Prequalifying for a VA Loan in Colorado

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Before you look for a home, consider getting prequalified for a VA loan in Colorado. A prequalification is a preliminary estimate of what you may be able to afford. It’s not an official approval and you’ll take further steps when you’re ready, but it’s a good start.

Prequalification shows you not only what you can afford, but also where you may need to improve your finances. Your findings tell you what conditions you must clear before moving forward with the home buying process.

It’s a great way to see if lenders like your qualifying factors, such as your credit score, income, assets, and debt-to-income ratio or if you have some work to do before applying for a VA loan.

Consider it the preliminary step to preparing for homeownership.

Prequalifying Differs from Preapproval

Note that prequalifying isn’t the same as a preapproval. When you’re ready to look at homes, you’ll move onto the next step – preapproval. It’s a more official step as underwriters verify your qualifying factors and issue a letter stating their intent to lend you money.

The pre-approval is what sellers and/or realtors want when you look at homes and is important to do before you start looking. A preapproval letter is good for 90 days, in most cases and it tells everyone that you can afford the home and are a serious buyer.

The Prequalification Process

The prequalification process is all about estimates. You provide an estimate of your income and debt by answering simple questions. We’ll talk about your credit score too. Lenders use this information to determine how much you may be able to borrow. The questions cover the following:

• Current and past employment
• Current monthly income (before taxes)
• Average income for the last 2 years
• Total monthly obligations
• Total assets including bank accounts, real estate, and retirement funds
• Any federal debts, collections, or other derogatory credit
• History of homeownership

It’s important to tell the truth during this step. While lenders don’t verify any of your information during the prequalification process, they do during the preapproval process and loan approval. Giving the facts now helps you get the right answers.

You’ll know what lenders think of your financial situation and how much they’d be willing to lend you as long as you can provide proof of the details you provide.

Approval to Pull your Credit

As a part of the prequalification process, underwriters need your credit score and history. Your credit report shows what debts you have, and how well you pay your bills. Lenders use this information to make lending decisions.

Pulling your credit dings your credit report by a few points, but nothing that will damage your score. VA lenders look for a 620 credit score. If you don’t have at least a 620, we’ll discuss ways to improve your score and your chances of approval before you officially apply for a VA loan.

I use the information provided to get you a prequalification. This starts the home buying process. You’ll know an estimate of what you can afford, and can think about your next steps. If you’re ready to move onto the preapproval process, we’ll get right into it, getting you on your way to homeownership.

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