The process can go more smoothly if you follow these 6 simple steps. Learn the DOs and DON’TS of the third stage.
A VA Loan One of the initial actions a borrower may decide to take after getting in touch with a VA-approved lender is prequalifying. Prequalification is the initial determination of a borrower’s loan eligibility based on a borrower’s preliminary income, debt, and credit data. Prequalifying often takes place prior to the underwriter receiving and reviewing official documentation, therefore it does not ensure loan approval.
What purpose does this optional step serve when prequalification for a VA loan is not the same as approval? Prequalifying can first offer you a rough idea of the pricing range in which to look for a home. Additionally, it can assist your loan officer in getting an early look at your credit and income and identifying potential problems that could cause your loan to be delayed. These problems are frequently small and can be fixed by paying off an old obligation or contacting a creditor to correct an error. Prequalifying typically helps you avoid unpleasant surprises when you submit your formal loan application.
Here are some “dos” and “don’ts” when prequalifying for a VA loan to assist you make the most of the process:
1. DO provide your loan officer all the information.
You’d be shocked at how much information a loan officer requires to begin processing your application. At this early stage in your relationship, inquiries like “Are you divorced?” and “Do you get child support?” may feel a little bit intimate. However, you will need to put everything on the table regarding your income, debt, and credit. Leaving out details in your initial interaction with your loan officer could lead to issues later. Be open and honest right away so your loan officer can support your success.
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2. DO question things
Ask about everything you believe may affect your ability to qualify for a loan from your personal or financial assets. You can have tips from a side job or rental money. It’s possible that your loan officer won’t immediately recognise that you have a sizable cash reserve in a retirement account or another asset. If you decide to follow this route, make sure to mention any other assets you may have because they may assist you get authorised, particularly if you are on a fixed income.
3. DO recognise the distinction between prequalification and approval
Prequalification does not guarantee loan approval, despite what your loan officer may tell you. You will still need to provide evidence of your eligibility. Chances are excellent that the underwriter will mark “Approved” on your VA loan application if you can verify all of the income, debt, and credit information you provided for this phase and no other qualifying issues arise. Prequalification is the starting shotgun for a race. The go-ahead has been granted, but before you can cross the finish line, your application must be accepted.
4. DON’T conceal anything
Probing for additional information is a crucial component of a loan officer’s job. Being absolutely honest about your financial situation is the best course of action. A smart loan officer will be able to point you in the direction of a solution that will assist you be authorised later if something arises that might hinder approval. According to Retired Major Tim Lewis, a 23-year Army veteran and customer experience manager for iFreedom Direct®, prequalifying should be viewed as a practise examination before the big exam. If you make a mistake, you can seek subject-specific assistance to ensure accuracy when it matters most.
5. Keep your cool
This procedure is a preliminary review of your qualifications for a loan. Utilise this step to learn more about the requirements for approval. You or your loan officer won’t benefit from worrying about a credit score that is on the edge or a past bankruptcy. Instead, when you have a setback, take a few deep breaths, and then start making plans. Work closely with your loan officer to address any problems that might be a barrier to homeownership. It might take some time.
6. AFTER YOU HAVE BEEN PREQUALIFIED, DON’T APPLY FOR NEW CREDIT
Some borrowers fail to remember that the loan is not finished until closing day amid all the excitement of the home-buying process. Neither a new car nor another credit card should be obtained right now. Your debt-to-income ratio will alter as a result of any new credit lines and loans, which could impact your eligibility. You should hold off on purchasing that new living room set or big-screen TV until after your VA mortgage has closed.
Take Action Now
Prequalifying might get you one step closer to homeownership if you have received home loan advantages. To begin working with a VA-approved lender who specialises in lending to the military community for government-backed mortgages, click here.