VA Loans: Military service member or veteran happy to buy a home in 2022-2023?
VA Loans: The VA Loan is a valuable tool that military members and veterans may use to pursue home ownership.
As a benefit of your service, the Department of Veterans Affairs offers unique resources to help those with military experience purchase a home with a low or zero down payment. VA Loans offer flexible options as either Fixed Rate or Adjustable Rate mortgages.
VA Loans:
VA loans are available and provide the buyer the chance to finance 100% of the purchase price of the home. This means no down payment is required. It is important to note that buyers will still need to qualify for the loan. This means that lenders will look at their credit and ability to pay the mortgage. If you are in a troubling financial position, a lender may want to see you pay down debt or save up money before they are willing to give you the loan improving you credit score.
You may also be responsible for closing costs, such as recording the title or paying lawyers to draw up all paperwork. This is negotiable with the seller and something to discuss with your Realtor before making an offer on a home.
The VA Loan process
A VA loan works the same as most other home purchases, with a buyer making a written offer to purchase a home under specific conditions (price, closing cost assistance, other contingencies), and then going through an approval process with a lender. The key difference with a VA loan vs conventional loan, is that the Department of Veterans Affairs requires that all homes purchased through this program meet certain habitability requirements. They will send out a home inspector and appraiser to make sure that the home is in good working order and is worth what you are paying.
This step may sometimes cause delays, especially if repairs are needed after the inspector looks around. Issues at the home do not necessarily mean that the buyer cannot use the VA loan, just that repairs will need to be done before the home purchase can be completed. The VA recently started offering a VA loan to be used for homes that need renovation on a limited basis.
How VA Loans Work
- Purchase your home with as little as 0% down payment.
- 30-, 25-, 20- and 15-year terms are all available with fixed rates.
- 5-year adjustable rate mortgage available.
- VA Jumbo loans available.
- VA Streamline Refinance with a reduced funding fee and flexible documentation requirements – available for veterans currently in VA loans.
- No monthly PMI (Private Mortgage Insurance).
- Credit score starts at 600
- VA loans are governed by the U.S. Department of Veterans Affairs.
- Pay your mortgage off at any time without pre-payment penalties.
1. Work with an VA-approved lender
Find a lender that participates in the VA loan program. Premier Home Financing is an approved Lender with the Veteran Administration. A loan officer may be able to help you identify the types of documents needed and what size loan you can qualify for. It’s a good idea to shop around since deals offered by lenders can differ by interest rates, VA closing costs and discount points and credit score.
2. Obtain a Certificate of Eligibility
Borrowers can take certain steps to help speed the process such as getting a DD 214 and the Certificate of Eligibility before signing a purchase agreement and ensuring you have other necessary documents during the underwriting process.
You need a COE before you can get preapproved for a VA loan since it shows that you meet the initial eligibility criteria for a VA loan. To get a COE, check the e-Benefits portal on the VA.gov website or contact the VA for help. Borrowers may also be able to apply through Premier Home Financing . Additional documents you may need to provide include proof of military service or a marriage license if you’re a surviving spouse.
3. Get preapproved for a mortgage
Getting pre-approved shows home sellers you’re serious about purchasing a home. Your lender can determine how much you can afford to borrow. It’s not a guarantee of a VA loan, as you’ll need to submit additional documentation to verify your income and other pertinent information. Get your pre-approval letter before you start home shopping on line or going out to view open houses. Read this : Become more attractive to sellers
4. Find a home
Find a real estate agent who understands VA loans — better still if this person specializes in helping members of the military. Veteran-friendly agents can help you understand what to look for in terms of maximizing your benefits. Premier Home Financing has a network of VA specialized REALTORS through the state.
5. Sign a purchase contract
Your agent’s job is to help you craft a strong offer and formulate a sound negotiation strategy. This can include sellers paying for some or all of the VA loans closing costs.
Don’t forget to ask about contingencies that you’ll want included in a contract. This can include how long you have to secure financing, the amount of earnest money you’ll need and the right to have a home inspection.
Depending on location, you might or might not be required to get a home inspection, but in general, you shouldn’t skip this step. You’ll be able to get to know your property better and back out if you can’t get the seller to agree to make certain repairs before closing.
6. Go through a VA loan home appraisal
A VA-approved appraiser will determine the value of the home. This person will also help you assess whether a property can meet the VA’s property condition requirements, or Minimum Property Requirements. This is also the stage where you’ll go through the home inspection process if that was agreed upon in the purchase agreement.
7. Complete the mortgage underwriting process
Underwriters will need additional documentation to evaluate your eligibility for a VA loan. Documents you might need to submit include proof of income, assets and other types of financial documents. If your information checks out, you’ll be issued what’s called a “clear to close.”
8. Complete the closing process
The closing step is where you’ll sign documents that you understand and agree to the terms of your loan. Before your scheduled loan closing, you’ll receive a document called a closing disclosure where you’ll be able to see a breakdown of your final closing costs.
Typical costs may include a funding fee, which varies from 1.25 percent to 3.6 percent of the loan amount. Usually, the higher your down payment, the lower the fee. There are also exceptions such as ones related to disabilities or death.
You can also do a final walkthrough of the property. Once you sign all closing documents, you’ll receive the keys to your new house.
9. File your certificate
After closing, the VA will return your Certificate of Eligibility with a note stating that you have used (all or part) of your VA mortgage entitlement. In other words, qualified borrowers can use their eligibility more than once to obtain a loan on a new owner-occupied home.
How the VA process differs from other types of home loans
The process to get a VA loan can take longer compared to conventional loans since there are additional documentation requirements as part of the appraisal and inspection process. However, borrowers will get more favorable terms which can save thousands of dollars throughout the lifetime of the loan.
Borrowers can take certain steps to help speed the process of VA loans such as getting a DD 214 and the Certificate of Eligibility before signing a purchase agreement and ensuring you have other necessary documents during the underwriting process.
Ready to start the process?
Have questions? Give us a call! One of our VA loans mortgage specialists would be happy to answer all of your questions.
**Premier Home Financing, is not affiliated with or acting on behalf of, or at the direction of FHA, VA, USDA or the Federal Government.
