The VA home loan program of the Department of Veterans Affairs assists the qualified veterans, active duty service members, selected reserve, National Guard members, and surviving spouses to buy homes without any down payment. The terms of VA home loans are highly concessional in comparison to the regular mortgage credit, which is beneficial for the military community to have access to homeownership with certain conditions. This article then seeks to help a first time buyer to understand the process of getting a VA home loan.
Determine If You Qualify
To qualify for a VA home loan, the veteran must have had at least 90 days of active duty during wartime or 181 days during peacetime, although there are some exemptions. You also have to have an Honorable or General Under Honorable Conditions discharge. Those who belong to the Selected Reserve or the National Guard can also avail of the program provided that they have served their organization for 6 creditable years and were given an honorable discharge. Also, as surviving spouses of qualified deceased veterans, un-remarried spouses may also use their spouse’s VA home loan benefits.
Gather Necessary Documentation
To be approved for a VA loan, you must present acceptable proof that you meet the active duty service requirements. This includes getting your Certificate of Eligibility (COE) and submitting your DD214 discharge documents. Your lender can advise you on all forms and eligibility evidence that are required when engaging in the VA loan process. The fact that this information will be easily accessible will go a long way in making it easier to apply for the job.
Check Your Credit
As with any other mortgage products, you will have to meet minimum credit score and debt-to-income ratio requirements to qualify for the best VA loan rates. Lender credit reports from the three main credit bureaus are usually checked and it would be wise to do the same several months before applying for a mortgage. This will give you a chance to fix any mistake that has been made on the credit reports and also ensure that you fix your credit score by paying off your debts where necessary. It is advisable to have a credit score of 620 and above to secure a VA mortgage but applicants with a score of 500 or lower may still secure the loan.
Save for Closing Costs
Another advantage for the loan is that it allows for home purchase without making a down payment. However, you will still require cash to meet your closing costs at the time of purchase. Husband and wife expenses usually fall between 2% to 5% of the total cost of the house. These include fees charged by the lender, appraisal fees, title searches, recording fees, transfer taxes and others. To this end, effort should be in put in to accumulate enough cash so as to be able to meet these costs when they arise especially when closing on the home.
Determine Your Largest Loan Amount
The VA does not establish fixed maximum mortgage limits. However, there are limits in VA home loans that you can only borrow depending on your eligibility, income, debts, and the home’s appraised value. In high cost counties, you may be able to borrow as much as 125 percent of the home’s appraised value with additional terms. Veterans with full entitlement can also use the VA entitlement to finance a second home or an investment property. It is the amount that your lender will decide that you are capable of paying back depending on your financial situation.
Choose an Experienced Lender
It is important to note that not all mortgage lenders that offer home loans are VA home loan lenders. Make sure that it is one that is focused on these types of mortgage loans. An approved VA lender is one who has received special training and accreditation to work in Department of Veterans Affairs loans. These lenders comprehend the qualifying criteria and documentation necessary to provide veterans, service members, and survivors with the means to easily secure a loan and successfully complete a home buying transaction. Recommendations from friends and other borrowers, online reviews, and the Better Business Bureau can help you choose a VA-approved lender.
Get Pre-Approved
It is advisable to begin the mortgage pre-approval process early while planning to purchase a home with the VA loan. Pre-approval gives you a letter stating the actual amount that the lender has agreed to provide you under certain conditions including interest rates. This goes a long way in showing the homeowners that you are a serious buyer who has the cash ready to make the purchase. Pre-approval is also a thorough assessment of your qualifications, income and debts to only offer you loans that you can afford.
Shop for a Home
This means that when in possession of the pre-approval letter, you can go out and look for homes within your price range of interest. First-time home buyers, especially those who are veterans, might take a VA home loan seminar offered by Veterans Affairs to get helpful tips on home hunting. When going around to look at homes, jot down all the details and possibly take a picture so that you can compare it with other homes in reference to the features you want or are looking for. Visit your preferred few through listing agents and inquire a lot of questions to the sellers and schedule a tour. It is advisable to seek the services of a real estate agent to help you find the ideal home, then, negotiate the best offer.
Undergo Appraisal
This property you want to purchase with a VA loan must be appraised by a VA fee appraiser before closing. The appraisal confirms that the home can be occupied and it is a suitable security for the credit. It also avoids a situation where you are paying more than the value of the home or the cost of the construction. Once the appraisal is available, go through it carefully especially the value that has been given to the home. Should the current value be lower than the agreed purchase price, the buyer has to bring in cash to make up the difference or negotiate for a lower price with the seller.
Close the Loan
The last and most beneficial stage is achieved when you make the purchase of the home and VA mortgage. Make sure you go through your closing disclosure form with all the closing costs paid thoroughly. These costs should be paid by a cashier’s check along with any prepaid items such as insurance and property taxes which are paid upfront at the time of the closing. Last but not the least, when all the legal work is done, you will finally get the keys to your brand new house! VA borrowers, you have earned this affordable means of attaining homeownership. Savour your new home in light of better financing arrangements that you have secured for the long haul.
Adhering to these significant procedures when securing a VA home loan prepares military borrowers for a smooth process from beginning to end. Coordinate with your experienced VA lender and your real estate professional to help you navigate through the process of becoming a homeowner.
