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Checklist to Getting a VA Loan

VA loans are a type of financing available to veterans and men and women currently serving in the military. These loans offer several benefits, including low interest rates, no down payment requirement and no mortgage insurance! With this type of loan, borrowers can finance their homes in a more cost-effective way. Learn about the steps involved in applying for a VA loan to be better prepared for the purchasing or refinancing process.

Determine Eligibility

Before applying for this loan, an applicant should determine if he or she is eligible for the financing. There are different eligibility requirements that must be met. Applicants must meet certain service length requirements, which vary depending on when they served in the military and whether or not they serve or have served in the Reserves. If an applicant is a veteran, he or she must have been discharged from the military under conditions other than dishonorable. If a veteran was disabled as a result of his or her service in the military, there may be additional loan benefits available to him or her.

Applicants must also meet certain credit and income requirements for this loan. The VA does not require that applicants have a high credit score, but they want applicants to have a clean credit history of at least twelve months. Most lenders will only accept credit scores of at least 620. The maximum debt-to-income ratio that an applicant can have is 41%, which means your total monthly expenses must be less than or equal to 41% of your gross monthly income. Applicants must also meet a minimum residual income (the amount left after paying all monthly expenses), which varies based on one’s family size and geographical location.

Obtain Pre-Approval for the Loan

Once an applicant determines that he or she is eligible for the loan, it is time to get pre-approved. Once an applicant is pre-approved for a loan, he or she should begin their house search, if they haven’t already. An applicant should decide what features he or she wants in a house and realistically determine what is affordable for his or her budget. Speaking with a loan specialist about loan terms and rates can help an applicant decide what options are best for his or her financing needs.

For a final loan approval, there is certain documentation that the lender will need to have. This documentation includes a month’s worth of consecutive pay stubs, copies of W2s from the past two years or tax returns, proof of insurance, certificate of eligibility and a purchase contract, if available. Before the home is purchased, a VA-approved appraiser will do an appraisal to determine the home’s value. Once the loan is processed and closed, the homeowner will usually have about a month before they will start making payments.

Make the Most of The Loan

The aforementioned steps apply to purchasing a home, but the steps to refinancing with a VA loan are fairly similar. When refinancing his or her loan, a homeowner needs to decide what he or she wants to get out of the refinance. A homeowner may refinance to consolidate debt, obtain a lower interest rate, change the terms of the loan or obtain cash. The homeowner can discuss his or her options with a loan specialist to decide what type of refinance loan is best for his or her situation.

Being educated on the process of getting a loan can make the process smoother and more efficient because the applicant is better prepared. Applicants who want to purchase or refinance with a VA loan should speak with a loan specialist to learn how to get started.

Victoria Belle-Miller is the newest member of the writing staff. Her background in journalistic writing and ability to evaluate the issues that Americans face in daily life make her a strong addition to the VA loans team and a valuable source of sound mortgage advice.

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