Acquiring a VA loan isn’t much different than acquiring any other form of mortgage. For homebuyers, the VA loan consists of five fundamental steps: preapproval, property shopping, contracting, underwriting, and closing.
This approach often leads in a more secure financial future, thanks to the use of possibly the most powerful mortgage product on the market.
Here we explain the step-by-step process of obtaining a VA loan and how Veterans may make the most of their VA loan benefit.
Getting pre-approved for a VA loan is an important first step. Preapproval is your mortgage lender’s initial approval and provides you with a comprehensive understanding of your purchasing power.
Preapproval also lends weight to any offers you make on a house. In today’s real estate market, house sellers anticipate receiving bids from preapproved purchasers. Some sellers may not even consider your offer unless you provide a copy of your preapproval letter.
During the preapproval process, your lender will consider your credit, money, job condition, service history, and other factors. Lenders use the Certificate of Eligibility to authenticate your service history. You do not need a COE to begin the procedure because lenders may often get this paperwork on your behalf using only your date of birth and social security number.
W-2s, recent pay stubs, and bank statements are common examples of additional papers. This phase in the VA loan process might take minutes or hours, depending on your lender’s paperwork requirements.
Document requirements vary depending on your income level, military service history, and other factors.
If you have any questions regarding the paperwork requirements, speak with your loan officer. The earlier you return this papers to the lender, the faster they can check the information and finalize your loan preapproval.
It’s easy to continue right where you left off!
With your preapproval letter in hand, you’re ready to begin the most exciting aspect of the VA purchase process: house hunting.
Finding a real estate agent that understands VA financing is crucial. These are more specialized home loan choices, and certain properties may be better suited for VA loans than others. Furthermore, VA loans provide significant savings on closing fees, and veteran-friendly realtors may assist purchasers in taking full advantage of these benefits.
Through SDVA Homes Realty, our global network of brokers who understand the needs of military purchasers, we help buyers connect with VA-savvy realtors.
VA loans, like other government-backed mortgage alternatives, are designed for the purchase of principal residences in which you expect to live full-time. Veterans can purchase a multi-unit property (up to a four-plex) as long as one of the units will be their primary residence.
Homes should typically be in decent condition. The VA appraisal process involves inspecting the residence in light of some basic property condition standards known as Minimum Property standards (MPRs). MPRs provide a high-level overview rather than a detailed evaluation of a residence. The VA does not require a home inspection, although they are usually always a good investment.
If the appraiser notices any MPR concerns, they may need to be addressed before the loan is closed. VA purchasers can request that sellers pay for repairs, and they can even bear the costs themselves if necessary.
Purchasing a fixer-upper is doable with a VA loan, but it might complicate the VA appraisal process. If you are looking for that sort of property, speak with a loan professional in further detail.
Once you’ve found a property you love, the next step is to make an offer on it.
Your loan officer and a reputable real estate agent can assist you in preparing a compelling bid.
Your realtor will look at recent comparable house sales in the area to help you determine a buying price. Pricing and negotiating methods vary based on the real estate market, the specific house, and other factors.
Prior to making an offer, veterans should consult with their loan officer and agent about closing expenses. VA loan closing fees might vary based on a variety of criteria. Buyers can request that sellers pay all loan-related closing costs as well as up to 4% in concessions, which can be used to offset escrow fees and other expenditures.
Most potential VA purchasers will submit a contract with multiple contingencies that address particular circumstances leading up to the loan closing. Typical contingencies include the right to a home inspection, the processing of repair requests, and the number of days the buyer has to acquire financing, the needed earnest money deposit, and more.
Every VA contract includes additional security for the Veteran’s earnest money during the VA assessment. A unique addendum assures that VA buyers receive their earnest money returned if the property’s appraised value is low and the Veteran decides to pull out of the transaction.
VA purchasers may need to go through several rounds of negotiations before reaching a purchase deal. Keep in mind that certain markets are harsher than others. You may have to make many bids on properties before finding one that works. Each buyer-seller arrangement is unique.
The VA loan procedure begins after you are under contract. Your loan team forwards your contract and documents to loan processors and underwriters, who verify the loan and home work for the borrower, lender, and VA.
At this step, the lender will also request a VA appraisal. Homebuyers normally pay for the appraisal upfront, though they might seek repayment from the seller at closing.
The VA appoints an unbiased third-party appraiser to determine the property’s worth and condition. Lenders have no influence over the appraiser, the appraisal process, or the property valuation.
When determining the fair market value of a house, an appraiser will consider recent comparable home transactions. Buyers will expect the house to appraise for at least what they have offered to pay for it. If an appraisal falls short, the buyer and seller must renegotiate the purchase price or cancel the deal.
If the appraiser observes that repairs are required to fulfill the VA’s Minimum Property Requirements, purchasers can request that the seller pay for them, or they can shoulder the expenses themselves in certain instances.
Your loan team will most likely have questions and requests for further information as the appraisal process progresses. The earlier you respond to your lender with answers and information, the smoother this procedure will proceed. If you have any concerns or need more information regarding an underwriting request, speak with your lending team.
After clearing the appraisal and underwriting, you will be given a “clear to close,” indicating that you are ready to proceed to your closing date. Being “clear to close” does not guarantee finance, but you are almost there.
VA purchasers will get a Closing Disclosure shortly before the planned loan closing. This document enables purchasers to compare their final closing costs and loan information to estimates obtained earlier in the process. Typically, your loan officer will examine this document with you. Please inquire if you have any queries concerning your prices, fees, or anything else.
You may also do a final walkthrough of the property. A final tour allows you to double-check any repairs, request removal of anything you don’t want to leave behind, and more. If you encounter any issues, please contact your real estate agent and lender as soon as possible.
On closing day, you should anticipate signing a lot of papers and then receive the keys to your new house.
A solid grasp of the VA loan procedure will allow you to make the most of your budget and this really valuable advantage. Contact an SDVA Homes loan representative to begin your home-buying adventure.
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