Buying a home using your VA home loan benefits can be one of the most exciting transactions you’ll ever make.
The VA financing offers the best mortgage programs in the industry, hands down. Fixed interest rates in the low 3’s and no down payment required make for a dynamic combination that is second to none.
However, it can certainly come with moments of frustration and uncertainty. Maybe that’s not entirely unsurprising when you’re talking about a six-figure purchase. The highs and lows of the home buying process are often amplified for first-time homebuyers. There’s a whole new language littered with strange acronyms like GFE (Good Faith Estimate), APR (Annual Percentage Rate) and MPR (Minimum Property Requirements).
Loan officers and underwriters are asking for pay stubs, tax returns and other documents you haven’t touched in years. And there’s a joy and sense of accomplishment when a seller accepts your offer that’s tough to find outside the world of home buying. The reality is this doesn’t have to be an emotional roller coaster. Sure, hiccups and unexpected issues can and do arise.
Both experienced and first-time military homebuyers who come into the process with some education and preparation in hand are setting themselves up for the best possible experience.
Here’s a look at 7 must-read VA loan tips to help VA home buyers get the most from their hard-earned benefits.
Tip 1: Start Without a COE
You don’t need to have your VA Certificate of Eligibility to start the VA loan process. It’s common for lenders to get this document for you a little later down the road. By all means, you can certainly obtain yours if you’re concerned about your entitlement amount or just feel better having proof of your benefit. Using the VA’s eBenefits portal is typically the quickest way when possible.
Tip 2: Scour Your Credit Report
Your credit profile will play a crucial role in your ability to land a home loan and the type of rates and terms available. Before you pursue loan pre-qualification, get a free copy of your credit report from AnnualCreditReport.com (this truly is free and requires no credit card information or monthly credit monitoring). Examine it with an eagle eye for errors, which can be anything from accounts that aren’t yours to reporting errors regarding late payments. About a quarter of all credit reports contain errors serious enough to derail a home loan, according to the U.S. Public Interest Research Group.
Tip 3: Your Credit Score Isn’t Your Credit Score
Your free credit report will not contain your credit score. This is something you have to pay to see, and as far as mortgages go it’s often best to not waste your money. That’s because lenders see different scores than consumers, and they use a formula weighted especially for mortgage lending. What your loan specialist pulls can and often does look different from the “consumer” score you shelled out money to see. The only way to really know where you stand is to have a lender pull your credit.
Tip 4: Job Gaps are a Problem
Lenders ideally want to see you’ve had your job for at least two years. That’s not always feasible, especially for veterans who recently separated from the military. So it’s possible to have fewer than two years and still secure financing, but it’ll require a closer look by your loan specialist. They’ll want to see continuity between your previous work, education, MOS or experience and your current employment. But even if there is continuity, if there was a gap of unemployment you’ll likely need to wait until you’ve been back to work for a certain number of months — the length can vary by lender and often corresponds to the duration of your job gap.
Tip 5: Not a One-Time Benefit
Once you earn the VA home loan benefit, it’s yours for life. This isn’t a one-time lending option or a program exclusively for first-time homebuyers. You can use these benefits over and over again. In fact, it’s possible to have more than one VA loan at the same time. So don’t let anyone claim you’re ineligible because you had a VA loan a decade ago.
Tip 6: Pre-approval is Key, But It’s Not a Guarantee
There isn’t a ton of sense in looking for homes before you’ve got a clear idea of what you can afford and how much a lender is likely to extend. VA loan pre-qualification and pre-approval will help with exactly that. Pre-approval in particular is important in that it shows sellers you’re a serious candidate who’s likely to make it to closing day. A prospective VA homebuyer with a pre-approval letter is a welcome sight among home sellers and real estate agents. Transparent Mortgage is the only firm in the industry who provides all of our clients with a FREE appraisal, read more here about our pre-approval process.
Tip 7: Stick With Your Budget
Your pre-approval amount isn’t a suggestion. It represents the ceiling of what you can afford based on your current financial situation. It’s easy to get caught up in the excitement of the home search. But remember: Just because you’re pre-approved for up to $250,000 doesn’t mean it’s in your best interest to purchase a $250,000 home. Homeownership comes with an array of new expenses, from homeowners insurance and property taxes to maintenance costs and more. VA loans have some safeguards in place to help veterans avoid becoming “house poor,” but it’s something you should consider from the outset.
Right now is the time to get started on your VA loan application. Check out this week’s rates here!
You may also learn more about your VA Loan Benefits here.