VA Loan Application

• Current copies of your W2 statements for the past two years, so that we can confirm your gross household income.
• Copies of your pay stubs for the past two months.
• Any statements that document other assets, such as current bank statements, savings accounts, stocks or bonds, and any other forms of income or assets such as alimony or trust funds.
• If you are self-employed, you will need copies of the most recent two years of consecutive tax returns

Critical Refinancing Documents

When applying for a VA Refinance mortgage, you’ll need to provide a current mortgage statement, a copy of your most recent settlement statement, a copy of your note, and – if possible – your lender’s policy of your title insurance. Naturally, it’s critical that such documents be accurate and as current as possible. Having your critical documents in good order will help us finalize your VA loan as quickly as possible.

Your Debt-to-Income Ratio

There are two ratios that lenders use to determine whether you qualify for a mortgage or home loan. First is the Housing Expense Ratio, using the total of the principal amount and the interest rate on your mortgage, plus real estate taxes, home owner’s insurance and mortgage insurance (if necessary). This is your Total Housing Debt, and it should not be higher than 30% of your total gross monthly income. So if your gross income is $5,000 per month, your total housing debt should be no higher than $1,500. The second ratio is your Debt-to-Income. First, add up all recurring monthly debt – including credit card payments, loans, alimony and so on. Then add your monthly recurring debt to your total housing debt. The total should not exceed 40% of your gross monthly income. Using our previous example, if your gross monthly income is $5,000, the total of your housing debt and your recurring monthly debt should not be higher than $2,000.

Home Warranty

We recommend purchasing your home warranty before you get your new home appraised. The last thing that home buyers want to worry about is what could possibly break or malfunction in their new home after they purchase it. That’s why it’s a good idea to get a home protection plan, or home warranty, to cover such items as air conditioning, dishwashers and other appliances, the furnace and water heater, ductwork, garbage disposal and inside plumbing stoppages, as well as ceiling fans, electrical systems, ovens and telephone wiring. Outdoor items such as sprinklers and pools are usually not covered, and not all warranties cover every appliance. Home warranties usually range between $250 and $400, depending upon coverage, and policies are usually prepaid for a year in advance at which time they can be renewed. A good home warranty is a wise investment, because it protects you against the expense of unexpected home repairs that may arise in the first few years of home ownership.

Home Inspection

Recommended but not required, a thorough, professional home inspection (by your own inspector) will alert you to any improvements or repairs that need to be done to the property you intend to purchase. In a worst case, you’ll be alerted to any major defects that might cause you to change your mind about buying the house. A thorough home inspection is a complete visual examination and report on the condition of all major systems in a home. Every inspection should include an evaluation of at least the following items:

• Foundations
• Plumbing and electrical systems
• Doors, ceilings, walls and floors
• Roof, heating and air conditioning systems

At the same time, the home should be checked for any hazardous materials concerns – such as asbestos – and the inspector should also check for proper insulation and ventilation. Having said that, it’s also important to approach the inspection process with realistic expectations. You can’t expect a 30-year-old home to be as pristine as a brand new one, but it is fair to take any serious faults into account as part of your price negotiation. The ultimate goal is that you be made aware of any work that may need to be done once you own the house.

Title Insurance

Title insurance is extremely important because it is your guarantee that you hold clear title to your home and property at the time of purchase. Title insurance protects you against loss arising from any problems connected to the title to your property, and all mortgage lenders require title insurance for the amount of the loan. For added security, buyers can protect their equity in the property by adding an owner’s title policy for the full value of the home – usually at a small additional cost. One thing to remember: if you refinance your home, you will most likely be required to purchase a new title insurance policy, because the original policy terminates when you pay off the mortgage.

Home Owner’s Insurance

Buying home owner’s insurance is like anything else: doing your homework before you buy will always pay dividends. Choosing the right kind of home owner’s insurance from the right company is important. Here are some tips to help you in the process:

• First, look beyond the advertising. Just because a company has the advertising budget for big mailings with flashy brochures, doesn’t mean it’s the best. Always do your homework, and don’t buy from the first company you see.
• Check your state’s website because they generally provide good information on what your home owner’s insurance will cover in terms of local weather conditions, state codes and zoning issues. Also, many states list consumer complaints against particular companies from local residents.
• Make sure the coverage is appropriate for you, by comparing the company’s areas of focus with the needs of your particular home and geographic area.
• Familiarize yourself with the claims process. It may turn out that making a repair yourself will be less expensive than an increase in your premium if you file a claim.
• Finally, get a home inspection by a certified professional, and make sure that any potential problems he discovers are covered by your policy – before you commit.