It’s an extremely common question for many first-time homebuyers: “How long will it take to buy a home with a VA loan?”
And it’s a tough one to answer. Buying a home is a multi-step process, and everyone’s homebuying journey is different. But there’s a lingering myth that VA loans take forever to close. And that’s simply not the case.
Most VA loans close in 30 to 45 days, which is standard for the mortgage industry regardless of the type of financing.
In fact, dig into the numbers a bit and you don’t find much difference between VA and conventional loans.
For the last eight months of 2014, the average conventional purchase loan closed in 38.9 days, compared to 39.6 days for VA loans, according to Ellie Mae.
Let’s review five key factors that could affect the timeline of a VA loan purchase. Knowing the details of the VA loan process is important for you and your customers.
Factor #1: Are you preapproved?
PREAPPROVAL: It’s one of the best ways to shorten the waiting game.
A “preapproved buyer” has met a lender’s basic requirements, and is likely to obtain a loan, provided that certain conditions are met. VA loan preapproval shows that a buyer is probably going to obtain financing, which eliminates a hefty amount of uncertainty and delays.
When should a buyer get preapproved? As soon as possible. Most lenders recommend getting preapproved months before starting the house hunt. That leeway gives potential buyers plenty of time to clear up eligibility problems before falling in love with a home.
Factor #2: Buyer/seller timelines
When do you want to move in? When does the seller want to move out?
Just because a home is on the market doesn’t mean the sellers are ready to move immediately. Perhaps the sellers want to stay until the end of the school year. Maybe they have to wait until their new home is complete.
And perhaps the buyer is in the same boat. Buyers and sellers have to agree on a closing date, and that date could either speed up or delay the entire process.
Factor #3: How long will the VA appraisal take?
A home purchased with a VA home loan is subject to a VA appraisal. And only a VA-approved appraiser can perform a VA appraisal.
VA lenders are responsible for ordering VA appraisals, which are completed in 10 days on average. But as VA appraisers are in short supply in rural areas, buyers should expect the VA appraisal to take longer in sparsely-populated locales.
Factor #4: Will any repairs be ordered?
The results of the VA appraisal can also either hasten or hinder the closing process.
If the VA appraiser makes a home “subject to” repairs, those repairs must be completed before the loan can close. Extensive repairs could push the closing date back by weeks or months.
The appraisal value can also affect the final timeline. VA loans can’t be issued for more than a home’s appraisal value. If the appraisal value falls below the purchase price, buyers have some thinking (and some delays) ahead. Buyers can either:
- Ask the seller for a price reduction
- Ask for a Reconsideration of Value
- Make up the difference in cash
- Walk away from the purchase
Factor #5: How long will underwriting take?
Post-appraisal, any VA loan file is subject to final underwriting. If an underwriter needs additional documentation or notices an eligibility problem, the closing date could change.
A word of advice for buyers: You’re extremely close to the finish line, so try not to panic. Be as helpful as possible during this phase, and you’ll likely be in good shape for a quick close.
Conclusion: Be prepared and give yourself wiggle room!
At the end of the day, it’s very difficult to predict how long the purchase process will take.
The lesson? Control what you can:
- Get preapproved
- Work with an experienced VA lender
- Choose a good agent
- Select a home in good condition
…and let go of what you can’t. Be flexible, give yourself wiggle room and get ready for an exciting journey!
For more information on things to avoid while in the contract phase, check out this contract guide.