In 2014 there will be new rules put into action for mortgage lending. The buzz on the street is the concern that it will be more difficult to secure your VA Home Loan.

The truth is, things will be about the same next year as they are this year. Lenders have already tightened lending standards and routinely  reject borrowers with shaky income and low credit scores. The new Consumer Finance Protection Bureau will evaluate lending standards and borrowers will be evaluated by those standards. The foreclosure crisis is the reason why the Federal Government established the CFPB. 

One area the CFPB studies is what affordability really means for most households. Remember when you qualify for a home loan that the car loan, the Visa, etc. monthly payments are all added up and they count against the amount you’re qualified to borrow. 

Student loans must be deferred for at least one year or you will need to get a statement from the provider of the education loan to show what the monthly repayment amount of the loan will be. Credit scores are very important… As a base line they affect whether you can qualify for a loan at all or what your rate for your loan may be. Make sure you have at least three creditors  which will show as what we call trade lines on your credit report. If you have credit do not take your credit up to the limit… keep it at 40% of the available credit.

Lenders may have even higher liability under the CFPB than they do now so it is a hypothesis that the borrowers at the lower end of the scale in terms of credit score may have a more difficult time of getting a loan.

Now is the time to look at your credit. You should pull your own credit through some of the free services online.

By law you are allowed a free report once a year… Make sure you scan your credit report  for all inaccuracies in your payment history etc. Any disputes need to be cleaned up. If you have collections, contact the creditor, and most time, you can settle for less than the amount owed.  Make sure you get it in writing when you’re dealing with collection companies.

There is good low interest rate loans for you to use your VA benefits to buy a home. If you do what I have mentioned above you will greatly speed up the time it will take for you to have a final approval on your home and get the keys.


 –Michael Frakes USN ( ret)

Mike Frakes is  a Senior VA Loan Specialist for Creekside Mortgage, Inc.