4 Financial Tips of VA Home Ownership
The veterans loan program is a mortgage loan that was specifically designed to help veterans achieve home ownership. The requirements are pretty simple to qualify. To qualify for a VA home loan, one must have served 181 days during peacetime, 90 days during war time, or six years in the Reserves or National Guard. The spouse of a service member who was killed in the line of duty may also qualify. The requirement that this does not discuss is your finances. Purchasing a home usually means you are taking out a loan, and you will have to make payments to that loan.
Evaluate your financial situation
The veterans loan program can be a great mortgage program, if you are ready for home ownership. Try not to jump into a mortgage, simply because you feel like you should own your house. Evaluate your financial situation first. Estimate your ability to make the monthly mortgage payment. There are also additional costs to consider, including insurance, maintenance, and taxes. Factor in these added costs and come up with a monthly payment that you are comfortable with. Try to stick with this amount, rather than the amount you are approved for. You will find it easier to make your monthly payments this way, especially if your financial situation should change over the life of the mortgage.
Check your credit, prior to applying
You want to avoid any credit surprises when filing for your mortgage application. These financial surprises can slow down the filing and could ultimately, affect you from purchasing your dream house. There are many free credit checker programs today, making it easy to run your credit before officially filing. Pay attention to things on your credit that could raise red flags or that could prevent you from being approved. Fortunately, the veterans loan program carries less loan requirements, but you will still be required to run a credit check.
Avoid financially changing situations
It is important to avoid financially changing situations during the home buying process. Taking out new lines of credit, changing jobs, or losing income can all affect the buying process. New paperwork and credit reports have to be pulled, and can extend the approval process. In the meantime, you could lose out on a desired house or end up losing your approval altogether. This is one of the most common first time buyer mistakes. They are not aware that another credit report will be pulled prior to closing on the house, so any activity between the first report and the closing is very important.
Understand your closing needs
You may also be required to bring money to closing. This amount can be substantial or minimal and it depends entirely on your loan terms. One of the benefits of VA loans versus conventional is that the closing amount is much less. Perhaps one of the best parts of the VA loan is that they do not require mortgage insurance and they allow for 100% financing. However, you still might be required to bring insurance or tax funding to the closing. Regardless of your type of mortgage loan, you want to understand your VA home loan rates before heading to closing and know if you need to bring any amount of money.
The veterans loan program has helped many veterans purchase a home. In fact, just in the year of 2016, 707,101 home loans were guaranteed by the VA nationwide. Although the veterans loan program has many perks over conventional mortgages, it is still important to evaluate your financial situation. Calculate your affordable monthly payment prior to house shopping, monitor your credit report, avoid any significant financial changes during this time, and understand your loan terms and closing cost needs. Understanding these financial aspects of the home buying process will ensure that you make the best real estate decision.