Serving in the military or retiring from the service can be a blessing, but at times you might encounter several challenges. Some people have been forced to file bankruptcy due to financial obstacles, and that ruins your credit score. That credit score has a huge impact, especially when applying for a VA loan. Lenders take your credit report into account before granting you a loan. If your credit is not perfect, you can still secure a VA loan but with higher interest rates. Here are six tips you need to help you get the loan.
1. Be Aware that VA Home Loans are not Given by Veterans Affairs
The most important fact to know is that VA home loans can’t be acquired from the VA itself. They just provide a guarantee on a large part of the loan. In short, they give the lender some security that in case they fail to pay the loan, the VA will take care of the loan.
However, you will still have to talk to the lender. Find one that specializes in helping veterans secure VA loans at the shortest time possible. One of the VA home loan credit requirement is a certificate of eligibility (COE) which dictates whether you qualify for a VA-backed loan or not.
2. Pay all Your Bills on Time
Take care of your bills and pay them on time. The utility bills and house rent should come first. Paying your bills on time contributes to 35 percent of your score, which is easier to maintain.
Make sure that regardless of your financial situation, all the important bills are paid on time. The more you pay on time, the more your score will rise, and maybe after a while, your credit score can change for the better and help you get that VA loan easily.
3. Know that Your Credit is Not the Determinant
There is good news! Acquiring your VA loan doesn’t depend only on your credit score. The lender will consider a couple of other things like:
The amount of debt in your name
How long you have worked under your employer.
How many times you made late payments.
For instance, if your credit score is low, but your payments have never been short, you can have an advantage over the person with a 630 score. Bottom line, don’t assume you don’t deserve a VA loan because of your credit score.
4. With a Bad Credit, You May Also Qualify for Other Home Loans
VA-backed loans are a perfect choice for the qualified ones, but they aren’t the only option for securing a home loan even if you have bad credit, especially if your down payment is amazing. As long as your credit score is over 580, you qualify on FHA loan.
If you have a credit score that’s above 620, boy, you might be lucky to get a conventional mortgage. Do you still think bad credit is that terrible?
5. Take Advantage of Your VA Loan Benefits
Bad credit is frustrating, especially when you intend to buy a home for your family. But as long as you are a veteran, you don’t have to worry. Qualifying for a VA loan makes it easier for you to get a loan without stellar credit.
Just be a little patient, do your diligence, and bring your score up with time to purchase the house you have always wanted.
6. VA-Backed Loans can be Used for Refinancing
The loan can be used to refinance another existing one. The VA supports two refinancing options.
If you have an outstanding VA home loan and wish to lower the interest rates, you can apply for VA streamline refinance loan. That way you will be able to refinance your other loan.
These six tips will help you get the VA home loan so that you can buy a home. But you can always talk to a Veteran United loan specialist to find out more.