When you apply for a VA loan, you want to be prepared. Ask some important questions before you proceed. How many VA loans do they do each month? How much experience does the Loan Officer have? What percentage of VA loans does the Loan Officer do each month? Experience, or lack thereof can be the difference between a quick approval and a long and painful process leading you to looking for a new lender.
Most lenders specialize in Conventional loans. Combine that with all of the details that go into VA loans, like termite inspection requirements, or what is needed when the property uses well water as opposed to public. There are so many other details that go with VA loans, you can see how important being prepared is with an experienced VA Specialist.
We won’t get into all of the details of the VA loan here. This is basically “Ground Zero” for you. You want to know what you need to proceed with a VA loan application. Below, are the steps to apply for a VA loan. Every application is different because every person’s career and life history is different. So there may be different requirements for one person versus another. Your VA Loan Specialist can assist you once you’ve reached VA application step. Below are some basics to help you decide if you are ready to apply for a VA loan.
Before you Apply for a VA Loan
Before you apply for a VA loan, you should know what to look for in a lender and the proper questions to ask. This will save you a lot of time and relieve you of potential stress. Below are a list of items to check off before you apply for a VA loan and have any lender pull your credit.
Credit: Do you have at least a 620 credit score? Most lenders require this as a minimum to approve your loan. You can be approved for a VA loan with less than 620 credit.
Home equity: Do you have enough equity in your home to cover all of the settlement charges? With an IRRRL, it’s generally not important as there are generally no appraisal requirements. With a regular VA refinance (refinancing into a new VA loan), an appraisal is needed. However, you CAN refinance up to 100% of the value of the home. If you think it’s close, talk to your VA Loan Specialist about having the bank pay for all or part of your settlement charges with a Lender Credit.
Benefit: Before you apply for a VA refinance loan, make sure there is a clear benefit to do the loan. When you refinance back into the same term (Example: 30 year fixed to a 30 year fixed ), the lender is required by VA to lower your rate. You can refinance into a higher rate VA loan, but only if your are refinancing out of an ARM into a fixed VA loan.
VA Loan to Purchase a Home
Credit requirements: The credit requirements for a VA loan to purchase a home are the same as the VA refinance.
Income requirements: Income is required by VA to continue for 1 year from closing date of the purchase. Make sure any employment contracts or terms of duty will last for at least one year
Obligations: Qualifying ratios is one of the single most important factors to getting approved for a VA loan. Whether it be to refinance or purchase a home, having enough income to make all of your payments will always determine whether you can get a VA loan or not. Before you apply, add up all of your monthly obligations, including your new estimated VA mortgage payment. Be sure to include the monthly property tax and insurance in your calculation. If the ratio of payments to your income is 50% or less, you’ll be fine. If higher, ask the VA Specialist at the bank if 50% can be exceeded. In most cases, it is fine.
Here are the 3 Easy Steps to Apply for a VA Loan:
Determine if you meet the VA Eligibility Requirements. A valid Certificate of Eligibility will need to be ordered (you may do this yourself or the bank can do this for you)
Fill out a mortgage application and have your credit pulled by the bank. You must meet the Credit qualifications set by the lender (see above). The minimum credit score required is generally 620. It may be possible to get approved if your score is currently down to 600. The bank will let you know.
Gather all documentation required by the bank to get pre-qualified for a VA loan. Generally all that is needed for this is the most recent 1 month of LES/pay stubs; Last 2 years of W2’s; Most recent 2 months of bank statements. Other documentation may be required depending on your income and/or losses filed on your tax returns.
It’s as easy as that. The bank will issue you a pre-qualification letter for you to provide to your realtor and Shazam! You’re ready to buy your home!!!
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