What Is a VA Loan?
A VA loan is a type of government-backed loan that is available to qualified veterans and active duty for all branches of the military. The loan is available to veterans through a program that was developed by the Department of Veteran Affairs.
Veterans can choose to construct, buy, repair, or refurbish a home with the help of a VA loan. The terms and conditions of a VA loan are defined by the Department of Veteran Affairs.
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How Does a VA Loan Work?
The entire process of applying and qualifying for a VA loan is relatively simple.
- Finding a Lender
The very first step involves finding a lender associated with the VA. Once you have found the right lender, you will be asked to provide some preliminary details about your income, current debts and assets, and so on. The lender will then use these details to create a rough estimate of the overall cost of the transaction you wish to complete. Based on your eligibility, the lenders will quote the amount they are likely to approve. This process is called pre-qualifying for a VA loan. - Verification of Your Purchasing Power
This step is called pre-approval. In this step, lenders will validate your documents and give you letters of approval. These letters will come in handy when you are approaching sellers and contractors. - Negotiating a Contract
Once you have your lender and the desired loan amount in place, you need to work with an agent to find a home that best suits your needs. Your agent must be familiar with the nuances of a VA loan as they will help you negotiate a reasonable contract with the seller and put in an offer. - The Appraisal
This is one of the most crucial aspects of your home purchase. The VA loan will be approved only if the house meets certain standards set by the VA. Your house will be subject to an appraisal by a VA official. If the officer finds that your home meets the required standards, you will be allowed to move forward with the purchase of the home. - Closing the Purchase
Once the approval process has been completed, the last step is to close off your purchase. You will be required to submit several documents and sign several agreements. Once the formalities have been completed, the property is yours.
What are the Eligibility Requirements for a VA Loan?
VA loans are available to military veterans who meet certain criteria put forth by the Department of Veteran Affairs.
The service requirements are as follows:
- 90 days of active duty during wartime
- 181 consecutive days of active duty during peacetime
Spouses of veterans are also eligible to receive the loan, provided that their spouse died during duty or suffers from a disability due to service in the military.
In addition to these requirements, you should also have a good credit history and possess a valid proof of identity such as a Social Security number.
If you would like any more information about VA loans, don’t hesitate to contact us.