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I am a veteran, so I automatically get my VA Home Loan when I apply – right? This is a common misconception among veterans and the general population. It stems from the fact that many people think that the Veterans Administration is the lender for their VA Loan. In truth, the VA is a guarantor for up to 25% of the loan, but they are not in the business of making veterans home loans. Their role in the process is to verify that you have the entitlement necessary to receive the guaranty – not the loan.
Loan Applications
Once you have your Certificate of Entitlement from the VA, you will go through the same credit evaluation that anyone else goes through, so it would be in your best interest to do a little research before applying for a loan. Here are just a few of the items to check:
• Debt-to-income ratio – This is simply a comparison of what you earn to what you owe. If the ratio of your debt to the amount of money you bring in is too high, it will make a loan more difficult to secure. • credit history – If you have been slow to pay, have had judgments filed against you for failure to pay or defaulted on other loans, it will affect your borrowing power. • Bankruptcy – Any bankruptcy that has not been discharged for over two years will be a negative factor in your loan evaluation.
Don't lose heart! While these are problems for your lender, they can be mitigated. Here are some factors that will help you offset some of the negatives:
• Conservative use of consumer credit • Minimal consumer debt • Long-term employment • Significant liquid assets |
