We all know that type of person: Fifteen minutes early to every appointment, overpack for vacations, floss twice a day and have never misplaced their wallet or keys. You might be that person. And that’s not a bad thing, especially if you’re considering using your VA home loan benefits.
When we were doing a hangout with CENTURY 21 recently, we received a host of great questions about the best way to prepare for applying for a VA loan. That made me think: Just a little prep work before you start the process really can make a world of difference.
It’s certainly not necessary – the loan specialists at Veterans United walk veterans through the process, one step at a time, from that first phone call all the way to closing day. Now is the right time to get started on your VA home loan, but gathering some financial documents and other information at the outset can help you be even better prepared and in the best position possible to maximize the benefits earned by your service.
Let’s take a look at some of the documents you need.
Service and Credit
Certificate of Eligibility: This formal VA document determines what VA loan entitlement you have, if any. You don’t need to have your Certificate of Eligibility in hand to start the loan process. In fact, it’s something lenders can typically obtain for you as part of the preapproval process. But if you want to be sure about your eligibility, you can usually get yours online using the eBenefits portal.
The Basics: Make a list of the addresses you’ve lived at in the past few years, along with your current phone numbers and email addresses. Maybe you’ve been out of the service for a decade (or more) – do your homework ahead of time and write down the years you served in which branch(es), and dig out any paperwork the military gave you. It could come in handy later.
Credit report: If you’ve been paying your debts on time, keeping up with credit card payments and are living within your means, chances are you’ve got a solid credit score. Even people with great credit usually have room to improve, which can help you land even better rates and terms. Get free copies of your credit reports from Annual Credit Report.com and scour them for errors. (If you do find errors, get started on correcting them today, as they often take a long time to dispute.) You won’t be able to see your credit score, but that isn’t a big deal. The scores consumers can pay to see can and often are different from the ones lenders see. Lenders get scores that are weighted more toward homebuying-related factors. The cleaner your report, the more likely you’ve got a score worth bragging about.
Income and Banking
Proof of income: Dig up your most recent paystubs — two months’ worth should do if you’re paid a salary. If your pay wavers from paycheck to paycheck, you may have to provide additional information. If you don’t have these on record, try your company’s human resources department.
Most recent bank statements: Print out every page from your most recent bank statement. Lenders will want to get a look at your assets and make sure you’re in a financial position to afford a mortgage and the expenses that can come with homeownership.
Estimated Monthly Debt: An important financial consideration for VA borrowers is debt-to-income ratio, better known as DTI. In order to calculate your DTI, your lender needs to know your monthly income, as well as any outstanding debts you have, such as a car payment or student loans, as well as childcare costs, child support and income tax repayment plans.
Bankruptcy History: Have you ever filed bankruptcy or lost a property to foreclosure? Having all of that paperwork handy up front can help save some time down the road.
W-2 statements: Employment records can be handy. Having a couple years on the same job is the gold standard, but you don’t necessarily need to have been in your current position for that long. The key for lenders is continuity from one job to the next; lenders don’t like to see gaps in employment. Gather your W-2s from the last few years if possible.
Going in Cold
Remember, you don’t need any of this documentation on hand to start the loan process. Most people don’t have all of this handy at the outset, and Veterans United loan specialists can often help you track down documents and other necessary information. But if you’re a planner or looking to close as quickly as possible, getting together some of this information before you contact Veterans United can certainly help your chances.
Photo courtesy NASA Goddard Photo and Video