With a VA home loan, you get a fantastic chance to purchase a home using a home loan with competitive terms and relaxed qualifying for borrowers. VA loan prequalification isn’t an essential step on the journey, but it can be a handy tool if you use it wisely.
VA Loan Prequalification
How can you capitalize on VA loan prequalification? First, you’ll need to understand exactly what it is. It’s also helpful to know a few tips to get the most out of getting prequalified. Finally, it’s important to understand the difference between getting prequalified and getting preapproved.
What Is Prequalification?
What does it mean to get prequalified for a VA loan? According to MilitaryBenefits.info, when you get prequalified for any type of home loan, you provide a lender of your choice with information about what kind of loan you’re interested in, your employment status and income, your financial assets, and your credit. For prequalification purposes, you aren’t required to back that data up with any documentation. The lender goes over the numbers that you’ve given them and comes up with a general assessment of how much they would be willing to lend you, assuming that the information that you provided is accurate. Because there’s no time spent scouting out and verifying documentation, the process is free and relatively speedy. You’ll typically get results in a day or two. When you’re trying to figure out how much you can spend on a house, getting prequalified is a quick, easy, and affordable way to get an expert’s opinion.
Tips for Getting the Most Out of Getting Prequalified
If you decide to get prequalified for a VA home loan, what should you do to get the most out of the experience? Military.com offers some useful advice:
- Be accurate. The results of a prequalification aren’t binding, but you’ll only get as much out of the process as you put into it. The more accurate and thorough you are, the closer the results will be to what you can expect when you actually do go in to fill out the papers for your formal loan application.
- Ask questions. Do you have an asset that doesn’t seem to fit any category? Is there an issue with one of the questions that has you scratching your head? Ask about it.
- Be forthcoming. Any and all information that can impact your income, assets, debts, and credit will be a potential factor in a loan application, so be prepared to be forthcoming, even if the questions feel personal. The loan officer isn’t trying to collect gossip or judge you. They’re asking about topics like marriage, divorce, and child support because they could be features in your financial picture.
- Be honest about financial problems. Don’t try to hide or minimize financial problems. These issues would inevitably be revealed during the approval process, so it’s better to confront them now and find out how much trouble they’re likely to cause.
- Stay calm. If problems like a low credit score, bankruptcy, or foreclosure surface during the prequalification process, stay calm. Listen to the loan officer to learn what you can do to fix past mistakes and improve your chances of getting approved for a home loan.
- Avoid making big changes. Once you’ve gotten prequalified, avoid making major changes to your financial status. If it’s possible, don’t apply for new credit, take out other loans, or switch jobs.
- Remember that prequalification is different from approval. Getting prequalified can help you get your home purchase off the on the right foot, but it’s just the start of the journey, and it’s a long way away from getting approved. Before you secure a home loan, you’ll still need to find a suitable property and prove that you have the income and credit to qualify for the VA loan that you need to buy it.
Prequalification vs. Preapproval
You may hear the terms prequalification and preapproval being tossed around like they’re interchangeable, but, as Investopedia makes clear, they’re really not. What sets them apart? While prequalification is generally free and requires no documentation, preapproval is a bit more serious. Getting preapproved for a loan typically involves an application fee and requires providing both information and documentation in order to discover how much the lender will be willing to let you borrow.