Buying a home can be fun and exciting, but it can also present challenges at nearly every stage, from getting the initial preapproval to closing. As a veteran, a VA home loan is designed to take the stress out of the home buying process, but it doesn’t eliminate all the pitfalls. When you are ready to buy a home, it helps to enter the process fully prepared for these steps.
Get Your Ducks in a Row
The VA loan comes with several financial advantages and lenient lender requirements, but you should still avoid entering the home buying process with messy finances. Once you decide to buy a home, start taking steps to boost your buying power as soon as possible.
First, get your credit in order. Sign up for credit monitoring and shoot for a minimum score of 620. This makes you eligible for a VA and FHA loan. To boost your score, pay down your debt, dispute or correct any errors on your report, pay your bills on time, and, if you have any, get caught up on past-due bills.
Next, prepare your financials. Gather income statements, tax returns, bank account statements and loan documents. Armed with this info and a fair to excellent credit score, you can begin shopping for loans.
Shop for Loans and Secure a Preapproval
Though a VA loan comes with several advantages — including zero down payment requirements, no PMI requirement, and lenient lending requirements — it may not be the best option for your family. Shop around with various lenders and for various loan types to secure one that allows you to get the most home at the best price. Alternative options include an FHA loan, which has similar benefits to the VA home loan; a USDA loan, which is available to low- to moderate-income households; and conventional mortgages, which come with few restrictions but higher down payment requirements.
Financial experts describe a few good reasons to consider a VA loan alternative. For instance, if you have 20% down and stellar credit, a conventional mortgage can help you save tens of thousands of dollars in the long run. If you are on the CAIVERS list or have poor credit, you may not qualify for a VA loan. Finally, if you want to buy a high-end home or an investment property, a VA loan is out of the question.
Find Your Dream Home
Now it’s time for the fun part — searching for your dream home. Regardless of the type of loan you go with, partner with an experienced realtor who can represent you, negotiate on your behalf, and protect your rights. He or she can also take your must-haves and absolutely-nots lists to find the home in which you and your family will be happy.
Close on the Home
Closing is the last step in the home buying process, and it’s a big one. At closing, you may have to come up with 3% to 5% of your home’s purchase price to cover closing costs, unless you and your realtor negotiate otherwise. Ways to reduce closing costs include asking the seller to cover them, negotiating a lower purchase price, or rolling them into your mortgage. If the purchase of your dream home is contingent upon the sale of your previous home, partner with RE/MAX Capital to sell the latter quickly.
Buying a home doesn’t have to be the stressful journey you may fear. By entering the process prepared, you can streamline the process and sail into the home of your dreams.
Image via Pexels