For those that have been here before welcome back. We are your hosts, BJ 'n Cindy. We own and operate this site as well as the sister sites. Buying a home is one of the biggest decisions you’ll ever make, and it can be especially meaningful for veterans. That’s why getting it right is so crucial. If you’re a veteran looking to buy a house, here’s what you need to know.
Credit Scores, Debt, and Affordability
The financial side of the home-buying equation is complex. When it comes to credit scores, you want to make sure yours is in tip-top shape. While it’s true that the federal government doesn’t set a mandatory minimum credit score requirement for VA loans, many lenders do. Additionally, other kinds of loans usually have a minimum somewhere in the 580 to 620 range, according to Experian, barring a few exceptions.
However, in all cases, higher credit scores are better since they help you get better interest rates. If you’re looking to buy a home, review your credit reports and dispute every error so you can get the highest score possible.
After that, take a look at your debt. Generally, lenders prefer debt-to-income ratios of 36 percent or less. If yours is above that, pay down your debt to get a better ratio.
If you want to determine how much you can afford, TIME notes that common guidance is to ensure your monthly mortgage payment doesn’t exceed 28 percent of your gross income. However, it’s important to note that homeowner’s insurance and property taxes are packaged into your mortgage payment, so you’ll need to account for those costs as you do the calculation.
Home Loan Types
Before you buy a house, you’ll need to figure out what type of home loan best meets your needs. Generally speaking, mortgages fall into five main categories, including:
- Conventional
- VA
- FHA
- USDA
- Jumbo
There are also two kinds of interest rates - fixed-rate and adjustable-rate – as well as four common term lengths (10, 15, 20, and 30 years). While that can be a lot to review, it’s worth doing the work. That way, you can decide which option is right for you.
Once you choose a loan type, you’ll need to complete the preapproval process with at least one lender. However, you may want to do it with a few, allowing you to compare the interest rates and other terms to figure out which option is best.
Property Searches
While doing an independent property search is an option, partnering with a realtor is typically a better choice. Realtors understand the local market conditions, as well as the home buying process itself, making them valuable assets.
When you speak with a realtor, be clear about your budget. Also, outline any must-haves – such as target neighborhoods or required home features – along with any deal breakers.
Additionally, give your realtor feedback on the properties they present. That extra information helps them narrow down the options, making it easier to find the right home for you.
Offers, Negotiations, and Closing
Once you find a property you’re interested in, you’ll start the buying process. Usually, that involves:
- Making an offer (including special requests, like asking the seller to cover closing costs and contingencies)
- Negotiating to find an agreeable price
- Formal appraisal
- Home inspection
- Another round of negotiations
- Settling on an acceptable price and other requests
- Finalizing your mortgage
- Signing closing documents
Once the documents are signed, you’ll get the keys, which means the final action to take before moving in is getting the locks changed out (the previous owners won’t need access inside now). Find a professional by searching for a local locksmith online and using a service directory like Angi to make your choice. Then, with new locks in place, the house is officially yours!
Written By Kelli Brewer