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So, you’ve decided to take the step into home ownership. Now is the time to delve into the world of home loans to find the right mortgage. You may qualify for a VA home loan if you are a veteran or active duty service member of the US military. VA loans are available exclusively to current and former members of the US military and offer several benefits over traditional mortgages.
Read on to learn more about these low cost mortgages and how to get one.
Step 1: Verify your eligibility
To get a VA home loan, you must first meet eligibility requirements, which depend on your military service. You may be eligible if you:
1. Served for 90 consecutive days during war, or
2. Has served for 181 consecutive days during peace time, or
3. Served in the National Guard or Reserves for more than 6 years
4. Are they the surviving spouse of a service member who died in the line of duty or as a result of a service-related disability.
If you meet any of the above criteria, you can start gathering the required documents to apply.
Step 2: Gather the 4 Important Pieces of Documentation
A number of information is required to verify your eligibility as well as your ability to repay it. This includes:
1. Certificate of Eligibility (CEO). The COE is your proof to the lending institution that you meet the minimum qualifications for a VA loan. You can obtain this form through the Department of Veterans Affairs, online at the VA’s e-Benefits portal, from your VA-approved lender, or by mailing Form 28-1880 to the VA.
2. Credit Report. A credit report will provide the lender with information about your current financial standing, such as your credit and loan repayment history. This information helps determine how much you can borrow and still be able to repay. The VA does not set a minimum credit score. Individual lenders set minimum credit scores, but VA loan requirements are generally more relaxed than traditional requirements, which is one of the main advantages of this type of mortgage.
3. Proof of Income. You will need to provide proof of income in order to get a mortgage. Most lenders require the last two months of pay stubs and the last two years of tax returns, or W2s, to verify income. If you are applying jointly with your spouse, his or her income must be included.
4. DD-214 is the form you will need to use to apply for your CoE. This form details the conditions of your discharge and verifies that you are eligible for benefits. DD-214s are provided upon discharge but new ones can be obtained from the National Archives.
Your VA lender can help you obtain these pieces of documentation if you cannot do it yourself.
Step 3: Choose a VA Loan Lender
You will need to find an FDIC-insured lender to underwrite your loan. FDIC backing ensures that the lending institution is following safe and sound operating practices, thereby reducing your risk.
Not all lenders work with VA loans and others are just lead farms and don’t manage the loans themselves, so you’ll need to do some research. Even among VA lenders, you’ll find different terms. Shop around and find the best deal for your situation. Ideally, you’ll want to choose a lender that is FDIC insured, is a bank and focuses almost exclusively on VA loans or VA loan refinances.
That’s it! 3 simple steps and you can be on your way to buying a home with one of the best mortgage programs available. Go ahead, you’ve earned it!
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