Applying for a mortgage can be overwhelming for many borrowers. However, understanding the process of obtaining a VA loan becomes much easier when broken down into six simple steps.
Choose a VA-approved Lender
At first glance, it may seem like any lender will suffice. However, upon closer examination, you’ll realize that not all lenders are equal. To originate VA mortgages, lenders must be approved by the U.S. Department of Veterans Affairs. Some lenders primarily focus on conventional loans, while others specialize in the VA loan program for military clients. Opting for a VA specialty lender with extensive knowledge of the VA loan process can lead to a smoother and faster loan process. Connect with a VA specialty lender by clicking here.
Obtain a Certificate of Eligibility (COE)
An experienced lender can assist you in obtaining a Certificate of Eligibility (COE), which proves that you meet the initial eligibility criteria for VA loan benefits. It also informs the lender about the amount of entitlement you can receive, which is the portion the Department of Veterans Affairs guarantees on your VA loan. To acquire your COE, you’ll need to provide your lender with some information about your military service. Usually, you can obtain the COE instantly online through a lender’s portal or the eBenefits portal on the va.gov website. However, if you cannot obtain it online, servicemembers or surviving spouses will have to request it by mail. A VA lender or the VA can guide you to the appropriate resource for your specific situation.
Pre-Qualify for Your Loan Amount (optional)
While not mandatory, pre-qualifying is important. Completing this step can save time and prevent surprises later in the process. During the pre-qualification process, you’ll have an open conversation with your VA loan professional about your income, credit history, employment, marital status, and other factors. Providing your lender with comprehensive details during pre-qualification can help avoid surprises during the underwriting stage. It can also highlight areas that need improvement before loan approval, such as credit or debt-to-income ratio. Keep in mind that a prequalification letter provides a price range for house hunting but doesn’t guarantee loan approval. Your lender will verify the information you provide, and final approval by underwriting is required once all documents have been received and reviewed (see Step 5).
Begin House Hunting and Sign a Purchase Agreement
The fourth step is often enjoyable for borrowers since they get to explore potential homes to buy. Working with a real estate professional experienced in the VA process can maximize your benefits. The VA allows certain fees and costs to be paid by the seller if both parties agree, and a knowledgeable agent can assist you in negotiating seller-paid fees. Once you’ve signed a purchase agreement, you can proceed with the VA loan process.
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Lender Processes Application and Orders VA Appraisal
Your signed purchase contract is the final document needed to complete your initial application. Once your lender receives the contract, they will order the VA appraisal. It’s crucial to note that only appraisers certified to meet VA standards can evaluate homes considered for VA financing. The VA appraiser ensures that the agreed-upon price aligns with the current value of the home. Additionally, the VA appraisal inspects the property to ensure it meets the minimum property requirements (VA MPRs) set by the VA. However, it’s important to understand that the VA appraisal does not replace a home inspection, which focuses on code violations, defects, and overall property condition. While some borrowers may have heard stories about the length of the VA appraisal process, the Department of Veterans Affairs grants appraisers 10 days from order to completion, except in extenuating