Applying for VA Home Loan
The VA home loan program is a benefit provided by the United States Department of Veterans Affairs that allows qualified veterans, active duty and reserve members, eligible surviving spouses to purchase a home with no down payment and no private mortgage insurance is required. This type of home loan is relatively cheap since its interest rates are very competitive and has relaxed credit requirements. In this case, VA home loans are ideal if you meet the requirements to assist you in buying a house. Below is a guide to help anyone obtain a VA home loan:
Check Whether You Are Qualified If you want to take a VA home loan, you need to meet the credit and character requirements of the VA. Below are the basic eligibility requirements:Below are the basic eligibility requirements:
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You must have an honorable discharge from the armed forces of the United States after at least 90 days of active military service. In general, to be eligible for REAP, you must have served on active duty for a period of not less than 90 days; however, there are exceptions. Members of the National Guard and reserves must have had a minimum of 6 years’ service.
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You cannot right now be discharged from service under anything other than other than honorable conditions. However, there are certain circumstances where one can avoid this if they can prove that their services were honorable.
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You cannot have been dishonorably discharged from any branch of the military.
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The income and credit history prove that you are able to repay the loan and have a satisfactory credit history. You should be able to find most lenders requiring a credit score of not lower than 620.
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Lenders demand a VA Certificate of Eligibility (COE), and VA income and credit requirements must be met.
It is important to know that you are eligible for VA home loan, talk to your lender to find out if you are qualified. If you do not meet the requirements but will in the near future, you can apply in advance in order to be considerate as soon as you become eligible.
Obtain Your VA Certificate of Eligibility The VA Certificate of Eligibility (COE) is used to convince your lender that you meet the qualifying requirements of the program. You can request your COE in one of two ways:You can request your COE in one of two ways:
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Use eBenefits, an online portal for the VA and the Department of Defense, to submit an application. If you’re not already logged into your account, you will have to create an account to complete this step. The COE is available in a form of a letter that can be downloaded and printed and it is usually released within one business day.
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Your lender will help you to apply for the COE. The lender handles the paperwork and will inform you once they receive the eligibility documentation from VA.
Stock up for the First Expenses While you don’t have to make any initial payment, VA loans require closing costs of 2 to 5 percent of the mortgage amount. EstABAte closing costs: origination fees, appraisal, inspection, taxes, title company, insurance, and etc range from $5000 to $12000. Find out the normal charges in your state and one is advised to put aside enough money to cater for such expenses. Your lender is required to provide the precise costs in your Loan Estimate document.
Improve Your Credit Score While credit requirements are more lenient for VA loans than for ordinary loans, it is still possible to get a VA loan with a fair 620 FICO score. Before applying:
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Reduce credit card balances and other types of revolving credit.
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The following changes include; timely payment of all the bills that are due.
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Review the report from all three credit bureaus because the lenders use the merged middle score.
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One way to add positive payment history is by becoming an authorized user on someone else’s credit card.
- The other steps involve writing letters to fix any mistakes that may be in the credit reports.
Higher scores get better mortgage rates, so you want to increase your number as much as possible.
Get Preapproved It is advisable to engage a lender offering VA home loans to undergo preapproval before buying a home. However, preapproval entails a detailed check on your financial status but comes with a formal letter stating your eligibility for a certain loan limit. Sellers can be assured that you are willing to buy their products when you provide documents that support the financing of your offer.
To get preapproved:
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Include identification, Social Security, military orders, or financial documents depending on the situation.
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Provide documents to perform credit checks to enable the lender to assess your credit worthiness.
- Wait for the lender to go through your application and wait for your Certificate of Eligibility from VA.
Shop Multiple Lenders Interest rates and charges may significantly differ depending on the lender. Even if one is preapproved, it is advisable to shop around with different lenders to get the best rate. They will all pull your credit score, however, multiple inquiries from mortgage lenders during a two week period are grouped as one inquiry.
It is important to compare loan estimates to determine which lender will charge a lower interest rate and closing charges. Further refine your selection to the one who has the least overall cost.
Make An Offer Now that we have explored the types of homes and financing options, you are finally ready to begin your search for a house. Consult with a real estate agent to find out which properties are available and to put in bids for them. You should also note that your agent will agree on the price and even contracts that relate to the property. Common incentive strategies include asking the seller to contribute toward closing costs or offering VA financing.
