Navigating the VA Loan Journey: From Application to Keys
Securing a VA loan might seem like a complex undertaking, but by breaking it down into clear, manageable steps, it becomes a straightforward path to homeownership. Understanding each phase, including the documents you'll need and the important role of the appraisal, will empower you throughout your homebuying journey.
Step 1: VA Loan Pre-Approval
Getting pre-approved for a VA mortgage is the first step in buying a home. Early approval from your mortgage lender gives you a clear idea of how much you can afford when searching for homes.
Furthermore, having a pre-approval boosts the attractiveness of your home offer. In the housing market now, sellers want buyers to have a pre-approval. They may only accept your offer if you give them a copy of your pre-approval letter.
After checking your documents and confirming your eligibility, the lender will give you a pre-approval letter. This letter informs you about the maximum amount of money you can borrow before purchasing a house. This ensures you will know that you have the money to make a strong offer.
A pre-approval letter doesn't guarantee financing. Before reaching the final stage of the VA loan process, you must meet certain underwriting conditions.
Documents You May Need for Pre-Approval:
To expedite your pre-approval, having the following documents readily available will be incredibly helpful:
- Your most recent 30-60 days of pay stubs.
- W-2s from the past two years.
- Two years of tax returns, especially if self-employed or if your income includes commissions, bonuses, or significant deductions.
- Award letters for disability income, pension, or Social Security benefits.
- Your most recent two to three months of bank statements (checking, savings).
- Statements for retirement accounts (e.g., 401(k), IRA) or other investment accounts.
- Statements for any existing loans (e.g., auto loans, student loans, personal loans) and credit cards.
- Information on child support or alimony obligations.
Contact information for landlords or proof of consistent rent payments.
The pre-approval process can vary in duration, from a few days to a couple of weeks, depending on how quickly you provide documentation and your lender's processing times. Being organized and responsive can significantly speed this up.
Step 2: Find Your Dream Home
With your VA loan pre-approval in hand, you're now ready to actively search for your new home. This is where working with a real estate agent who has experience with VA loans can be highly beneficial. They understand the nuances of the VA loan process and can help you find properties that are likely to meet the VA's requirements. You can use VA loans for property types, including single-family homes, condos, multi-unit properties, manufactured houses, and new constructions*.
Navigating the home-buying process can be complex, and that's why we're proud to connect you with our affiliate partner, Mid-Continent Realty, Inc., and its network of expert realtors.
Our goal is to ensure you have a team that understands your unique needs and can maximize your benefits from start to finish.
Why Use a VA Loan Expert Realtor?
The VA loan process has its own specific requirements, forms, and timelines that differ from conventional loans. Working with a realtor who specializes in VA loans offers significant advantages:
- Understanding of the VA Appraisal and Minimum Property Requirements (MPRs): The VA requires a specific type of appraisal that ensures the home is safe, sound, and sanitary (known as MPRs). An expert realtor is familiar with these requirements and can help you identify properties that are more likely to meet them, saving you time and preventing potential deal-breaking issues.
- Expertise in Negotiation and Seller Misconceptions: Unfortunately, some sellers or listing agents may have outdated or incorrect beliefs about the VA loan process, which can make them hesitant to accept an offer from a Veteran. A VA-savvy realtor can effectively debunk myths and negotiate on your behalf to ensure your offer is competitive and understood.
- Knowledge of Closing Costs and Fees: VA loans limit what closing costs you, as the Veteran, can pay. An experienced agent will know which fees are permissible, which may need to be negotiated for the seller to cover, and how to structure the contract to minimize your out-of-pocket expenses.
- Seamless Coordination with Your Lender: A realtor who frequently works with VA loans, particularly with a partner like VeteransLoans.com, will ensure a smooth, efficient process. They speak the same language as your VA lender, streamlining communication and helping to prevent delays that can occur when agents are unfamiliar with the VA timeline.
- Support for Unique Military Situations (like PCS): If you're relocating due to a Permanent Change of Station (PCS), an expert realtor understands the time constraints and potential logistical hurdles involved, ensuring the home search and closing process is as stress-free as possible.
To get connected with one of our VA loan-expert realtors in your area, simply let your loan officer know during your pre-approval or application process!
Step 3: Contract and Negotiations
Once your VA loan realtor gathers all the necessary information, they can draft the VA loan contract. This includes outlining details such as the property's scope, timelines, purchase price, and other relevant terms. Clarity and precision are essential to avoid any confusion.
Negotiations follow the drafting phase, allowing for discussions and revisions to reach a mutual agreement. This could involve aspects like the purchase price, closing dates, or specific conditions. Flexibility and willingness to compromise are key during this negotiation process.
This contract will also include how to handle repair requests.
Every VA contract also includes an additional layer of protection for the veteran's earnest money concerning the VA appraisal. VA buyers have a special addition that allows them to get their earnest money back. This is if the property's value is lower than expected and the veteran decides not to proceed with the purchase.
Worth noting that it may require several rounds of negotiation for VA buyers to secure a purchase agreement. You might find yourself making offers on multiple properties before discovering the right fit. Keep in mind that each buyer-seller interaction is unique.
Step 4: The VA Appraisal Process
Once your offer is accepted, your lender will order a VA appraisal. It's crucial to understand that a VA appraisal is not a home inspection. While a home inspection assesses the property's condition for the buyer's awareness, the VA appraisal serves two primary purposes:
- Determine Fair Market Value: The appraiser assesses the home's value to ensure it's worth at least the purchase price, protecting both you and the VA from overpaying.
- Verify Minimum Property Requirements (MPRs): The appraiser ensures the property meets specific VA-mandated Minimum Property Requirements (MPRs). These are broad safety, soundness, and sanitary guidelines designed to ensure the home is safe, habitable, and structurally sound.
What are VA Minimum Property Requirements (MPRs)?
VA MPRs are designed to protect veterans from purchasing homes that are unsafe, unhealthy, or structurally unsound. They cover essential aspects of a home, including:
If the appraisal identifies necessary repairs to meet MPRs, these must typically be completed before the loan can close. This can sometimes extend the closing timeline.
Step 5: Loan Underwriting
Following the appraisal, your loan file enters the underwriting phase. This is where the lender's underwriter meticulously reviews all gathered documentation—your financial records, credit report, COE, and the appraisal report—to ensure that both you and the property meet all VA guidelines and the lender's specific requirements. The underwriter's job is to ensure the loan meets all necessary criteria for final approval.
They may request additional documentation or clarification during this stage. Promptly responding to these requests can prevent delays.
While under contract to purchase a home, it's essential to be cautious and avoid the following pitfalls:
Step 6: Final Approval and Closing
Once the underwriter gives the final "clear to close," your loan is fully approved! The final step is the closing, where all parties involved (you, the seller, lender representatives, and a title agent or attorney) gather to sign the necessary legal documents.
During closing, you'll finalize the loan terms, pay any remaining closing costs (which are limited by the VA and can often be covered by the seller), and formally take ownership of your new home. While the overall timeline can vary, a VA loan typically takes anywhere from 30 to 45 days to close after an offer is accepted, which is comparable to other loan types.
