Owning a home is still a goal that many Americans wish to accomplish. However, if the collapse of the housing market taught us anything, it’s that home ownership is not for everyone. Buying a home is a huge decision that requires an extensive review of your current and future financial circumstances. Essentially… it’s an investment. While there are instances in which you can refinance your mortgage for financial relief, starting off on the right foot is your best option. With that being said, being well informed about the home buying process and your personal finances is a must to prevent financial hardship down the road. In order to do this you will need to:
- Understand Your Current Financial Status
- Apply for a VA Home Loan
- Hire a Real Estate Agent/Being Home Shopping
Understanding Your Current Financial Status
Purchasing a home requires a significant amount of finances and the continued means to pay for the property. Interested veteran home buyers should start by assessing their current financial status to ensure that they are in fact ready to buy a home. In assessing your current financial status you will need to:
- Know what you can afford
- Know your credit standing
What Can You Afford?
It might seem very self explanatory when purchasing a home. However, many first time buyers make the mistake of underestimating the true costs of homeownership. This is in no way to deter you from purchasing a home, but to ensure that you’re purchasing a home that you can enjoy and not fall into debt with. Your monthly mortgage payment is not the only costs that you will incur once you sign on the dotted line. You will be responsible for closing costs, down payments, homeowners insurance, property taxes, utilities, and maintenance. It is ideal to get a general understanding of how much you’re looking at paying each month for the home. This will help you to factor what you can really afford.
What Does Your Credit Look Like?
Even if you intend to apply for a VA home loan, having a decent credit score and history are ideal. Good credit scores open the doors for more mortgage programs and allow you to get a better interest rate on your mortgage (which saves you money each month). You should pull your credit report to determine exactly what you’re dealing with. If you notice that you have a low credit score, you may want to clean things up before you begin searching for a home loan. Try to pay off old and outstanding debt and dispute any negative ratings that should not be on your report.
Applying for a VA Home Loan
American veterans have an abundance of programs and options out there for homeownership. Selecting the right mortgage provider will require a basic understanding of home loans as well as knowing a bit about the mortgage provider you intend to work with. As such, it is recommended that you do research on at least two to three mortgage providers before making a final decision. When looking at various VA mortgage programs, be sure to review information such as:
- Down payment amounts – While may VA loan programs offer a no down payment incentive, it is not offered by all providers. Therefore, find out what the down payment percentage is and what the eligibility requirements are for qualifying for a low or no down payment offer.
- Government guaranty – No one plans to default on mortgage payments, but in this recovering economy, there is always a chance. As such, the government often offers assistance for veterans which state they will pay a percentage of the home loan should you default for certain reasons.
- Credit requirements – VA loans don’t have such strict credit requirements but are still worth looking into. Find out what the minimum credit score is for qualifying for a VA loan.
- Interest rates – Lastly, check the interest rates of various mortgage providers based on your current credit score. You ideally want to find a mortgage provider that also offers good rates. This will save you money each month and allow you to pay off your home loan a lot faster. The Low VA Rates blog contains numerous resources on this subject, including a free Low VA Rates Buyer’s Guide E-Book.
After assessing the above information, you can then select the best mortgage provider. Once you’ve applied for the mortgage, you will be given a pre-approval letter which is necessary to begin viewing homes for sale.
Once you’ve gotten an approval notice, you are ready to begin shopping for your new home. Be sure to secure a real estate agent that understands the area you’re looking to buy in and also has an understanding of VA home loan regulations. From there, it’s just a matter of waiting until you find that place that you want to call home.