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Buying a Home With a VA Loan

By Gretchen Wegrich Updated on 1/7/2015

VA loan process

1. Determine eligibility.

Prior to taking the steps necessary to apply for a VA loan, borrowers should determine whether or not they meet the strict eligibility requirements, as the Department of Veteran Affairs only issues mortgage loans almost exclusively to active duty servicepersons and military veterans. Consider VA eligibility before taking any further steps.

2. Find a real estate agent.

Eligible borrowers should begin by finding a real estate agent who can help in the home search by finding a property that suits the borrower’s individual needs. While a real estate  agent is not always necessary, borrowers who are unfamiliar with home purchase can save a considerable amount of time and money by employing one.

3. Find a lender.

Before actually looking for potential homes, borrowers should find a lender who will finance the mortgage. Find a lending organization that particularly focuses on lending VA loans and get pre-qualified or pre-approved for a specific loan amount. Typically, real estate agents will require proof of at least pre-qualification before working with a buyer since pre-qualification guarantees a borrower satisfies loan minimum requirements.

4. Obtain a Certificate of Eligibility.

Borrowers should next acquire a Certificate of Eligibility, which proves VA eligibility and determines how much the applicant is entitled to borrow.  While the lender can obtain this certificate, borrowers can alternatively download and complete application for this certificate, mailing the form along with a copy of the DD214.

5. Make an offer.

Once the VA borrower has located a home to purchase, he or she should place a strategic offer. If the offer is too low, the seller may simply add the offer to a list of other bidders. However, borrowers who make too high of an offer run the risk of paying more than the value of the property. With a real estate agent, borrowers will have a professional understanding of the ideal bid, considering how long the property has remained on the market and any additional concerns.

  • When making an offer, buyers generally make a deposit that expresses a genuine interest in the property, typically $500.
  • While pre-qualification does provide some assurance, it is not a guarantee; always include provisions which state that the offer is contingent upon approval of financing. In addition, the offer should also depend on the VA approval of the home inspection.

6. Gather necessary documentation.

If the seller accepts the offer, the borrower should contact the lender to update them on the progress of the home purchase. With the home selected and an offer accepted, borrowers should next retrieve any necessary documentation to complete the loan application, including the past two years of tax returns, pay stubs, and bank statements. Lenders will also require the purchasing of homeowners insurance during the loan application process prior to closing the mortgage.

7. Get a VA appraisal.

Before the loan application can be completed, the prospective home must undergo VA appraisal and home inspection. Furthermore, the lender must review the borrower’s income, debts, and credit history during the underwriting process of the loan transaction. During this time, the borrower will need to inspect the home along with the certified inspector who will disclose any potential problems with the property and note any issues with major points such as roofing, heating and cooling, electricity, etc.

8. Finalize the loan.

Following the appraisal and verification of credit, income, and assets, the lender will set a closing date in which borrowers can sign all of the documentation and finalize the mortgage application and home purchase, including a transfer of the property title or the closing date would have been determined at the time the offer was accepted and the contract signed.

9. Prepare for closing costs.

At closing, borrowers must pay the necessary fees associated with the services which the lender provides by financing the loan. A closing attorney or title agent will be present at this time, as well as the title company selected by the lender that will enact the transfer of ownership. Once completed, the VA mortgage application is complete and  home purchase transaction finalized.

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About The Author:
Gretchen Wegrich
Gretchen Wegrich is an editor at Lender411. She specializes in mortgage basics, personal finance and green living. She graduated with a bachelor's degree in writing from University of California, San Diego and previously worked at the Santa Cruz Sentinel. Contact her at gretchen@lender411com.

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