VA Home Loan Basic Training
Knowing what to expect from the VA Home Loan process can be very daunting, especially if you are first time homebuyer. However, as with everything in life, the more you know, the more prepared you will be when taking the first steps toward homeownership.
Furthering your knowledge, while simplify the process can easily be done by breaking the VA Loan into a five step process. In addition to these five steps we will also look at the most common delays that may arise, and how you can prevent them.
Prequalification is the first step toward your VA Loan. During the stage, a loan officer will ask you several questions, regarding financial status and credit, and will provide you with an initial assessment of your VA Loan eligibility. This step can generally be completed over the phone in a matter of minutes.
In this step, you are given an estimate of what you are qualified for. It will take a deeper look by a loan officer to solidify your approval.
Preapproval takes place directly after prequalification. In this step, you must complete a loan application and provide your loan officer with pay stubs, tax returns, and in some cases, bank statements.
In this step, a loan officer will evaluate your information and take a deeper look into your financial profile.
During this step, qualified borrowers, such as Veterans United Home Loans can obtain your Certificate of Eligibility, a formal document that explains what VA entitlement you possess.
Preapproved borrowers will also receive a preapproval letter, which is often a selling point when included in an offer to purchase a home. This document can provide greater leverage during negotiations.
- The VA Appraisal
After a borrower is preapproved and picks out a home, your loan officer will schedule an appraisal. This process is completely separate from a home inspection and is meant to purely set a value on the home.
The value is very important when determining the fate of the loan. VA Loans can’t exceed the appraised value, which means a low appraisal can send buyers back to negotiations or looking for a down payment.
Note: It is still recommended that you schedule an inspection to ensure the home you are buying is satisfactory and has no underlying issues.
Following the VA appraisal, your mortgage documents are sent to an underwriter. Here the underwriter conducts a careful review to ensure the borrower and the property meet the basic guidelines set by the Department of Veterans Affairs.
The final step of the VA Loan process is closing. In this step, you will schedule a closing date with the buyer, seller and title company.
Shortly before you close on the property, you will complete the final walk-through to ensure the property is in the negotiated condition. Once the walk-through is completed, buyers and sellers will gather to sign the necessary documents and pay any fees needed to finalize the transfer of property.
While these steps are easy enough, borrowers should know that home lending is ultimately a business composed of human beings; meaning, there are always a chance for simple mistakes, oversights and paperwork errors.
Most of these problems are easily fixed and very preventable; however, choosing a lender that specializes in VA Loans can save you much time and effort.
Here is a look at five of the most common issues that slow down the VA Loan process:
- Application Errors
It is important to double-check your VA Loan application. Underwriters are perfectionists and will need your paperwork to be completely accurate. You don’t want something slipping through the cracks that will cause a delay down the road.
Most mistakes that are caught early can easily be fixed; however, if problems arise, such as income that cannot be verified, undisclosed debt or even a flub in family size, you may find yourself with problems down the road.
- Employment Changes
Employment changes can delay your loan process by requiring a completely new set of documentation and verifications or even trigger an underwriter to believe the new income is unreliable.
Note: If a change is inevitable, be sure to tell your loan officer.
- Credit Changes
Before closing, the underwriter will re-verify your credit to make sure everything is constant and that you have not incurred any large debts over the course of the process. If you buy a new vehicle, default on a loan or do something that could affect your approval, expect delays.
Keep in mind that even the little things can throw up red flags. Avoid credit checks and do not take on any new debt until your loan has been closed.
- Delays from the Borrower
One of the more common delays is the time it takes a borrower to send financial statements and other information to the underwriter. Make sure you understand all requests from the underwriter and talk to your loan officer if you are unsure.
Underwriters will not issue your final approval until they have reviewed every piece of required documentation, meaning a prompt response is key to closing your loan quicker.
- Factors Beyond Your Control
Sometimes, items you have no control over will cause setbacks in closing on your home. The inspection could turn up structural problems or a termite infestation, or the seller could even back out of the deal.
These items are out of your control, and, as long as you're are following the above steps and maintaining communication with your loan officer, go ahead and relax.