If you are thinking about shopping for a home, there’s one document sellers and realtors want to see from you – the pre-approval letter.
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This simple paper lets sellers and realtors know that you are serious about buying a home. It also tells them that you are qualified for the loan. Without this letter, a seller doesn’t know if you are just a nosy neighbor trying to see what other homes in the area are like or if you are someone that is trying to buy a home but really doesn’t have the financial means to do so.
Needless to say, getting pre-approved is a crucial step in the process. Because of this, it’s important that you know what documents you need to get a pre-approval.
Gathering Your Documents
In order to get pre-approved from a VA lender, you’ll need to prove that you can afford the loan. You do this by providing the following documents:
- Paystubs that cover the last month of employment
- W-2s that cover the last two years of employment (from all jobs)
- Tax returns from the last two years if you are self-employed
- Proof of social security income or disability income
- Proof of pension or other retirement income
- Court ordered divorce or child support documents
- Last two months of bank statements
- Copy of your driver’s license
- Copy of Form DD 214, request for your Certificate of Eligibility, and/or a Statement of Service from your commanding officer
The lender will take these documents and evaluate them along with the loan amount you are requesting. If you are just testing the waters to see how much loan you can afford, the lender will let you know the maximum amount of loan you can borrow based on the qualifications you provided.
Keep in mind that you don’t have to borrow the full amount that the lender offers. Typically, they will qualify you for the most money that you can borrow. This means that your debt ratio will likely be 43% with the maximum loan amount.
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You aren’t under any obligation to take the full loan amount. You should only borrow what you are comfortable paying back in a timely manner.
You should keep in mind the things that may change in your future. Remember, a mortgage is for 30 years in some cases. What do you see changing in those 30 years?
Will you cut down to one income because you plan to grow your family? Will you go back to school or start your own business? While we know that no one can predict the future – at the very least, you can determine what goals or dreams you have now and see how they would affect your ability to pay the loan in the future. This way you can avoid taking on too much mortgage and finding yourself in over your head in debt.
The documents you provide for the VA loan approval are basically what the lender needs for final approval. Once the underwriter digs a little deeper before giving you a clear to close on a loan, he/she may ask for a few more documents, but typically not very many. The remaining conditions on a home loan usually have to do with the home itself. The lender needs to know that the home has enough value in it to be collateral for the loan. They also need to know that the title is free from any liens or ownership issues.
If everything comes together, you can qualify for a VA loan and get your pre-approval. Your lender will state the conditions that the approval is contingent upon, which again, usually have to do with the house itself rather than the borrower.
Meta Description: The VA pre-approval is a powerful step when shopping for a home. It can help you get your foot in the door and maybe even win a bidding war against another buyer.
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