For veterans, military members and reservist homebuyers, the process doesn’t differ much from the process of conventional or traditional home loans. The major differences come in play when a prospective buyer looks and studies the advantages of taking out a VA loan vs. a traditional one. Let’s have a deeper understanding of the entire VA Loan process.
Getting a preapproval in taking out a VA Loan is the first and foundational step. It is important on several major fronts:
- Provides veterans and service members a definite and transparent sense of purchasing power.
- To home sellers, as well as to real estate agents, preapproval demonstrates that a buyer is genuinely able to make strong offers to reach the final and closing table.
Currently, in the real estate world, home sellers are expecting offers coming from preapproved home buyers. In fact, some sellers may not even acknowledge or look at certain offers without seeing a copy of the preapproval letter.
In most cases, lenders start by asking about a borrower’s home buying goals, military service background, and employment history prior to a comprehensive credit inquiry. After meeting the lender’s minimum credit score threshold, prospective buyers will need to submit documentation of key information.
The home search
After obtaining the preapproval letter, the most thrilling part begins – the home search. VA homebuyers can use the loan benefit in purchasing:
- Existing singe–unit family homes
- Manufactured or modular housing
- Multi-unit properties
- New constructions
Speaking with real estate agents that are well versed with the VA Loan program is advisable as there are properties that are better fitted with VA loans compared to others.
Loan officers and reliable real estate agents can help craft a solid and strong offer. Agents will look at the area’s similar home sales to shape up a buyer’s purchase price. Negotiation strategies, including pricing, vary in every market. VA homebuyers are advised to have a sit with the loan officer and the agent and discuss the closing costs prior to making the final offer.
Most prospective homebuyers will propose a contract that has multiple contingencies that provide for events which eventually leads to loan closing. Common possibilities cover things such as:
- Right for home inspection and handling repair requests
- Buyer’s allowed number of days in securing financing
- Amount of money to be deposited and more
The process of the VA loan jump–starts after the buyer and the seller gets in a contract. The loan team sends the contract and other pertinent documentation to the loan processor and underwriter to review the overall procuring picture. The lender also prepares and orders the appraisal through the VA. This cost is typically covered by the buyer up front, though in some cases, can be requested to be reimbursed by the seller by the closing stage.
Shortly before the scheduled closing of the loan, VA home buyers will be sent the Closing Disclosure notice. This document provides a comparison of the final costs, including other loan information, and the estimates received during the earlier part of the process. A loan officer typically reviews this notice with the buyer so it is best to ask any question about the costs or anything that concerns the purchase.
In some instances, there will be another round of verification that lenders will conduct before loan closing. In case anything changes, whether with employment or with income status, buyers should notify the loan team quickly.