A commonly asked question about VA mortgage loans involves the prep time leading up to the loan application. How much time does a borrower need to get ready for the mortgage loan?
In general, you should spend 12 months at a minimum preparing for your application. This prep time is helpful for saving up money for appraisal fees, closing costs, plus any down payment you might wish to make. While it’s true that VA mortgage loans don’t (in general) require a down payment for qualified borrowers, those who do put money down save money on the VA loan funding fee and the general cost of the loan over time.
That 12 months may seem like a long time, but when checking your credit reports, reviewing your FICO scores, and reducing your unnecessary lines of credit, you may find evidence of identity theft, errors in your credit reports, or other issues that require attention and time to correct.
The credit reporting agency will need time to review your case should there be an issue to report, and you will need added time to fill out any required paperwork to clear up the problem.
Another reason why it is a good idea to prepare a year in advance of your application? Lenders want to see a solid 12 months of on-time payments on your financial obligations leading up to your credit application. Coming to the VA loan process with anything less than this could put loan approval in jeopardy, so it pays to carefully monitor your payments in advance.
Another thing to keep in mind during your VA loan planning phase? Being careful not to apply for new lines of credit in the year leading up to your application. New credit lines during this time are discouraged, borrowers should be working on reducing the amount of debt rather than increasing it. Your lender will examine your debt-to-income ratio to see if you can afford the loan.
And finally, giving yourself plenty of preparation time reduces the stress of trying to cram the saving, credit report checking, and financial due diligence into a short period of time. Your home purchase is a major financial investment, it’s good to have plenty of time to get ready with a budget, all your paperwork organized and in order, etc. Once you begin the house hunting process you might be surprised at how quickly you find suitable properties; in some cases it may be difficult to decide between one or more homes on your real estate radar, but if you’ve taken enough time to prepare you won’t have to add the stress of adding the tasks mentioned above to your to-do list.