VA Mortgages Q&A with Jamie Russen

I wanted to share some Frequently Asked Questions that I have received recently. I feel like it is important to share questions like these so we can all use them. They may apply to you.

When can a person with a bankruptcy on their credit report apply for a VA Loan? – John D. Collingswood, New Jersey

John, this is a very common question these days. The date of the discharge and the bankruptcy type are the determining factors. If a Chapter 7 Bankruptcy was discharged more than 2 years ago, it may be disregarded. If it was discharged between 1-2 years ago, the veteran must have reestablished credit by some means, and the cause of the bankruptcy must be documented as beyond control of the applicant, i.e. job loss or medical issues. If the bankruptcy was discharged less than a year ago, it will generally not be possible to determine that the applicant(s) are able to be approved.

How many properties can a veteran own through VA? Robert L. from Fayetville, NC

Robert, we see this now with the property values going down and veterans not wanting to go through with a short sale. A veteran can reuse the VA benefit multiple times as long as s/he has sufficient benefit to cover the new loan. The new home s/he is purchasing must be their primary residence. If there is less than a full benefit remaining for the purchase of the second property, it is suggested that the lender consider if the veteran can obtain a restoration of benefits or if the remaining benefit will cover the proposed loan amount.

Do unpaid obligations, such as collections and charge-offs, listed on the credit report have to be paid off?  Darren C. – Sicklerville, NJ

Charge-offs and collection accounts are not required to be paid off by VA. The underwriter should obtain the veteran’s explanation and supporting  documentation if needed. If it has been under a steady re-payment plan, this may be considered as a positive factor. Judgements, Federal debts and liens must be paid in full or have written repayment agreement.

I co-signed on a loan for my sister, does this debt have to be counted against me? Nicole D – Arlington, VA

In order to disregard a debt that the veteran has co-signed for another individual, there must proof that the payments are being paid by some one other then yourself. Canceled checks for 12 months is usually the best way to get this accomplished.

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