VA loans are traditionally much easier to secure because lenders tend to be less restrictive on their requirements when the government agency is securing the loan. Still, the loan application and qualification process can seem a little daunting when you first start looking at your options. These tips can help you understand a little more of the process and get prepared to apply for your loan.
Information you will need for the application
When you apply for the loan, you will need to provide some personal and financial information, including:
- Employment history for two years
- Current income including base salary and commissions or bonuses
- Alimony or child support payments
- Asset information such as savings, CDs, retirements, etc.
- Personal information such as social security number, birthday, current address and two years of address history
Providing this kind of information can be a concern for many people, but your information will be held confidential and secure. It will not be shared with parties that don’t have anything to do with your loan or the closing process.
Fill out an application by phone
You can fill out an application by phone. It will take around 15 – 25 minutes, but it can often be completed in less time. If something interrupts you in the middle of your application, you can call your loan officer back and complete the process then.
Staying in contact
Once your loan process has started, you will still need to stay in contact with your loan officer until the day of closing. He or she will be your main contact through the entire process so you will know who to consult when you have a problem.
Pre-qualified vs. Pre-approved
You may hear these two words being used, and it is important to understand the difference. If you are pre-qualified then you are qualified based on information that was included in the application. If you are pre-approved then you were approved.
It can take less than an hour to get you qualified for a VA loan if you work with a good loan specialist. Once you have applied the specialist simply needs to check your credit, calculate the debt-to-interest ratio, and then let you know if you are pre-approved and for how much.
Find out how much you qualify for
The qualifications for a VA loan will be based on many factors. Both your credit and your income will be examined. If you have a good credit rating, your debt-to-income ratio cannot exceed 50%.You can calculate the ratio by dividing your monthly debt obligations (including your new house payment) by your total monthly earnings and then multiply the result by 100. If you want to be more specific about the numbers, contact a VA loan specialist and have them run the numbers for you.
Getting pre-qualified does not mean that you will be obligated to do anything until the day of closing when you sign the final documents and receive your key.
Getting pre-approved for even more
It is sometimes possible to be pre-approved for more than originally asked for, depending on income, credit history, and assets. Your loan officer will usually only try to get you approved for the amount you requested, but there is often a cushion in case you want to get approved for a larger amount. If it turns out you need a little more than you originally thought, you can contact your loan officer and they will be able to explain your options and whether or not you will be approved for more money.
When to apply
It is possible to get pre-qualified for a VA mortgage at any time, even if you don’t have a specific home or property in mind. You may even want to get qualified as early as possible so you can look for homes that fit with your budget. You will also have more time to deal with any potential problems before any contracts are sighed.
As soon as you’re ready to start looking at homes, you should start the pre-approval process. There may be disputes on your credit report that need to be settled and other issues that could slow the process down. Start early and make sure that nothing gets between you and your dream home.