The VA Loan Process in 5 Steps
Start: Obtain your Certificate of Eligibility. Your lender should be able to get you your certificate of eligibility. However, it is quite easy to obtain this document yourself by downloading, completing, and mailing along with a copy of your DD214. You can access a certificate of eligibility here.
- Get Pre Qualified: Select a lending institution that specializes in VA loans and get pre-qualified along with your pre-qualification letter. This is usually a requirement before a real estate agent will start taking you looking for your home. The reason for this is a pre-qualification ensures that the bank has done a minimum review of you as a loan candidate and ensures the real estate agent that you have a good likelihood of being able to get a loan.
- Go House Hunting: Find a real estate agent in the community that you are looking to buy your home and discuss with them the type of home you are looking to purchase, the neighborhood(s) that you are interested in, and the budget that you are looking to spend. If you are unsure of your budget complete a Home Affordability Calculator which will give you general guidance on what you could afford. Please note just because you could afford it doesn't mean you should stretch yourself. You can see how much your payment would be by completing a Mortgage Payment Calculator.
- Place Your Offer: When you find the home that you want to purchase it is time to place an offer. Make too low of an offer and you risk getting placed in a cue with other bidders. Place an offer too high and you risk overpaying. This is where your real estate agent should be able to help weight your options given how long properties stay on the market in your area and their thoughts on where you should bid.
- Your real estate agent will then have paperwork that is standard in placing an offer. Also, when placing an offer you are required to make a deposit to ensure the seller that you are interested. The deposit amount can vary however $500 is considered by many a normal amount.
- It is important that the offer include a provision that is contingent to you having the ability to get financing. Just because you received a pre-qualification letter doesn't guarantee that you will get financed so make sure to cover the potential that you don't. The offer should also be contingent of an inspection.
- The VA gives an example of what should be included in your offer:
"It is expressly agreed that, notwithstanding any other provisions of this contract, the purchaser shall not incur any penalty by forfeiture of earnest money or otherwise be obligated to complete the purchase of the property described herein, if the contract purchase price or cost exceeds the reasonable value of the property established by the Department of Veterans Affairs. The purchaser shall, however, have the privilege and option of proceeding with the consummation of this contract without regard to the amount of the reasonable value established by the Department of Veterans Affairs."
- Your offer is accepted: Congratulations you are close to becoming a homeowner however there is still plenty of work ahead. Contact your lender and let them know of your development. Get ready to dig up your past 3 years of tax returns, pay stubs, and bank statements as your lender will likely ask for all of this information. You will also need to get homeowners insurance and will be required to have this prior closing date.
- Your lender will order a VA appraisal, home inspection, and begins to go through all of your income and debts through an underwriting process. This period will be pretty busy for you as you will have to inspect the property along with a certified inspector who will tell you the condition of the property and help make you aware of any potential problems or the useful life of some of the major items such as the roof, heating/cooling systems, ext.
- The lending institution completes the appraisal and does a full review of your credit, income, and assets verification and gives a “clear to close” which initiates a date, place, and time where you will go and sign all of the documentation and have the title transferred to you.
- Finally, the closing takes place and the property is transferred. There will be a closing attorney and title company that is selected by the lender. You are now a homeowner!