Taking out loans as a veteran means you have the backing of the VA which is usually an attractive aspect to lenders. Although you are still responsible for paying a loan off, the VA backing adds an extra layer of insurance. However, even if the VA is on your side and even if your credit score is excellent, you still might encounter difficulties securing a new loan.
The Chicago Tribune recently published a Q and A where an individual asks why she and her husband were being given the runaround by a lender. After three months and piles of paperwork, the lender was still requesting more information. Despite having a good credit score, the backing of the VA, and a solid income, their chosen lender was dragging their feet and losing paperwork. The Tribune replied with five possible reasons this could be happening, and we've compiled them for you below:
1. The lender doesn't want to give out residential loans. The housing crisis a few years ago affected just about every market in the global economy, and it goes without saying that residential loans were negatively impacted. It's very possible that the lender is being extremely careful about who they give home loans to or they simply don't want to give any at all, even if everything on your end is in order.
2. You own more than one property. Owning more than own property creates a somewhat complicated situation for lenders. Because of the tax advantages for owning multiple properties, your tax returns may report less income than what you actually accrue. When justifying your income, lenders will have to verify the actual income you receive rather than look at your income tax forms.
3. The lender is unable to determine your income bracket. Sometimes the answer is that you simply don't have enough income to warrant giving you the loan. However, it is possible that VA disability checks are throwing a monkey wrench into the lender's number crunching. While this shouldn't dissuade anyone from trying to obtain a loan if they receive VA disability, it could be the reason things aren't going as fast or as smoothly as you'd like.
4. The lender isn't efficient. Whether management is asleep at the wheel or each employee has too many balls in the air, some lenders aren't as efficient as they probably should be. While this can be difficult to gauge, be aware of unprofessional behavior – you don't want to work with a lender who will mishandle something as important as a home loan.
5. They don't work well with the VA. It's rare that lenders would have a problem with a issuing a loan that can be backed by the VA, but some lenders might have a better relationship with them than others. If you're running into trouble with a loan, you may be better off going to a military-friendly lender more suited to your veteran status.