Home Buying Tips - VA Loan

VA loans offer prospective homebuyers an amazing degree of financial flexibility, from no down payments to low interest rates. But like many other consumers, veterans and their families can still encounter frustration when navigating the home-buying experience. It can be a challenging and at times confusing process.

To help, we've assembled a list of tips for VA loan recipients. These nuggets can help borrowers work through the process and make the most of their VA loan:

No Financial Surprises

Lenders will scour a prospective borrower's credit and financial histories. Would-be home buyers should bring that same degree of scrutiny to their financial documents long before they ever reach a lender's desk. Obtain credit reports and hunt for errors or inconsistencies. Be sure to get a report from the three major credit bureaus.

Prospective borrowers should gather as much documentation as they can to bolster their financial position. Loan officers will typically examine income, savings, credit history, property holding and other major elements. Beyond that, borrowers should bring in tax returns for the past few years and a few months' worth of pay stubs.

Determine Your Service Status

A borrower's military status and duration of service may impact a loan application. Differences and considerations can arise for military members who have served in combat and those who saw mostly peace-time duty. Discharged veterans and those who are not on active military duty can obtain VA loans. Reservists can also be considered for VA loans, but the process differs in some ways.

Do your Lender Homework

The VA works with scores of lenders across the country. The government's eligibility requirements and lending criteria are consistent, but each of those lenders will have its own credit limits and terms. Remember, the government just backs the loan – it doesn't actually issue the mortgage. Like any other home buyer, VA loan recipients should take time to investigate lenders and determine who offers the best fit for their unique needs, including whether a fixed-rate or adjustable rate mortgage makes the most sense.

Aim for Pre-Approval

Pre-approval is not the same as loan pre-qualification. Pre-qualification involves lenders providing an estimate of their expected loan terms based on a borrower's initial financial information. Pre-approval is more formal and important. During pre-approval, lending institutions will scrutinize a prospective borrower's financial history and commit to a certain level of funding. This pre-approval is typically good for three to four months. It's also important because sellers generally prefer buyers with pre-approval.

Get the Terms Before Going Hunting

Pre-approval can make this even easier, but, in general, prospective borrowers should considering holding off on house hunting until they get loan approval.