What Does the Future Hold for VA Loans?
It's no secret that home prices are rising in many parts of the country, making it difficult to find affordable housing options. However, one factor that has allowed people to buy homes they might not have been able to otherwise has been VA loans.
(Mar 25, 2023)
VA loans have been one of the hottest topics in mortgage lending over the past decade, and they're not going anywhere any time soon.
With more than 3 million home loans closed over the past decade, veterans have access to some of the best rates on mortgage loans available on the market today. But what does the future hold for these loans? How long will these loans stay so popular? Will they continue to be used extensively, or will lenders and borrowers look elsewhere? Here's an overview of what's happening in the world of VA loans and what you should expect to see in the coming years.
The Future of VA Loans
Purchasing a home today in the U.S isn't as easy as it was in the past few years. The housing market collapse on account of the subprime mortgage meltdown has developed a more restrictive and prudent lending environment. This sounds good to the lenders, but the changes provide a little comfort to veterans and service members who are now on edge. Securing a VA home loan today is generally more difficult with lenders looking for significant certainty that you'll handle the financial burden.
Gone are the days of the famous "no documentation loan" that allowed you to obtain a home loan with light proof that you'll manage to repay it. Some regulations have incorporated more layers of protection in securing home loans. However, lenders might start to loosen up in the future, but a consecutive approach will continue to govern the lending industry and manage the path to homeownership in the U.S.
How Does the Change Affect the VA Loans?
Veterans, active service members, and surviving spouses have already felt the effects. The VA loans still maintain their low foreclosure rates, lenders across the U.S have tightened their credit and underwriting benchmarks. Today, if your credit score is below 620, you relatively have few financing options for VA loans. This is why improving your credit history will become more critical in the future.
If you're an eligible military borrower, you must keep a close eye on your credit profile, debt-to-income levels, and discretionary spending. Keep in mind that your discipline and responsible financial decisions will serve as the keys to obtaining a VA home loan in the future.
After all, the VA loan remains more robust than ever and a reliable refuge for qualified military borrowers. The VA Guaranty Program continues to provide you with greater buying power and excellent rates than other loan products out there. If you have a FICO score of 620, you may be able to secure a 30-year fixed loan that's entirely above the national average. We can't predict how long this combination will last, but the lenders' tough credit and underwriting standards are likely here to stay.
The VA Loan Guaranty program
The VA Loan Guaranty Program is a government-backed loan guarantee that allows veterans, active service members, and surviving dependents to purchase homes with no money down. The program makes it easier for qualified borrowers to finance their dream homes—it's that simple. This program has been in the lives of military members and their families since 1944, making homeownership accessible and more affordable.
Despite the change in lenders’ regulations and underwriting standards, the benefits of the VA Guaranty Program aren’t going to change. So if you have an interest in homeownership—not to mention if you already own a home—you must understand the process and what’s in there for you. Whether you’re in the process of purchasing your first home or refinancing an existing mortgage, be sure to do as much research as possible to avoid future surprises.
In addition, qualifying for a VA loan does not require you to put any money down or pay private mortgage insurance (PMI). These are two of many reasons why VA loans are attractive financing tools for first-time homebuyers, especially those who have served in war zones. All you need to do is go with your gut and pick the best financing option, bearing in mind that VA loans were created to honor and reward you for your sacrifices. So, gravitate to the mortgage companies, loan officers, and realtors who honestly embrace that spirit.
Bottom Line
In the last few years, VA loans have become the most popular way to purchase real estate in the United States. With low-interest rates and government backing, there's no wonder that VA loans have taken off in popularity! The program’s popularity doesn’t seem to be going anywhere anytime soon.
However, some people believe changes may be coming sooner rather than later. So if you're looking to enjoy the VA loan benefits hereafter, it's imperative to understand what the future holds for these loans. This will help you have reasonable expectations when exploring the available options.
(Mar 25, 2023)
