If you served in the military, you may be able to use your VA loan benefits to assist you with purchasing your first home. Here are a few things you need to know about the loan approval process when you also have Veteran Administration loan benefits to take into account.
#1 Check Your Credit Report For Errors
When you get a VA home loan, your credit report still factors into your ability to secure a loan. Get a free copy of your credit score and check it for any errors. If you notice that you were listed as delinquent on an account that you were not delinquent on, follow up with the company that made the report in order to have the error fixed as well as with the credit bureau. If there is an account listed in error on your credit report, go through the appropriate steps to have it removed.
Incorrect information on your credit report can completely ruin and destroy your chance of getting approved for a VA home loan; make sure that you check all the information.
The one thing you should not do is give too much weight to the actual credit score itself; most lending companies use a formula that is weighted for mortgage lending and the score they use to determine your eligibility may look different than the score that you see. Work to improve your score, just don't be shocked if the score the mortgage lender uses is a little different than the one on your report.
#2 Lower Your Debit To Credit Ratio
The VA has requirements in order to provide you with their special benefits. One of the most important of their requirements is that you have a low debt-to-income ratio, or DTI. The VA will not approve you for a loan that they do not feel you can afford. They will calculate your monthly income against estimated loan payments to determine what your DTI will be. The VA requires your DTI with your home loan to be at or below 41%.
Before you set your budget for your home buying experience, figure out what type of payment you can afford that will allow you to keep your DTI at or below 41%. This will give you a more realistic idea of the amount of money that you may be approved for while using your VA benefits.
#3 Get Your VA Certificate Of Eligibility From eBenefits Portal
When you approach a lender for a loan, they are going to ask you for your COE, which stands for your VA Certification of Eligibility. You can generally start the loan approval process without your COE; however, you will be expected to present it eventually.
You don't have to go to your local VA office to get your COE. You can request your COE through the eBenefits portal. If you don't have a VA online account, you will need to register for one. Once you are registered, you will be able to use the Certificate of Eligibility for Home Loans portion of the portal to find out what your VA home loan benefit is and to get your COE. You should be able to print your COE out on your own; you will not have to wait for it to be mailed to you.
Make sure that your credit report is accurate, figure out what type of loan you may be able to afford based on your DTI, and get together your COE before you start shopping for a VA loan for your first home (click here for more info).
Share12 May 2016
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