The process of securing a VA mortgage follows a path, to the mortgage process albeit with some variations.
Step 1; Establish Your Eligibility for a VA Loan
VA loans, which are supported by the Department of Veteran Affairs and offered by mortgage lenders nationwide begin with a requirement; demonstrating that you meet the criteria as a service member according to the VA.
Step 2; Explore Different VA Lenders
All VA-approved lenders are mandated by the VA to incorporate a COE in their loan evaluation process. The efficient way to acquire your COE is, through a designated VA lender. They can typically retrieve it within minutes using a portal provided by the VA for lenders.
Identifying lenders specializing in VA loans is straightforward. You can evaluate these lenders based on their rates and reviews that surface during your search.
Step 3; Choose Your VA Lender(s). Get Pre Approved
Many people start looking for homes before getting pre approved by a lender. This approach can cause issues if you struggle to secure a loan for your desired home.
Therefore the next step involves applying for a VA loan with one or more of the VA lenders you trust the most and obtaining pre approval.
Within three days of your application lenders should provide you with written quotes detailing rates and fees. It’s important to understand the closing costs associated with VA loans.
Once you have your COE (or have reviewed an existing one) lenders will request documentation regarding your residence, employment, income, assets and debts.
Timely submission of all requested documentation is crucial. All lenders must adhere to the approval guidelines, for VA loans; thus if one lender asks for upfront information they may need it later on.To apply for a loan you will need to provide the following;
Your credit history, along, with scores from Equifax, Transunion and Experian which are obtained when you authorize a lender to check your credit report.
Details of your residence history for the two years including ownership expenses.
Your employment history spanning two years (Note; Different requirements apply if you are on duty).
Copies of your filed tax returns for the two years.
W2 forms from all jobs held in the two years.
The recent statements from all bank, investment and retirement accounts for the two months.
The VA specifies that your total monthly housing cost plus other monthly payments such as car loans and student loans should not exceed 41 percent of your income. Certain exceptions exist to this guideline, which you can discuss with your lender.
If your separation date is within 12 months of your loan closing date you must provide proof of income in one of these ways;
Documentation showing re enlistment or extension with an ETS date than 12 months after the loan closing date.
A statement indicating your intent to re enlist along with confirmation, from your Commanding Officer regarding eligibility and belief that re enlistment will be approved.
Step 4; Select a Real Estate Agent
Once your VA lender receives your Certificate of Eligibility (COE) gathers all documentation and secures loan approval, from the lenders underwriter it’s time to seek out a real estate agent. Your agent doesn’t necessarily have to specialize in working with veterans or VA loans. Its important to introduce them to your lender.
This allows your lender to confirm with your agent the amount you are approved to spend on a home through VA financing.
Step 5; Search for Properties and Submit Offers
Your agent will guide you through viewing properties until you find one that interests you enough to make an offer. If you’re curious about the estimated mortgage cost for a property you can utilize a VA loan calculator.
The purchase agreement outlines the price you’re willing to offer any desired inspections or repairs the timeline for completing inspections and how quickly you can finalize the purchase.
It is advisable for the purchase agreement to be accompanied by a approval letter from your lender as evidence of your approval status, for the seller.Your pre approval guarantees that, as a borrower you are eligible for a loan but the actual loan approval is contingent upon both the borrower and the property meeting criteria. The pre approval letter typically states that final approval will only be granted after the lender reviews the purchase contract, title report, appraisal and any necessary inspections.
Step 6; Lender Conducts Property Appraisal and Other Evaluations
The lender will arrange for a VA appraisal of the property you intend to purchase under contract. While it is the lender who initiates the appraisal process it’s important to note that VA appraisers are professionals approved by the VA and randomly assigned by the VA regional loan center.
The purpose of the VA appraisal is twofold; to determine if the propertys value aligns with your offer price and to evaluate its condition. Specifically they look into aspects such as;
Functionality of systems like roof, heating, plumbing and electrical.
Absence of pest related issues like termites.
Lack of lead based paint.
Prevention of water damage.
Assurance of no health or safety hazards.
Should any discrepancies be found in these areas they must be addressed before finalizing the loan. The responsibility for covering repair costs typically involves negotiations, between the buyer and seller.After the property evaluation the lender needs to give their nod to;
The purchase agreement, which may include any terms, like credits from the seller or agent to the buyer.
The title report must be checked to ensure there are no claims on the property when ownership is transferred.
Step 7; Finalizing
Once all these aspects are sorted out and if your financial situation remains consistent since pre approval your loan will be set for finalization.
Depending on your location the lender will. Release the loan funds along, with your paperwork. After receiving your signed documents.
Upon receipt of the loan funds, ownership of the property can officially transition from the seller to you.
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