What You Need to Make a VA Loan Work for You

If you are a veteran or active service member in the US military, VA loans are a tremendous resource for helping you buy a home. The support of the Veterans Administration can help you qualify for a loan, get a competitive interest rate and buy your home with no down payment. However, the Veterans Administration cannot do it all for you. To successfully buy a home with a VA loan, it helps to be prepared before you even start house hunting.

You see, buying a home often comes down to timing. Sellers may have multiple people interested in their homes, and if you are a potential buyer you need to secure your financing on a timely basis once you put an offer in. To make sure there are no glitches that could cause the deal to fall through, it helps if you have a number of details in place beforehand.

Lining Up the Details

Here are some things you should have at the ready when it comes time to apply for a VA mortgage:

  1. Separation documents or current statement of service. You can check the VA web site to see if you meet the eligibility requirements for a VA loan, and if you do, you will need to document the extent and nature of your service. Generally what is needed is DD Form 214 if you have already been discharged, or a statement of service for active military personnel.
  2. Certificate of Eligibility. The above documents are not in themselves sufficient to secure you a VA loan. You need to use them to get an official Certificate of Eligibility. You can apply for this certificate directly from the VA, but also lenders who regularly deal with VA loans should be able to help you with the process of obtaining one.
  3. Credit report. Meeting the service eligibility requirements does not mean that you automatically qualify for a VA loan. You have to have decent credit as well, so check out your credit report in advance to make sure there are no surprises lurking there that will hurt you when you go to apply for your loan.
  4. Proof of income. Besides your credit history, another requirement is sufficient income to make your mortgage payments. Get together some written documentation of your income so you will have it ready to present to a lender when the time comes.
  5. Mortgage calculator. There are a variety of mortgage calculators out there that can help you see what a given set of loan terms will translate to in terms of a monthly payment. Familiarize yourself with these tools so that you can calculate possible payments on the fly once the process gets serious.
  6. Homeowner budget. Once you calculate the projected monthly payments for a given type of loan, outline a budget to see how those payments would fit with your income, given your other expenses. This preparation might help demonstrate to a lender that you are ready and able to meet your loan obligations, but in any case this is an exercise you should go through in order to be fully aware of the financial burden you are taking on.
  7. Savings for upfront expenses. You can get a VA loan with no money down, but there might be other closing costs involved in initiating the mortgage. Research and save up for these so there will be no delays when you want to buy a home.
  8. A short list of lenders. You don't get VA loans from the VA – they are issued by private lenders. That's great because it means you have lots of choices, but in the interest of timing you might want to narrow those choices down to a short list so that you can quickly compare the terms they offer when you have a specific loan in mind.

Your experience with the military probably taught you the importance of preparation. Applying the same principle of thorough preparation to using this military benefit will help you successfully buy a home with a VA loan.

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