Looking for a VA Loan? 5 Tips for Quick Approval

A VA loan guaranty can greatly increase your chances of getting a loan and even lower your interest rate. The guaranty is a promise the government will purchase your debt if you default; it is a type of insurance for lenders. Once you have the guaranty, you will be considered a low risk borrower by most standards. Follow these steps to get your VA home loan approved.

#1 Watch your Credit

The VA will promise to purchase your loan, but a lender does not want to have to use that option unless it is a last resort. As a result, even though the VA guaranty can go a long way, it is not the only criteria a lender will look for. A lender will still shy away from extending financing to you if you have a record of missed payments. The lender will forgive a low amount of assets or even a short credit history, but make sure you are consistently meeting any payments you have in the years leading up to taking a home loan.

#2 Get your Certificate of Eligibility

A certificate of eligibility is the first step to a VA home loan guaranty. You can get the certificate at any point in the process. Simply use the online resources available to fill out your application. You will only need your personal and military information in order to gain your certificate. It will list the size of the guaranty you qualify for, giving you immediate insight into how affordable your home loan will be. Using this certificate, you can directly show lenders you will qualify for the guaranty even prior to actually getting acceptance of your application.

#3 Set Reasonable Limits

The size of a guaranty is typically fairly low compared to the cost of home ownership. It will rarely cover the entirety of your mortgage. While getting a mortgage slightly larger than your guaranty is not detrimental, you should still be aware of reasonable loan limits to protect yourself from default. The further you go above your guaranty, the lower percentage of your loan will be insured. This makes the additional loan amount much more costly. Further, you will have a larger mortgage, leading to higher monthly payments over a longer period of time. This can cause default for some VA borrowers. If you default and the VA does purchase your mortgage, you will be disqualified from other federal loan options in the future.

#4 Wait to Make an Offer

When you make an offer on a home, you are essentially contracting with the lender. Yes, you will have to sign an official contract later, but this offer locks you in, meaning you could have to pay several thousand dollars to break the contract if you back out. Always ensure your financing will come through prior to making an offer. It is best to get pre-approved. If this does not work for you, make your offer contingent on the fact your VA loan guaranty is approved. This way you will not lose money if your guaranty does not come through in time.

blog comments powered by Disqus