you have. Knowing as much as possible about the lender you may be dealing with will save you a lot of troubles later on.
Decide whether you will work with a mortgage broker
You can enjoy lots of benefits by working with a real estate broker. A St. Louis mortgage broker will save you lots of time by doing most of the work when searching for St. Louis mortgage companies. If you decide to go with a mortgage broker, it’s vital to take enough time to do a bit of research. You can ask for references and also learn from some other homeowners about their experiences working with brokers.
Ask your real estate agent for help
A good real estate representative will not limit referrals and recommendations to their smart loan officers, and in-house lenders especially if they take good care of clients referred by agents. You can use this to your benefit, and ensure that the lender you talk to knows you went to them through a referral from your real estate agent. That connection will not only be a great icebreaker, but it will also be of significant assistance when it comes to minimizing the closing costs.
Search for a suitable St. Louis mortgage broker for your home can be a daunting task. There are thousands of different lenders out there and more appear to be emerging online daily, making it pretty hard to know right away the best mortgage firms. To find the best mortgage lender, you should know that it’s essential to understand what you are looking for and also do your research. Regardless of what you want, these tips will help you make an informed decision.
With underwater homes in St. Louis and across the nation at their lowest rates in years, homeowners seem optimistic about the housing market, as any St. Louis mortgage broker would agree. However, one core group of Americans has not felt this relief, and in St. Louis, a closer look at the data tells a different story.
The term “seriously underwater” is as grave as it sounds, and it applies to a shocking number of St. Louisans. “Seriously underwater” is here defined as a home where $1.25 is owed for every $1 the home is worth. In their year-end home equity report, ATTOM Data Solutions revealed that despite “high equity” homes reaching all-time highs, communities like St. Louis had some notable exceptions.
Homeowners in these St. Louis communities are among the most seriously underwater:
Altogether, upwards of 10,000 St. Louisans’ mortgages are seriously underwater, and veterans are amongst the highest at risk. In 1944, the U.S. government created the VA home loan program for military members with the intent of helping millions of service-people become placed into an affordable home financing situation. Men and women, who sacrifice so much, should be able to afford and live comfortably in a home of their own. The VA attempts to ensure veterans have access to affordable, easily obtainable loans, and works with them to prevent default and foreclosure. However, this means as veterans’ home values slump, they are encouraged to hold their losses and continue paying off their underwater mortgages. And for those who do default, their problems only compound.
Veterans who default on their mortgages take a big hit to their credit rating and FICO score, which can make it difficult or impossible to obtain another VA loan and try again. They may find returning to active duty or even the private sector difficult as well, as a VA loan default shows negatively on security clearance applications. Across the nation, the data shows veterans in St. Louis are not the only ones suffering: according to the St. Louis Post-Dispatch, of the top 10 most underwater counties across the nation, fully half are veteran or active-duty communities.
All this means choosing your VA home loan provider is an extremely important decision, and can shape your financial future as well as your career. Liberty Lending Consultants, a St. Louis mortgage company, works specifically with veterans to ensure your unique loan is handled with care. Liberty Lending respects the unique challenges veterans face and provides a bevy of mortgage benefits including no PMI, no down payment, no VA funding fees, and 100% financing. Liberty Lending Consultants is committed to helping veterans in St. Louis becomes homeowners with competitive VA home loans.
VA loans are limited to active duty military, veterans, reservists, and spouses of those in the military or military veterans. When applying for a VA loan, applicants should prepare copies of their two most recent W-2 statements, their two most recent pay stubs, documentation of other assets, and proof of discharge if applicable.
The post St. Louis Vets are Seriously Underwater—and It’s Not Their Fault appeared first on LL.
Credit scores have a reputation for being rather complicated and frustrating. Whether or not you understand the details of how they work, it’s important to understand that credit scores determine your ability to take out loans. A bad credit score can prevent you from making important financial decisions. But before you have to worry about getting a loan in St. Louis with bad credit, let’s focus on the steps for establishing good credit.
It’s important to remember that ending up with bad credit is easier than you think. Just a couple of months of missed payments can put your score in a precarious position. For this reason, it’s imperative that you have the correct funds to make your payments on time. One way to minimize uncertainty is by limiting excessive spending and saving little bits of money throughout the month for the purpose of paying off your credit. That being said, mistakes happen. Even if your credit score takes a few dips, it’s possible to bring it back up. In addition to making payments on time, you can keep inactive credit accounts open in the short term to help raise your score. And if you’re looking to open another credit card, think long and hard about whether or not you really need it. If you’ve made some significant mistakes and your credit score has suffered the consequences, you’re not out of options. No matter your credit score, there’s a good possibility that Liberty Lending can still help you qualify for a loan.
Federal Housing Administration Loans, or FHA loans, have requirements that are less strict than other types of loans. Not only are they a great fit for first-time homebuyers, but a helpful loan resource for those struggling with their credit. Although qualifications vary depending on the type of FHA loan, they’re usually available to people with credit scores as low as 500. With flexible monthly payment options, the opportunity for cosigners, and lower down payment requirements, it’s easy to see why this type of loan is ideal for people struggling with low credit. If you’re pursuing a loan and are worried about your credit score, it’s not the end of the world. Here at Liberty Lending, you’ll find experienced mortgage brokers who can work with you to provide the best FHA loan solution available.
Looking for more information? Fill out our form or give us a call at (314) 336-9111 today.
The post My credit score is low, but I don’t want a high-interest loan! appeared first on LL.
An FHA Loan Explained
An FHA is a mortgage that is offered by the Federal Housing Administration (FHA). This particular mortgage is popular among those buying homes for the first time because they, first of all, allow for a lower credit score, and they also are more lenient with the down payment (only 3.5% down). Borrowers will also have to pay a mortgage insurance premium to protect the lender if the borrower defaults.
If borrowers can produce a credit score of more than 580, they will be able to acquire the FHA loan with the 3.5% down payment. The borrower can still qualify for an FHA loan if their credit score is between 500-579, but they will have to put down a 10% down payment instead. Moreover, the lower your credit score is, the more interest the borrower will have to pay.
There was a tremendous amount of foreclosures and defaults in the 1930s, and part of the problem was due to mortgage lenders not having any insurance to guard against borrowers who failed to pay their premiums. Thus, the FHA program was not only created to help these lenders get back on their feet, but it also provided a much-needed shot in the arm for the housing market because it brought people with less-than-perfect credit into the housing market. However, under the FHA program, the government will ensure these lenders so they now have the freedom to lend out mortgages to more people. They have the assurance that their risk of loss will be covered if a borrower defaults on the loan.
Loan Requirements for FHA Borrowers
Are you interested in buying a home with an FHA loan? If you wish to try to qualify for the St. Louis FHA loan that will only require a 3.5% down payment, then you will have to ensure that your credit score is 580 or above. However, as we have covered before, you can still qualify for an FHA loan with a lower credit score as long as you put up a 10% down payment. Just make sure that your FICO is always at least 500 or above.
However, the credit score and the down payment requirements are just two of the hoops you will need to jump through to qualify for an FHA loan. Here is the complete list of things to consider:
FHA borrowers will need to have a steady history of employment. If there are gaps, it is still possible to qualify for an FHA loan as soon as they have been with the same employer for at least the past two years.
Borrowers need to have a valid Social Security number, be a legal resident, and be of the legal age for signing a mortgage in their state.
The minimum down payment for an FHA mortgage will always have to be 3.5 percent, and yes, the money can be a gift from a family member.
You can only utilize an FHA loan if you are going to use the home as a primary residence.
Borrowers must have the proposed property appraised from an FHA-approved appraisal specialist.
A borrower must have an appropriate front-end ratio. This means that such things as homeowners insurance, property taxes, mortgage insurance, HOA fees, and the mortgage must all no more than 31 percent of their gross income. The good news is that some borrowers can still get approved if they have reached as high as 40 percent. Of course, this might mean extra work for the lender simply because they will have to prove this note is an acceptable risk. Compensating factors must be accounted for when it comes to approval of the loan.
To receive maximum financing, all borrowers must have a minimum credit score of 580. This qualifies them for the 3.5% rate.
As long as borrowers have a credit score between 500-579, they will be able to qualify for an FHA loan with an LTV of 90 percent. They must put down a down payment of 10% at the very least. Your credit-worthiness will be determined by FHA-qualified people on a case-by-case basis.
The good news is that you can still qualify for an FHA loan if you have had a bankruptcy in your past. You must be two years from the bankruptcy and you must have taken steps to reestablish your credit. However, some people who have a bankruptcy that is only one year old can still qualify if they prove they manage their money well and that the bankruptcy was caused by extenuating circumstances.
There is more good news for FHA borrowers who have had a foreclosure in their past. As long as you are at least three years out of foreclosure and established a solid credit history again, you can be considered for an FHA loan. Again, if you want to qualify for an FHA loan and it hasn’t been three years since your foreclosure, you can still possibly qualify if you can prove extenuating circumstances. Please note that if you could not sell your home and had to make an unexpected relocation, this is not considered an extenuating circumstance.
There are also some property requirements that must be met. If your home is appraised and does meet the FHA property standards, then it must either be repaired by the seller, or you must pay for the repairs yourself by the closing date.
Benefits of FHA Loans: A Lower Down Payment and Less Stringent Credit Requirements
The beauty of an FHA loan is that it is very easy to qualify for. You can have less-than-perfect credit or not even have enough for a regular down payment, and you can still qualify for one of these loans.
Can’t afford a 20 percent down payment? You should look into an FHA loan. Has your credit had some hiccups? Apply for an FHA loan. Don’t think you can qualify for private mortgage insurance? An FHA loan might be for you.
If there was the full scope of the advantages of FHA mortgages, it would be a good deal. However, FHA loans can often make selling your home easier. This is due in part to the fact that an FHA mortgage is “assumable.” When you go to sell your home, you can simply have the new owner “assume” your FHA mortgage.
These factors make an FHA home mortgage something worth looking into.
While it can be said that lenders have varied criteria regarding their approval or denial of loans, there are common threads between each. We’ve compiled a handy list of actions and things to be aware of during your mortgage approval process.
We understand that mortgage approval is an intimidating and complicated process which is why we’re here to answer your questions and assist you every step of the way. For more information about loan financing call Liberty Lending Consultants at (314) 336-9111 or visit our website at libertylendingconsultants.com.
In 1944, President Roosevelt enacted a culturally significant and socially valuable law which is still with us today. The Servicemen’s Readjustment Act, also referred to as the GI Bill of Rights, was designed to support servicemen returning from WWII. It focused largely on employment and housing, two of the biggest challenges for veterans.
The VA Home Loan Program was a component of this original bill. Today, it fulfills much the same purpose as it did back then. It helps returning servicemen – many of whom have no savings or investments to come back to – safely purchase homes with less rigorous mortgage requirements. While it may be seventy-five years old, the GI Bill of Rights is still considered one of the most important in American history.
This article takes a closer look at the history of the VA Home Loan Program and its impact on culture and society.
Where It All Started – 1944
After the bloodiest war in history, the US government felt it was vital to show support to servicemen trying to rejoin civilian life. While away fighting, these men had inevitably fallen behind their peers in terms of things like career opportunities and financial investments (particularly in property). They were returning to unemployment, poverty and few chances to change their situation.
Thus, Roosevelt decided to make buying homes easier for servicemen. They would not be subject to the same rigorous financial requirements as others. Instead of offering money to invest, which he feared would not be helpful in the long term, he took away many of the obstacles to ownership.
This is how a St. Louis VA Home Loan (or a VA loan in any other part of the country) works. The VA does not create or offer the mortgages. Instead, they financially back them. Just as a standard home loan requires evidence of collateral in case of default, the VA agrees to step in if the buyer cannot pay. In short, the VA puts up the collateral on behalf of the buyer. This encourages lenders to approve mortgages to servicemen because they’re less afraid of making a loss.
In 1944, the VA Home Loan assurance was capped at half the total mortgage amount or a maximum of $2,000. It might sound like a small sum today but typical property prices in the forties stood at around $9,000. To be approved and protected, home loans could not exceed a 4% interest rate cap or a twenty-year term.
There were obviously other requirements too. As the earliest version of the VA Home Loan Program was intended specifically for WWII veterans, all applicants had to provide evidence of military service between September 1940 and September 1945. The government encouraged eligible veterans to apply before 1950 as it could not guarantee receipt of the same benefits after this time.
While the scheme was well-received by policymakers and the general public, it ran into a number of problems after its initialization. For instance, as soon as house prices across the country began to rise, the $2,000 sum guaranteed by the government became less useful. There were also increasing worries about monthly payments due to the twenty-year cap on VA loan terms. Some economists expected the scheme to have a negative impact on the housing market as too many people might apply.
As a response to growing concerns, the government increased the surety amount by $4,000 and amended the maximum loan term. It also gave servicemen a period of ten years (as opposed to the original five) after leaving the army to apply for a loan. This was the biggest change and the most valuable. It enabled the VA Home Loan to become more than just a short term fix. After the forties, it began to establish itself as a respected and honored part of American culture.
Making the VA Home Loan a Permanent Fixture – Fifties, Sixties and Beyond
In early 1950, the government forged ahead with plans to significantly expand the VA Home Loan Program and make it available to more people. It amended the original bill with eight important alterations, most of which focused on extending the long term impact of the scheme’s benefits.
Firstly, the VA surety protection was increased to 60% of the total loan or $7,500 maximum.
The maximum loan term was also increased to thirty years from the previous twenty.
Perhaps one of the most important changes, from a cultural perspective, was the decision to offer VA Home Loans to widows of fallen soldiers. Even if a serviceman died in action, his spouse would still be eligible to receive the same benefits. Later, this clause was further expanded to include servicemen who had died of disabilities relating to their military work.
Congress also introduced new legislation to prevent mortgage providers from shirking the guidelines and continuing to charge servicemen at normal rates. This, essentially, enshrined the loan program in law for lenders too.
Later in the year, shortly after these amendments had been enacted, the Korean War started. It took just two years for the government to fully roll out the loan scheme to servicemen who had returned from this conflict as well. By 1966, the VA Home Loan Program was an all-encompassing system which invited any serviceman enlisted after the Korean War to apply for the same benefits as their grandfathers and fathers in some cases.
The arrival of President Nixon, in 1968, triggered further changes to the rapidly growing and expanding benefits program. By 1971, he had introduced the Veterans Housing Act, a more contemporary incarnation of the original GI Bill. For the first time, there was no deadline associated with VA home loans. Across the country, millions (almost nine million, by some accounts) of veterans rejoiced as the abolition of expiration clauses meant they were once again eligible to apply.
Nixon also made it possible for applicants to withdraw cash from their equity and use the money to settle other types of loans, pay for education fees, invest in home renovations or spend in any way that might improve their wealth in the long term. The variety of viable properties also increased as changes to the law meant veterans could now use their loans to purchase condos and mobile homes, not just traditional properties.
By 1978, the VA Home Loan Program had expanded further still to include loan investments designed to improve properties with energy efficient renovations. Improvements like solar panels were made a legitimate option for eligible property owners trying to increase resale value and double or triple their original investment.
To learn more about VA loan requirements in your area or how to apply for a St. Louis VA Home Loan, visit Veterans United Home Loans or in St. Louis, Liberty Lending.
At Liberty Lending Consultants, our unrelenting commitment is to help as many mortgage customers as possible achieve their financial dreams while helping them save money on their closing costs. As a St. Louis mortgage broker who has helped thousands of consumers over the years, it is our unwavering mission to help provide a funding solution for all your residential or commercial lending needs. No matter what the current interest rates are, Liberty Lending Consultants will make sure you receive the mortgage rate you deserve. That’s why thousands of consumers in trust us when buying their first or second home, their commercial or investment property or when closing on a refinancing loan.