Starting your VA loan?
Buying your first home is an exciting process. Confusing sometimes, yes, but exciting nonetheless. However, there can and will be bumps in the road and if you’re not prepared for them, buying a home and financing a mortgage using our VA home loan benefit can cause a few headaches. What are some of the things you can do to help your road to home ownership is a smooth one? In no particular order, they are:
One of the first things you should do is find out how much you can afford based upon your current income. VA lenders use a formula based upon a percentage of your gross monthly income, called a debt ratio. The VA debt ratio limit is 41, meaning no more than 41 percent of your gross monthly income can be used to take care of monthly credit obligations. To get your debt ratio, contact a local VA lender and speak with a loan officer. There’s no obligation to apply for a mortgage, but you do need to get further details on what you can afford.
Get a copy of your credit report. There are a variety of resources to obtain a copy but you can get a free report at www.annualcreditreport.com. This website is sponsored by the three main credit agencies, Equifax, Experian and TransUnion. Get your report and review it for errors.
Your certificate of eligibility, or COE, is the official document from the Department of Veteran’s Affairs that validates your VA home loan benefit. Lenders cannot approve a VA loan without this document. You can go online to get your COE or ask your lender to retrieve it for you.
Get referrals for a good real estate agent, experienced in negotiating sales contracts for VA buyers. An agent doesn’t cost you anything and will walk with you hand in hand from searching to closing on your new home.
Gather your most recent pay check stubs covering 30 days, your most recent bank statements and copies of your federal income tax returns from the previous two years. These documents will accompany your VA loan application.
If you follow these simple steps, your shopping experience will be a happy one. Take your time, be prepared and enjoy the ride.