Buying a home is an exciting phase in your life and the process gets easier with VA loans. It is regarded as one of the best financing options available in the market because it caters to the first-time home buyers smoothly. Now, there are a few things to know before unlocking the benefits.
To make the most out of the VA home loan credit score 550 in Houston, TX, there are a few things to remember. The tips are applicable for both first-time and experienced home buyers who wish to join the process with some education. Here are a few things to remember before buying a VA mortgage loan in Houston.
Table of Contents
Focus on Your Credit Score
Credit score plays a vital role in landing a mortgage and VA loan is not an exception. Before qualifying for the loan pre-qualification, acquire a copy of the credit report. After getting the report, start monitoring it to find out errors. Many veterans find out transactions that they have not made. This often paints two scenarios – you have been a victim of credit card fraud or the reporting errors are for late payments. You can raise concern to the agencies and get it fixed. In case, your credit score is lower than 550, you need to work on it. Pay the bills on time, settle outstanding debts, and do not close old accounts. Every bill plays a crucial role and it is important to make an opportunity out of it.
You can Get Low Closing Costs
VA loans have low closing costs in comparison to traditional mortgages. It is possible partly because some of the loans are monitored or regulated. The seller’s contribution is available so the seller can cover 4% of the closing costs.
Job Gap is an Issue
The lenders prefer candidates with two years of stable employment; however, this is not a common scenario for the veterans. Having spent significant time overseas on duty, it takes time to bounce back on the professional front. The lender needs to have a closer look at your application understanding your inability to work for 2 years straight. At this moment, a lender would like to assess your continuity between current employment, education, and previous job. When there is a long streak of continuity but only a gap in unemployment, the lender might have a positive response to it. Of course, this process varies from one lender to another.
Not a Good Idea for a Second Property
VA funding fee depends on whether you have had VA mortgage in the past. For this reason, it is better to go with a traditional property if you are set to buy a second one. If you are not a disabled veteran or used the loan in the past, the VA loan will come with a 3.3% funding fee from the administration. It is one facet that makes the traditional mortgages better than the VA loans.
In the end, most military homebuyers are smart enough to apply for a VA loan. Thanks to its no down payment and interest rates, borrowers can build their home in a hassle-free way.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.