Through the VA loan program, veterans can get access to home financing more easily. This program does not require a down payment all the time and is offered to military personnel: either veterans or those in active duty. Another advantage of this loan is it does not require a mortgage insurance and there is no minimum credit score requirement. This makes this type of loan easier to acquire than the conventional type.
It is important to understand that the Department of Veterans Affairs is not the one issuing the VA loan rather only assures a certain amount in a mortgage to be given to the lender in cases the buyer did not successfully paid the dues. Purchasers can buy home via financing by applying through the affiliated banks and financing institutions which offers extended financing on house purchases via the VA Loan program.
The Basics of VA Loan Financing
VA loan program is designed for:
- Active military
- Surviving military spouses
Although, it is intended for these individuals, certain requirements must be met to be approved for this loan. When it comes to service requirements, the prospective buyers need to have a service requirement of at least 181 active duty days during peacetime or if during the war period 90 active duty days is required or have a service record of 6 years in the Reserves or the National guard.
Although, this mortgage is offered to certain individuals, the process might be confusing. To guide you correctly for the VA Loan Financing, here are few steps you should follow.
Look for a VA Loan Professional and Get Eligibility
To learn the set of requirements for this loan, VA Loan professionals should be consulted. It is important to note that spouses of military members who died during their service are eligible to apply. A certificate of Eligibility (COE), should be obtained by the borrower. However, one can start the mortgage process even if COE hasn’t been obtained yet. In most cases, this file is required during the pre-approval period of the mortgage process.
Look for a Lender
This is crucial in the VA loan financing process and this is where a VA Loan professional is helpful. The borrower should find a lending institution that supports this home loan program. Once an institution supports a VA Loan mortgage, pre-qualification is needed and at this phase, you will have an idea on the amount you are granted. It is worth noting that lenders have their set interest rates, discounts and closing points. So, it is advisable that you find lending institutions and compare their rates.
Obtain a Certificate of Eligibility
The COE gives a verification to the lender that VA loan requirements are being met by the purchaser.
Search and choose the home you want to buy and sign and agreement to purchase it.
Negotiation is made during this time. Your real estate agent will help during this process. It is very important to note that the sales agreement should have a VA Option Clause and it should detail that you won’t continue with the purchase if you won’t get the VA loan.
Application of VA Loan
A loan application should be completed. The lender will advise the purchaser regarding this matter. Documents are asked during this stage such as bank statements and pay slips.
Processing of VA Loan Financing
The credit information and income statement submitted will be processed after the lender offers an appraisal rate. After reviewing all the financial documents and comparing to the appraised rate, the lender then determines if the loan is approved or rejected.
Closing of the Loan
Closing is conducted by the presence of the lender’s representative, usually a lawyer, who will coordinate the transfer of the property. This individual will communicate regarding the date and time of transfer.
Questions regarding the VA Loan financing process should be directed to your mortgage originator who is experienced in handling these cases.