Obtaining your first VA loan is an amazing goal and opportunity that allows you and your family to receive amazing benefits, including zero down and low-interest rates for your first home. The VA loan is critical to making these things a possibility for you and to assisting you in the purchase of your first home.
At The Reichert Mortgage Team, we are vastly dedicated to being a resource for all home buyers. However, we are owned and operated by a veteran who has been through the VA loan process himself, as well as assisted numerous vets and their families in securing beautiful homes across the front range. Our founder, Troy Reichert, has a special place in his heart for veterans, which is why he has dedicated so much time to understanding the VA program so that he and his team could better assist you along with your first-time home buying experience.
Because Troy and The Reichert Mortgage Team have such a rich history with the VA loan program and they care to deploy about assisting veterans in finding a home, they have developed this guide to the VA loan.
VA Loan History
The VA loan has a long history, dating back to 1944 when it was created as part of the original Servicemen’s Readjustment Act, more commonly known as the GI Bill of Rights. This legislation was signed into law by President Franklin D. Roosevelt and its objective was to reduce the barrier of entry to home buying for those that had served during World War II. These soldiers would have exclusive access to rates and benefits designed to make home-buying feasible for a young veteran after the war.
This legislation is still just as important today. After the housing crisis, VA loan volume has drastically increased, allowing military families relief in the form of lenient credit requirements and no money down. Without this program, many of these families that put their lives on the line for our freedom would not be able to afford suitable housing of their own.
What is a VA Loan?
A VA loan is a mortgage loan that is federally guaranteed by the United States Department of Veterans Affairs. Essentially, this means that the government is guaranteeing that they will pay back a portion of the loan in the event of default. In turn, since the government is willing to pay back a large portion of the loan when the homeowner stops making payments, lenders are more willing to give a loan. This is due to the level of risk. The lender needs to have assurances that they will receive their money back at some point. That’s why when you get a loan you can use your house or car as collateral, allowing the lender or the bank to recoup some of their losses with your hard assets. At the end of the day having a VA loan allows you to have no down payment, low-interest rates, and much more.
VA Loan Requirements
The U.S. Department of Veterans Affairs has strict guidelines designed to reserve the VA benefits for those that have served this country. Visit the VA for more information and find the service requirements for veterans and service members on active duty. Visit VA Loans | Frequently Asked Questions to learn more.
First Time Home Buyer VA Loan Tips
1. Use A Mortgage Loan Calculator
By using a mortgage loan calculator, you can quickly assess your ability to make a monthly mortgage payment. Although a VA loan is guaranteed by the government, it still is not smart to default on your loan. This can cause serious damage to your future creditworthiness. Use our free Mortgage Payment Calculator or Rent Or Buy Calculator to determine what options are available and best fit your financial situation.
2. Evaluate Your Creditworthiness
After assessing your ability to make a monthly payment, it is always important to understand your creditworthiness via your credit history. Although VA loans are drastically more lenient in regards to creditworthiness, the bank or lender is still lending you a large sum of money that they will not see back for nearly 30 years. Having a good credit score or taking action to improve your credit score can only help your case.
3. Job Gaps Can Be Red Flags
Just like bad credit, job gaps, or a lack of a job can hurt your ability to obtain a VA loan. These things are all red flags to the lender and make you less likely to obtain a loan.
4. Get in Contact With A Broker/Lender ASAP
Once you determine your ability to pay the loan and your overall creditworthiness, it’s time to find a broker or lender. A mortgage lender is a bank or entity offering a range of mortgage plans designed to assist you in home buying. On the other hand, a broker such as The Reichert Mortgage Team, is a business that typically has your best interest in mind. Mortgage brokers have the ability to shop around at different lenders or banks in order to search for the best loan to fit your needs.
5. Ensure You Have A Good Broker (Shop Around)
That being said, shopping around for a broker is always a good idea. Consider what you would do if you were buying a new car. You would most likely drive multiple models from multiple manufacturers. Why should home buying be any different, especially when a home is significantly more expensive than a car? As you shop around, take note of the brokers that look into your creditworthiness. Unfortunately, the majority of them will perform a hard credit check which will momentarily affect your score. However, most of the credit bureaus agree that shopping for a good broker is important and will lump these harsh checks into one negative hit at the end of the year.
6. Obtain Your COE
In order to qualify for a VA loan, you will need to obtain your Certificate of Eligibility (COE). To do so, visit eBenifits and fill out the forms. If you have any questions your broker should be able to assist you.
7. Get Pre-approved
After you have found a trustworthy mortgage broker that is willing to search for and or make a tailored mortgage that fits your needs, it’s time to get preapproved. Being preapproved allows you to move faster when you locate the home of your dreams. It lessens the chances of you losing a home because you are waiting on approval from the bank.
8. Find An Experienced VA Real Estate Agent
Now that you are preapproved, you can begin house shopping! Just as it was important to find a VA mortgage broker, it is also important to find a Real Estate Agent that has dealt with VA loans before. This allows you to ask them questions about what types of homes the VA will approve, how long the process will take, and so much more.
9. Remember That The VA is Not a One Time Benefit
When searching for homes, it is important to remember that the VA is not a one-time benefit. Therefore, if your current financial situation does not allow for your forever home you can still take advantage of the VA in the future.
10. Stick To Your Budget
Because the VA can be used more than once, it is also essential to make sure that you are not stretching yourself too thin. Between your mortgage broker, our mortgage calculators, and your real-estate agent, you should be able to determine a comfortable home price and budget.
Lenders For First Time Home Buyers | The Reichert Mortgage Team
As a veteran-owned and operated mortgage broker, The Reichert Mortgage Team is dedicated to providing both education and personalized loans to homebuyers. As a first-time homebuyer and a veteran, you are in a unique position to receive substantial assistance while purchasing your first home. Although there are many complicated steps, this is a monumental life step that should be celebrated and should be handled with careful consideration. The Reichert Mortgage Team has the experience and drive necessary to seek out the most optimal plan to suit your specific needs and wants. If you are ready to save large sums of money and obtain your first VA mortgage, contact us today.