If you are a veteran of the U.S. military or are presently serving, you may qualify for a loan backed by the U.S. Department of Veteran’s Affairs (VA). With a VA loan, you can finance 100 percent of a primary home purchase without being required to purchase mortgage insurance or incur a prepayment penalty. The process for obtaining a VA loan is not all that different from the traditional mortgage process. There are just a few nuances that an experienced loan advisor can help guide you through. Below we explain the 7 steps to buying a home with a VA loan:
Determine your Eligibility
First, you will need to prove that you have met the VA’s service member requirement. You can do this with a Certificate of Eligibility (COE). The type of COE you need to provide will vary depending on your type of service (veteran, active duty, former National Guard, etc.). You can obtain your COE through various avenues, including your VA benefits portal, requesting via mail or having your lender request it on your behalf. For a complete list of instruction for securing your COE, click here.
Choose a Lender
As a best practice, it helps to consult a loan advisor before you start house shopping. Otherwise, you risk not qualifying for a loan necessary to buy the home you have fallen in love with. Meet with a few different lenders until you find one whose personality and work ethic meshes with yours.
To be pre-approved, a lender will need to review your financial profile and documents (COE, detailed residence history, employment history, income, asset, debt documentation, etc.). After reviewing your financials and determining how much home you can afford, your lender can give you a pre-approval letter that states you have been approved for a VA loan, which can give your offer more weight when bidding on a house.
Choose a Real Estate Agent
Once you have been pre-approved and know how much home you can actually afford, now is the time to start working with a local real estate agent. Ask people you trust for referrals for a real estate professional. Your lender can give you a referral as well! Purchasing a home can be a stressful time, so make sure you select a realtor who has expertise with VA homebuyers and the neighborhoods you are interested in.
Start the Home Shopping Process
Now that you have the right mortgage and real estate professionals backing you, here comes the fun part: home shopping. Look at homes in neighborhoods that fit your specific needs and wants. Once you find a home that you love, consult with your professionals and make an offer that will be attractive to the seller.
Qualifying the Home
Remember, when your lender hands you a pre-approval letter, it means that you as a borrower are approved for a loan, but the home will also need to qualify. If the seller accepts your offer, the next step is to have your lender order a VA appraisal. The VA appraiser will assess the condition of the property to ensure that it meets the VA’s lending criteria. The property will have to meet this criteria for the loan to close.
If your borrower profile and financial situation have not dramatically changed since your pre-approval, once you complete the above steps, your loan should be ready to close. Your lender will send your closing documents to an escrow company or attorney for you to sign. Depending on where you are purchasing a home, the lender will send your loan funds with your documents or the funds will be sent after the lender receives your signed document. Once the loan funds, you become the official owner of your new home.
Have more questions regarding VA loans and the mortgage process? Contact a loan advisor today to discuss your lending options.