In this post, we’re going to go over 5 steps to get mortgage ready for a VA loan. These work for both purchase loans and a cash-out refinances, and hopefully these preparatory steps can help save you time and money. That’s what we’re all about here at Low VA Rates. To help and benefit veterans with the VA loan process.
Get Mortgage Ready with These Steps
We cant always prepare for everything in life but the following tips will help you prepare and get mortgage ready to purchase a new home. Keeping these things in mind can help the application process go much smoother.
Improving Your Credit
There is a lot you can do to improve your credit score. But there is one simple thing you can do: go to optoutprescreen.com. What will this do? This website allows you to remove your name from getting eligible credit cards in the mail.
And here’s the nice thing about it. By going to this website and opting out, it may give you 5-7 points on your FICO score. It takes about six weeks to go through the business cycle and then you’ll get a benefit from it.
Here’s something else to keep in mind. Most people believe that by closing a credit card account, it will help their credit score. But this actually has a negative impact on your credit because after you close it, you are no longer receiving credit. You build credit by making payments on time and you can’t do that when you’re credit is closed.
Additionally, you should refrain from making big purchases during the home buying process. Making big purchases makes things difficult for your lender and yourself. We want to help you out as best as we can so you can benefit in your home buying process.
For employment, let’s talk about overtime first. Overtime needs to be consistent in order to verify it. For example, if you are working five hours of overtime each week, please make sure to keep that consistent because if it isn’t, then we can’t take it into account.
Another thing to keep in mind is promotions and salary changes. Let’s say you get a promotion and your salary decreases but you get bonuses and commissions. You’re probably making more because of these bonuses and commissions, but these aren’t verifiable. We need a 24 month history of income verification.
So these are a couple of things to keep in mind with your employment and salary.
Debt-to-Income Ratio (DTI)
Here’s a poignant rule: don’t change your spending habits. Changing your spending habits can affect your home loan application and slow things down.
For instance, we know that getting ready for your new home is exciting and you can visualize the new stuff you want to accommodate your new home such as a big screen TV. But, it’s crucial to hold off on these new luxuries and avoid opening up any new credit cards or spending the money that’s going toward your house.
Now, we do understand that stuff comes up such as family emergencies or vehicle maintenance. These things are out of your control, but it’s important to know that these things can influence your DTI. So, whatever is in your control, just be patient during the loan process, and whatever is out of your control, make sure to keep us in the loop.
To keep it simple, don’t change jobs during the application process. And maybe simple isn’t the right word — things happen. But, if you do change jobs, let us know. If you’re an accountant and go from one firm to another and your salary stays the same, that’s something we can work with.
But changing jobs without letting us know can be cumbersome because we’ll need to verify your employment before we can fund your loan.
Changing your spending habits would also fall into this category, but one thing that tends to get overlooked is co-signed debts. We can work with co-signed debts if you happen to be a co-signer. But what you’ll need is 12 months of canceled checks to show that the other signee is making the payments.
Contact Us To Learn More
By keeping these five things in mind, it will help you to get mortgage ready and make the VA loan process go much smoother.
If you are looking for VA approved lenders we can help! Contact us now if you have any questions or concerns regarding the VA loan process at 855-223-0705. We’re ready to help you out and help you start using the VA benefits that you have earned.