“Where do I start? What do I do?”
First-time homebuyers can be understandably confused about starting the mortgage process. The VA loan program, with its unique requirements, can be even more elusive.
But with the right agent and a skilled lender at hand, the VA loan process can be as simple as completing five basic steps. Let’s break those VA loan steps down for our military buyers:
Prequalification is the first evaluation of loan eligibility by a lender. A loan officer asks several questions regarding financial status and provides an initial assessment of loan eligibility. It’s a quick process and can generally be completed over the phone in a matter of minutes.
Preapproval takes place after prequalification and is a more in-depth look at a borrower’s profile. In order to receive VA loan preapproval, borrowers must complete an application and provide additional documentation (pay stubs, tax returns and/or bank statements). A lender like Veterans United will also work to obtain a borrower's Certificate of Eligibility, which isn't needed to start the loan process.
Preapproved borrowers often receive a preapproval letter, which can be included in an offer to purchase real estate. Since most sellers prefer to work with preapproved borrowers, a preapproval letter can provide great leverage during negotiations.
After a VA borrower selects a home, the lender schedules an appraisal. This process is totally separate from a home inspection, which borrowers should certainly pursue independently.
The VA appraisal ensures that homes meet the VA’s Minimum Property Requirements. Any repairs necessary to bring the home up to VA standards must be completed before the loan can close.
The VA appraiser will also place a value on the home. That value is extremely important for the fate of the loan. VA loans can’t exceed the appraisal value, so a low appraisal value could send buyers back to the negotiation table. Sellers can either lower the purchase price to equal the appraisal value, buyers can make up the difference in cash, or the parties can walk away from the deal.
Following the VA appraisal, all loan documentation is sent to a mortgage underwriter. The underwriter conducts a careful review to ensure that both the applicant and the property meet all VA and lender guidelines. Any shortcomings must be corrected before the underwriter can issue final VA loan approval.
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Once the appraisal is complete and negotiations have wrapped, borrowers move to the closing stage of the process. Lenders schedule a closing date with the buyer, seller and title company.
Shortly before closing, buyers will complete a final walk-through to ensure the property is in agreeable condition. Buyers and sellers then gather round the closing table to sign the necessary documents, pay the necessary fees and finalize the property transfer.
Wrap your fingers around those shiny new keys -- it’s time to celebrate! Congratulations!
Military buyers quickly realize that the VA loan is a special financing tool with unique requirements. It’s vital for buyers to pay special attention to a lender’s experience with VA financing.
The VA loan process involves a number of carefully planned steps, each of which must be meticulously completed. One misstep can sidetrack the entire purchase, so make sure your lender has the necessary VA loan expertise.
We recommend our partners at Veterans United Home Loans, the nation’s No. 1 dedicated VA lender. Loan specialists are available 24 hours a day, seven days a week to better serve troops overseas. Contact a Veterans United representative at 855-870-8845. You can also check out this really great guide on the VA loan process here.