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How to Use Power of Attorney to Purchase With a VA Loan

The concept of Power of Attorney (POA) is a well-worn one for military members and their families. This legal instrument allows a service member to designate a person who can enter into contracts and execute other civil, financial and legal obligations on their behalf, often because of a deployment.

VA home loans are absolutely on that list, and the time to get the ball rolling on one is right now.

The VA ensures that deployed service members and other veterans who can't be present to sign documents still have access to this cherished and increasingly powerful benefit. There are a couple different paths that the VA and approved lenders take, and your unique circumstances will likely dictate whether you need a General or a Specific POA.

Let's drill down a bit into those different documents to see which might make the most sense for you. This is also something your loan specialist will explain in detail.

VA Loans and General POA

This is a pretty common tool for military members. General Power of Attorney is, well, general in nature. It gives your designee power to act on your behalf for a broad array of needs, from filing taxes and handling banking transactions to entering into contracts.

Military borrowers will only need a General POA if they're actually able to sign all of the initial loan documents, which include the standard residential loan application and other critical forms, and later the purchase agreement. Even those who are deployed can have a spouse with General POA sign those loan documents and the purchase agreement on the new home.

But in the latter case, along with a few others, the military borrower is going to need a Specific POA to complete the loan process. The VA can actually deny a loan if a lender isn't able to properly verify this.

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VA Loans and Specific POA

Specific POA is also known as limited Power of Attorney. It's limited because the designee is only allowed to execute on a very specific issue that's detailed in a written document, like, say, a VA home loan.

So, for example, let's say you and your spouse decide to purchase a home after you're a few months into your deployment. Your spouse signs all the initial loan documents and the contract on a property using a General POA. But both the VA and the lender are going to need a Specific POA that provides specific details about the property, the price and some other important information.

In order to move forward with a VA purchase, your Specific POA must contain the following information:

  • Purpose: Clearly expressed intent to obtain a loan for purchase, refinance, etc.
  • Property Identification: Clear identification of the subject property for the loan transaction
  • Price and Terms: Clearly outline the sales price (if applicable), total loan amount and any other relevant terms to the transaction
  • Occupancy: Clearly identify the veteran's occupancy intention for the property
  • Entitlement: A lender may require clearly expressed intent to use all or a specified amount of entitlement

In addition, lenders will need to verify that the military member or veteran is alive and, if on active duty, not missing in action. This "alive and well" statement can be a simple phone call with a VA mortgage specialist on the day of closing or a formal letter from a supervisor.

Military members purchasing while overseas or otherwise relying on Power of Attorney is more common than many people realize. You can talk with a Veterans United loan specialist about your unique situation at 855-870-8845.

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