Experts typically encourage prospective homebuyers to visit their mortgage lender before they put any significant effort into scouring the internet for home listings and attending open houses. Why? So that they can get prequalified before they invest their time and emotions in serious house shopping. Once you’ve learned how to prequalify for a VA home loan, you can feel confident moving forward with your search for the perfect home. Scroll down to learn what’s involved in prequalifying for a VA loan.
Your First Step: How to Prequalify for a VA Home Loan
While the U.S. Department of Veterans Affairs (VA) doesn’t actually extend the loans offered by its popular VA-backed purchase loans, it does offer a guarantee that allows private lenders to make home loans with favorable terms (including exemplary interest rates, limited closing costs, and no requirement for a down payment or private mortgage insurance). If you’re trying to decide if a VA loan is the right tool for you, getting prequalified can be a valuable first step in your journey.
As the Consumer Financial Protection Bureau explains, prequalification is a way to learn how much a lender would be willing to lend you if their assumptions about your financial situation hold true. Knowing how much you have to spend enables you to take a targeted approach to your home shopping. Why suffer the inevitable disappointment of falling hard for a home that you cannot afford? Why waste time and energy even looking at homes that aren’t a good fit for your pocketbook? Getting prequalified allows you to verify your own financial speculations so that you have a better idea of what you can truly afford to spend on a home. With that information in mind, you’re ready to review listings with reasonable expectations and focus on finding the ideal home for your family. As an added bonus, being able to show that you’ve been tentatively approved for financing means that you’ll be taken more seriously by sellers.
How to Prequalify for a VA Home Loan
What’s involved in getting prequalified? The process varies from lender to lender, but it generally involves a quick review of your financial circumstances. Some lenders may ask for some minor documentation, but most will simply ask you to provide them with the relevant information. While you won’t need to hand them over, it can be helpful to have recent paystubs, tax returns, and other financial information on hand so that you can answer the loan officer’s questions with greater accuracy. As Military.com notes, a loan officer will ask you about your income and credit history. With your permission, they may run a credit report. If you have your eye on a VA loan, they may also ask that you verify your eligibility for the program by providing your Certificate of Eligibility or some other proof of your service.
Once the necessary facts are assembled, the loan officer will use the information that you provided to assess your situation and offer an estimate of how much you will likely qualify to borrow. It’s important to note that prequalification is not a guarantee of approval. The only way to truly determine whether you qualify is to go through the underwriting process, which is far more involved. Although it may not be definitive, prequalification is a quick, easy, and useful first step.
Tips for Prequalifying for a VA Home Loan
What can you do to make the prequalification process as simple and helpful as possible? Military.com offers some advice:
- Ask questions. If you don’t understand a detail or think something unmentioned might be relevant, ask.
- Stay calm. Prequalification may reveal issues with your credit. Remember that finding a problem doesn’t make buying a home impossible. Instead, it gives you an opportunity to fix the issue and strengthen your financial situation.
- Understand that prequalification is not the end. Prequalification is the beginning. It’s not a guarantee of a loan, and even when you are approved, your purchase of a home isn’t finalized until closing. It’s important to consistently make smart financial choices until everything is completely settled.
At PrimeLending: Manhattan, Kansas, we’re delighted to serve those who have served our country. Our experienced loan officers have a deep understanding of all the ins and outs of the VA loan program. When you’re ready to get the greatest benefit out of your VA housing benefits, we can help. To explore the possibilities presented by a VA loan or to learn more about our other loan products and services, contact us today.