If you’re a former or current member of the military community, you understand, when faced with a new duty or retirement station, preparation is essential. This prep skill comes in handy when buying a home. When you’re ready to buy, being prepared will guarantee there’s no unnecessary stress.
You’ve heard it before: a little preparation goes a long way.
True, VA loans require no money down, but depending on your lender, there may be uncovered closing costs. In this case, the decision to tighten the budget should be agreed upon pronto. Uniform Services Veterans Mortgage offers VA loans with no money down, two payment deferment options and, in some cases, no appraisal required.
You’re buying a home, so sticking to a budget is a good idea. Saving money is never easy, but being frugal keeps money in the household. To get started, set up a monthly $20 auto-transfer from checking to a “household” savings account. Eventually, the money gone will be conditioned to the budget, then consider upping the ante to $50. It’s called conditioning the brain with consistency, which improves muscle memory, and that is a good thing!
Check your credit
There are many ways to keep track of your credit, and credit score, online. Look it over for accuracy. Identities are stolen every day, and it’s your responsibility to make sure only your credit accounts are reporting. Report any fraudulent activity to the appropriate credit bureau(s).
Qualifying for a VA loan requires a minimum credit score. You’ll want to keep yours over 620. If you’re using credit cards, try paying minimum, plus extra. Once you’ve decided to buy, debt-to-income ratio matters, so don’t make large purchases, like cars or furniture.
To find your household DTI (debt-to-income) ratio, use the formula (d/i=dti). Example: $2,475 monthly debt (/) $5,500 monthly income (=) 45% DTI. You want to keep yours under 50 percent.
Get Your Certificate of Eligibility
Before application, contact the Department of Veterans Affairs for a copy of your certificate of eligibility, or COE. Your lender needs this form to confirm eligibility details. Applying is easy, but processing can be lengthy. So do it soon after deciding to buy to allow time to receive the COE.
Lenders require employment and income documentation. Check your access to MyPay, bank statements, W2s, filed taxes, and any other income contributed to the household.
The best part about buying a home is selecting your home. Being prepared to deliver on lender requirements will ensure a smooth process. Understanding credit scores, government documents, application processes and access to personal financial documents will allow you more time to enjoy the process of exploring neighborhoods and different layouts of homes.
Knowing ahead of time what lenders need to complete your purchase is the first step to finding a place to call home. Let us help secure your dream. Contact us today.