The process of purchasing a home can be an overwhelming task, as lenders have tightened the borrower’s requirements because of the increased regulation combined with the need to limit the risk associated with loans to non-qualified applicants. With the majority of home loan options available to potential home buyers, there are strict guidelines to ensure that borrowers have the option of paying monthly mortgage payments in addition to other debt obligations, including criteria for sufficient down payment amounts, credit and repayment history guidelines, and debt income ratio standards. Although qualifying for a mortgage seems like a tough fight, almost 22 million people have access to a less stringent option to pay for a home without a loan through the Veteran’s Administration (VA).
The VA home loan program is available to former and current members of the military who meet specific qualifications. The SA does not manage home loans directly to qualified applicants, but instead works through private lenders approved by the organization. This creates an extensive network of mortgage lenders with which a future home buyer can work together to get a mortgage through the home loan program. Although there are numerous lenders who offer VA home loans, the process of getting a VA mortgage is relatively similar for all applicants. Potential buyers must ensure that they meet the eligibility requirements to receive a VA loan first. From there, borrowers must find a VA mortgage lender, pre-select a new mortgage, buy a house to buy, apply for a VA loan, meet all loan processing requirements and close the new home purchase.
The majority of active service, veterans and reservists serving the military and national guard are eligible for the VA home birth program, as well as spouses of service members who have passed during active service or due to service disability. For active service members, access to the VA home loan program starts after six months of service, while reservists and members of the National Guard have a waiting period of six years before they are eligible if they have no exposure to active or active duties. However, for veterans who have served during a war period, access to the VA mortgage program is available after 90 days of service. A VA loan can only be used for a home where the borrower intends to live, including single-family homes, apartment buildings, modular homes and certain multi-unit properties.
Once eligibility has been established on the basis of the above criteria, the future homebuyer must obtain a Certificate of Eligibility (COE). The certificate provides lenders with the information necessary to take into account an applicant who is eligible for a home loan, partly supported by the VA. To obtain a COE, borrowers must prove that they are eligible, such as a DD form 214, a current state of service signed by the human resources office or the commander of the service member department, or an NGB form 22. The proof of suitability was then used to request a COE from oGuermantes familyine, by post or through a lender approved by the VA.
Find a lender
Although a number of private mortgage lenders are immediately available to potential home buyers, not all businesses are created equal. Most mortgage lenders offer a similar set of conventional home loans, including those supported by Fannie Mae and Freddie Mac; However, not every lender offers VA loans or is VA approved. It is crucial for borrowers to first look at the VA approved status of potential lenders before they start working with them, as mortgages in VA follow guidelines that are slightly different from traditional mortgage options. A VA-recognized lender must have expert knowledge of the VA home loan process and the VA mortgage options that are available to the borrower. In addition, a lender approved by VA must have the ability and willingness to explain the process and requirements from start to finish.
Once a borrower has the most suitable lender, pre-qualification is usually the next step in the process of purchasing a home. Being pre-qualified is simply the process of checking how many mortgages a borrower can pay based on credit history, current debt obligations and income. While this is not a required step for VA home loans, pre-qualification helps potential home buyers understand the price to consider when looking for a home to buy.
The Home Search
When financing a home purchase with a VA loan, the home search process does not differ from other home loan options, because there are few restrictions on the location of the home, the use of a broker or buying agent, or home functions. However, the VA home loan program often requires that a house is almost ready to leave and must meet certain minimum ownership requirements with regard to safety and sanitation.
Once borrowers find a home they want to buy, there must be a signed purchase agreement between the buyer and the seller before they go to the next step of the lending process. It is recommended that a purchase agreement include a valued contingency clause, more commonly referred to as a VA option clause for VA loans, stating that the buyer does not have to forfeit any required money, pay a fine, or is required to purchase a property if the purchase the price of the house exceeds a reasonable value of the property, which is determined by the VA through an appraisal.
VA Home Loan Application
Once a signed purchase agreement has been concluded, potential home buyers must complete the home loan application for a home loan with the lender. The loan application process can be extensive as borrowers are required to provide in-depth information on current income, current debts, previous payment history and cash. Borrowers may be asked to provide payslips for the previous two months or tax applications for the past two years for self-employed. In addition, bank statements for checking and saving may be required for every borrower named on the loan, starting from six months. Each of these factors plays an integral role in qualifying for a VA home loan, but the approval guidelines are slightly less strict than those for conventional mortgage applicants.
One of the lenders receives a VA application for home loans in good order, the loan enters the processing phase. The lender analyzes the credit and income information provided by the borrower and an appraisal of the property is ordered. Although a VA valuation is not a guarantee for the condition of the house to be purchased, it does function as a good faith estimate of the market value of the house on the date the assessment was made. The combination of the assessment and the financial analysis can take a few days to a few months to complete, depending on the readiness of the borrower and the availability of the property to be purchased.
Close / The Bottom Line
The final step in buying a home with a VA mortgage is the closing process. Typically, a lender-selected title company, lawyer or company representative conducts the closing meeting, which consists of signing ownership of the property to the borrower, finalizing loan documents, and viewing relevant information regarding the repayment of the mortgage. Once all documents have been signed, the title of the house is transferred to the name of the buyer and payments for the VA loan begin.