Buying a home with a VA loan is quick and painless. VA loans have the reputation of taking too long to close or facing too much scrutiny during the appraisal. I’ve worked with veterans for many years, and have the pleasure of getting them from preapproval to closing just as quickly as conventional or FHA loans.
The VA loan purchase process is simple and straightforward. Here’s how it goes.
I recommend you get pre-qualified a few months before you look at homes. A prequalification shows you where you stand. How much loan will you qualify for if you can prove your financial worthiness based on the information provided?
Think of pre-qualifying as preparing yourself for homeownership. You’ll see where you stand, how much you can afford, and what you may need to change or budget for long before you look at homes. It’s an eye-opening opportunity that gives you time to fix qualifications that may not suit your financing needs.
If you don’t prequalify for as much as you thought or your credit score is lower than you anticipated, you have time to work on it before you look for a home. It’s the preliminary step in the process that helps set you up for loan approval once you find a home.
The preapproval is a step up from the prequalification. It’s a ‘real approval’ based on facts. You provide me with your income, asset, and other financial documents and the underwriter reviews them. If you meet the requirements for the loan amount you need, the lender writes a preapproval letter outlining the conditions you must satisfy to wrap up financing.
The preapproval is always contingent on the property itself, but it may include other financial conditions you must clear. We’ll discuss what you need well in advance so you can move through the home buying process easier.
Your preapproval letter includes the necessary information about your loan including the loan amount, estimated interest rate, type of loan, and monthly payment. Sellers and realtors need this information to ensure you’re a serious buyer that has the financial capacity to buy the home.
With your preapproval in hand, you can look at houses. Realtors and sellers will open more doors to you with the pre-approval available. Your preapproval is good for 90 days. But if you don’t find a home within that time – we can update your qualifications and re-issue the letter to give you more time.
Once you find a home, your realtor will negotiate the price based on your input. Make sure you know the average market value in the area to keep your bid reasonable. Lenders base your loan amount on the lesser of the agreed-upon sales price or the appraised value. Once you agree on a price, you’ll sign a sales contract, which we’ll submit to the lender.
After executing your sales contract, you have 30 to 45 days to close the loan depending on your sales agreement. The lender will order an appraisal with a VA-approved appraiser. If there are any outstanding conditions, supply your financial documents right away. The lender will complete the underwriting process and if the appraisal works out, you’re on your way to closing on your home.
If there is an appraisal issue, you have a few options. You can request a Reconsideration of Value if you think the appraiser made an error. If not, you may pay the difference between the appraised value and the purchase price or negotiate the sales price with the seller again.
Once you clear all conditions, the underwriter will clear your loan to close. At the closing, you’ll sign many documents including the deed of trust (mortgage) and promissory note, among others. All documents are legally binding, but I’ll walk you through them one at a time. Once you pay any monies you agreed to pay and the lender funds the loan, money exchanges hands and you receive the keys to your new home.