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When you enlist, you’re signing up to support your country for a period of time. In return, you’ll be provided housing and benefits as part of your service. If you choose to leave the military after your contract ends, you cannot terminate your lease on that property or any other benefits associated with the mortgage. This means it will remain your primary residence until the end of your loan term and will continue to be rented out afterward at no extra cost. For this reason, getting a home loan when you’re a veteran is especially advantageous – not only do these loans have lower interest rates than most other mortgages, they’re also easier to get approved for than normal. Here are some helpful tips on how to get your lender interested in meeting your needs and offering you a mortgage accordingly:
Ditch the Debt
Before you even start the home loan application process, you should consider and potentially ditch any existing debt on your credit report that may be keeping your loan application from being successful. While it is your right to have any debts you want on your credit report, lenders typically will not grant you a mortgage if they see any existing debt on your credit report, so it’s important to be proactive here. To help you learn more about how you can best get rid of any debts from your report, you can visit Resources and Research at the end of this article. Once you get a better idea of what accounts are negatively impacting your credit score and how you can start to get them removed, you’ll be well on your way to getting approved for a mortgage more easily.
Know What You’re Looking For
When looking for a new home, it’s helpful to be realistic as to what you can afford and what you’re looking for in a house. Ideally, you’ll be able to find a mortgage that works for both your budget and your needs, which means having an idea of what you’re looking for in a potential house helps you narrow down your search and find the right place. Understanding what you can and can’t afford will help you better understand what you can actually qualify for. If you’re on a tight budget, you may be looking at a house with a lot of extra “extras” that you can’t really afford, while a house that is more expensive may not be able to accommodate everything you want. It’s important to try to find a middle ground that allows you to get what you want in a house, but is within your budget.
Have a Good Credit Score
Your credit score is used by many lenders to gauge your creditworthiness, so having a good score will help your loan application get accepted much more quickly. Ideally, your credit score should be around 700 or higher – but be aware that some lenders will offer loans with lower interest rates if you don’t have quite as high a score. If your credit score is below the minimum, there are several things you can do to improve it and hopefully boost your score. Some of the most effective ways to improve your score include making on-time payments, keeping balances low, paying as much as you can afford each month, and keeping your utilization (or the amount you owe) low.
Get Pre-Approved Before Buying a Home
You may be surprised to hear that getting pre-approved for a loan is a huge advantage for veterans looking to get a mortgage. The purpose of pre-approval is to show the lender that you have enough income to pay the loan amount in full once it’s closed, which means the lender has a better idea of what to expect from you and can be more certain of your ability to make payments on time. Pre-approval can also help you better choose the right home by narrowing down your search to only those that are in your price range and that you would be willing to live in. If you get pre-approved before shopping for a house, you may be able to make a decision much sooner and get your new home sooner, too.
Don’t Be Afraid to Shop Around
When you first start looking for a home, don’t be afraid to shop around and ask your current lender what they would charge to approve you for a new loan. Often times, your current lender will have a lower rate or better features that you don’t even realize you have that could help you get approved for a mortgage. By switching lenders, you can see what different features lenders may offer you that you’re currently not taking advantage of, like a lower interest rate or a better loan repayment program. It’s worth switching lenders just to see what different deals you could potentially be missing out on!
Getting a mortgage when you’re a veteran is a great way to purchase a home with low interest rates and a very low down payment. Getting pre-approved and being willing to shop around for the best loans and rates is key to finding a mortgage that works with your finances. If you’re eligible and looking to apply for a mortgage, we recommend making sure your application is as eligible as possible by meeting the minimum requirements. While many borrowers overlook this aspect of their mortgage application, it could make the difference between being approved or denied.