What Must you Check Before Applying for a VA Loan?

Did you know that in Texas, the Veteran Affairs (VA) Case Numbers with the digits ‘62-62-6’ need a proof on the individual sewage disposal system from the local health authority? This is applicable in Texas according to the Houston Regional Loan Center. Usually, it is not possible for home-buyers to know such rules unless they consult with a lender that provides specialized residential home mortgage services.

Who is eligible for a VA Loan? This loan program is initiated by the United States Department of Veterans Affairs (VA) for veterans who served in the American armed forces. In case they are deceased due to a service related cause, this loan program helps their families to get long-term financing.

VA loans are not the most cost-effective options due to the fees associated with it. However, this loan program has a key feature that helps veterans and their families get the required financing to buy a home. One of the key aspects of this loan is that borrowers need not make any down payment. It makes homeownership much easier as a shortage of cash reserves doesn’t prevent people from fulfilling their dreams.

VA loans don’t have a mortgage insurance premium included, which helps borrowers save a significant amount of money. The best thing about this loan is said to be the guarantee provided by the government if borrowers failed to pay their mortgage. Apart from it, there is no penalty for paying off the loan early.

Things to know before you apply
Before applying, your lending firm should get you more details about the following aspects of VA loans:

• A loan application for a primary home is likely to get approved before a second home. Second homes such as vacation homes or beach houses that are not occupied full time by the borrower may not get approved easily. The reason being, a second home is considered more of a luxury than a requirement.
• Your credit rating may affect the loan approval process. Though the VA does not enforce a credit score requirement; still a score of at least 620 is what lenders look for.
• Getting pre approval can save time. During pre approval, an underwriter reviews the loan application, and determines the loan amount based on your income, savings and debt ratio. Once the application is pre-approved, it will give leverage to you in terms of negotiating as a cash buyer of loan.
• If you are still in active duty in the armed forces, you need a statement that is signed by your unit commander. You may also need to submit the names and contact details of your past employers.
• A Certificate of Eligibility (COE) and DD Form 214 are a must. These are among the most important documents needed for VA loans. The COE will prove your eligibility to receive this loan. DD Form 214 is the ‘Certificate of Release or Discharge from Active Duty’.
• VA loans are even available to people who have faced bankruptcy. A reputed lender can help you understand how it is possible. Ask your lender for detailed information.

Apart from the information mentioned above, there are numerous other things that you may need to know for making an informed decision. According to the Real Estate Settlement Procedures Act (RESPA), lenders are supposed to provide applicants with information on all closing costs and escrow account practices. Hence, it’s important to choose a reputed lender based on its track record rather than their attractive lending offers.