First time homebuyers: What the veterans need to consider

Veteran LoanVA loans guidelines are designed to help veterans and servicemen realize their dream of owning a home. From the provision of low interest rates, the option to refinance a non-VA loan into a VA loan and no-down payment, it facilitates their home-buying journey. If you have, however, refinanced your loan through the cash out refinance program, lenders may still monitor your credit score, debt-to-credit ratio, home appraisal and verify your income. Consequently, there are things you need to take care of; having your finances in order is anyway a good thing. Let’s see six major things, through this article, that you need to pay attention to:

Credit Report: Rectify Incorrect Information
Your credit report reflects your financial health and worth as a borrower in the market. It is, therefore, indispensable to peruse it regularly to identify and rectify any negative or inaccurate information blemishing it. Remember, your loan approval and its interest rates depend on the information that your creditors provide to lenders.

Credit Applications: Do Not Apply for Many
When people apply for big loans such as mortgages, car loans or student loans, they authorize the lenders to press a hard inquiry that means lenders check your credit report in detail. Hard inquiries also harm your credit score by lowering it a bit. Given this, you should refrain from applying too many loans or credit card applications at the same time.

Late Payments: Avoid ‘em
One of the worst things you would want is your payments accounts being forwarded to a collections agency to look after. This, usually, happens when borrowers remain delinquent with their debts and a collection agency is contacted to deal with their accounts. The negative part is that your credit score takes a hit.

Credit Utilization Ratio: Keep It as Low as Possible
Among the various factors that determine your credit score, one is credit utilization that falls under “Amounts Owed” category of the FICO scoring model. Credit utilization relates to how much credit line you have left to use. A low credit utilization increases your score, whereas a high credit utilization ratio decreases it. According to Consumer Financial Protection Bureau, keeping your credit utilization below 30 percent is a good practice.

Monthly Income Sources: Prepare Your Answers
Besides evaluating your income, its sources — be ready to explain from where your income, salary and others, is coming from–and stability, lenders also pay attention to the relationship between your income and expenses. More often than not, your fixed housing expense should not exceed more than 28 percent of your gross monthly income.

Just like USDA loans have pros and cons, VA loans come with a few advantages and disadvantages. The best, however, is that VA loans give the facility of zero down payment and have interest rates lower than conventional loans. Despite these benefits, you have to pay an upfront funding fee, and if you opt for a cash out refinancing program under it, you need to keep your credit score healthy and debts low, as creditors will check your credit report. When in doubt about elements that you need to pay most attention to or things you need to follow when considering a VA loan, it is best to consider a loan officer. These professionals have tie up with banks and years of expertise to help you get the best solution.


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