A VA loan is a kind of mortgage that is supported by the Department of Veterans Affairs and is provided by various private lenders. It has been helping veterans, active service members, and surviving spouses achieve the home of their dreams, allowing them to afford homes even without a down payment.
If you are qualified to get one, you can maximize the benefits you get from it. You can use the following tips to make VA loans even more advantageous.
Check Your Credit Report
Before getting a VA loan, you must remember that specific residual income guidelines determine whether you are eligible for one. There is no minimum credit score for VA loans, but most companies usually set a minimum of 620 on average.
A lender like Security America Mortgage may give you a better rate if your credit score is higher than average. Some lenders accept lower scores but might require more paperwork or requirements.
Understand that the Department of Veterans Affairs doesn’t decide on the minimum credit score. The lenders are given this freedom as long as they adhere to the regulation set by the VA to practice leniency.
The minimum score varies from one lender to another. Additionally, the VA guarantees a fraction of the loan if the borrower defaults but is not responsible for issuing the loan.
Before a loan application, it’s worth it to take some time to raise your score first to guarantee better approval or better offers.
Be Prepared For Lenders To Look Into Your Employment History
If you have an employment gap in your history, it’s still possible to get a VA loan application approved in some cases. While veterans are expected to apply after they’ve been discharged from military service for quite some time, most lenders would typically want to see them at work for a minimum of two years.
So, many lending companies would run a quick check on an applicant’s employment history. For more details on this process, you can check or message securityamericamortgage.com.
A loan specialist would also likely look into gaps of more than two years because there must be a continuity between education, work, military occupational specialty or MOS, and current employment.
The requirements also vary from lender to lender. If you have a gap in your employment history, consider waiting a few months after returning to work before applying for a VA loan.
Furnish Your Application With A Certificate Of Eligibility
The Department of Veterans Affairs is responsible for issuing the Certificate of Eligibility (COE). It is proof of your time in military service and that you’ve fulfilled the requirements to qualify for a VA loan.
While it is better to provide a copy of your COE upon application to increase your chances of approval, you can still get pre-approval without a COE, as it can be verified at the loan processing.
You don’t need to procure the COE yourself because the lenders can get it for you while you find your first home. Lenders can source the COE instantly most of the time. In other cases, it can take up to five business days.
If you prefer to handle the requirements yourself, you can head to the VA portal and request the COE copy yourself. Another option is to drop by the VA regional loan areas closest to you.
Practice Due Diligence
There are a few factors you must take into consideration before proceeding with a loan application. You may need to find concrete answers to these questions: Do you plan to keep your home for a long time? Do you plan to get a larger or better house later? How long are you willing to pay the home loan?
You can get two types of VA home loans. An adjustable-rate mortgage may be for you if you plan to sell the house eventually. But if you want to keep the home with you until you repay the loan, use discount points to pay your interest.
Additionally, you can choose options for a 15-year or a 30-year mortgage. But it would be best to find out how much interest you will be paying to ensure that it is within your financial capacity.
You must also keep in mind that, when using a VA home loan, you need to pay VA funding fees, but a few exceptions could let you walk away without paying out-of-pocket. You don’t have to pay if you have a disability attained through service and receive VA compensation. You can research more exceptions, and they may apply to you.
It’s also true that VA loans don’t require a down payment, but if you can provide one, you can get a discount on the funding fee. Doing a little research can help you find more VA loan tactics to get discounts or non-repayments, lower rates, and more.
The VA loan is a government-backed loan that you can use to your advantage. Lenders decide on the requirements, and the VA only subjects these lenders to exercise leniency.
But you can follow the tips above to get the most out of your loan. You can raise your credit score, ensure that you don’t have an employment gap, proceed to a loan application with a COE, and learn more about the rules you can take advantage of when you’re ready to apply for a loan. This way, the application will be easy and worry-free.