{"id":3561,"date":"2016-05-11T12:12:10","date_gmt":"2016-05-11T12:12:10","guid":{"rendered":"http:\/\/teammovemortgage.com\/?p=3561"},"modified":"2020-07-13T22:33:16","modified_gmt":"2020-07-13T22:33:16","slug":"debts-being-paid-off-at-closing-on-a-va-home-loan","status":"publish","type":"post","link":"https:\/\/teammovemortgage.com\/blog\/debts-being-paid-off-at-closing-on-a-va-home-loan\/","title":{"rendered":"Debts Being Paid Off at Closing on a VA Home Loan"},"content":{"rendered":"

Debts can be paid off at closing!<\/h1>\n

Debts can cause closing issues but there are solutions with VA loans!\"Debts<\/h2>\n

Have you ever had a VA<\/strong><\/span><\/a> purchase closing where there are remaining funds leftover from the seller paid costs but there are no other costs to pay?\u00a0 Do you have a situation where current debts are creating a high debt ratio problem?\u00a0 Check out some solutions we have to make that next VA purchase close!<\/p>\n

What to do with extra seller contributions on a VA purchase<\/h2>\n

Often on a VA<\/strong><\/span><\/a> purchase, the buyer and seller agree to a certain amount of seller paid closing costs for the buyer based on an estimation of the expected costs.\u00a0 But then as the process moves along and the estimates become actual invoices that start rolling in, the costs could go down.\u00a0 So what if there are funds left over from the seller paid costs and there are no other costs the seller could pay?\u00a0 There is a solution we allow on VA loans<\/strong><\/span><\/a>.\u00a0 In these cases, the borrower could provide a statement for a bill such as a credit card or loan so we could apply the extra funds to the balance.\u00a0 How about that?\u00a0 That is a sweet deal!\u00a0 Buy a house, have all of the costs included in the loan, and then pay down a bill!<\/p>\n

VA Funding Fee:<\/strong>\u00a0 Additionally, the seller paid costs may pay towards the Veteran’s funding fee as well.\u00a0 So if the funding fee is $4000, the seller could pay $1000 of it at closing so that only $3000 is financed.<\/p>\n

How to\u00a0help a Veteran qualify\u00a0with seller concessions<\/h2>\n

What if you are running into a situation where the Veteran’s debt ratio and\/or residual income is not within guidelines?\u00a0 The Veteran really wants to purchase this home and is confident in making the payment, yet there is this debt to income issue.\u00a0 On a VA loan<\/strong><\/span><\/a>, we allow for the seller to pay off a Veteran’s debt within the seller paid concessions of the contract.\u00a0 So let’s say that a borrower has debts that would need to be paid off in order to qualify and the Veteran does not have the funds to do so.\u00a0 In this case the seller could be allowed to not only pay closing costs but also pay off debts for the Veteran including loans, credit cards, or even the remaining term of their current lease.\u00a0 How about that?\u00a0 Another cool way that can help a Veteran buy a home and lower their bills at the same time!<\/p>\n

Language required on the purchase contract for debts to be paid off<\/h2>\n

If a seller agrees to pay for the Veteran’s debts in a purchase, then there needs to be very specific language on the purchase contract.\u00a0 The wording needs to state specifically that the seller contributions are to be used for “debt payoff” or it can have a general line like “seller contribution to be used for closing costs, prepaids, and other items at borrower’s discretion”.<\/p>\n

There are a lot of ways in which a VA Guaranteed Home Loan<\/strong> <\/span><\/a>can help Veterans, active service members, and qualifying surviving spouses.\u00a0 Trust our team of VA home loan experts and our understanding of VA guidelines<\/strong> <\/span><\/a>to help your VA purchase close.<\/p>\n

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Related Resources:<\/strong><\/p>\n