Getting a VA Home Loan

Most members of the military – veterans, reservists, and members of the National Guard are eligible to apply for a VA loan. The spouses of military who died in active duty or as a result of service-connected disability may also apply. Active duty members qualify after about six months of service.

Reservists and National Guard members must wait six years to apply unless they are called to active duty, where they gain eligibility after 181 days of service. However, during war periods members are generally eligible after 90 days of service. In consideration of your status of service, loan applications can differ. Your VA regional office personnel can assist you with any additional eligibility questions.

After pre-determining your eligibility, the first step for potential borrowers is to obtain a Certificate of Eligibility (26-1880) before applying for a loan. At this juncture, you will need to select an accredited VA loan specialist who will assist you in moving forward in the loan process which includes accessing and submitting this eligibility form online.

Before embarking on step two of the VA loan process, it is crucial that you have pulled your credit report in advance with all three credit reporting agencies to see where you stand with your FICO credit score. You should thoroughly examine the report for any errors and/or identity theft, taking care of any such issues beforehand. Although Veteran’s Affairs does not require a minimum score for a VA loan, most lenders have internal requirements, asking for a credit score of 620 or higher.

After you have completed this important task, you will provide this information to your VA loan specialist. They can answer any questions that you have and help you with determining the loan amount you are eligible for through a pre-approval process. The pre-approval process is required by most realtors before working with you to find a home. It serves to give you piece of mind and a price range that you can afford based on a pre-approved amount.

• The applicant must be an eligible veteran who has available entitlement.

• The loan must be for an eligible purpose.

• The veteran must occupy or intend to occupy the property as a home within a reasonable period of time after closing the loan.

• The veteran must be a satisfactory credit risk.

• The income of the veteran and spouse, if any, must be shown to be stable and sufficient to meet the mortgage payments, cover the costs of owning a home, take care of other obligations and expenses, and have enough left over for family support.

Your experienced VA loan specialist will be able to further discuss specific income and other qualifying requirements. According to the VA Loan Quick Guide, the VA loan limits generally do not exceed $417,000 (exception in maximum limits with VA Jumbo loans in designated High Cost counties – calculations can vary).

Select a realtor to work diligently with you to find your desired home. After finding the home based on your personal and financial criteria, you will make your offer. The offer should not be too low or too high, as you want to stay ahead of the pack in bidding but not risk overpaying for the property. After making the offer, you will be required to place a deposit down ($500.00 is customary) on the property.

In placing your offer, be aware that there are certain fees such as brokerage and lender fees, commissions or buyer-brokerage fees that the seller may have to absorb as they are disallowed by the VA to be charged to the veteran buyer. This amount may need to be factored into the offer/purchase price to be acceptable to the seller

It is recommended that two contingency provisions: 1) upon financing and 2) upon inspection, are inclusive or amended to the purchase agreement. Fact: A “pre-qualification” letter does not necessarily guarantee financing so you must be covered in the event that it does not go through. However, if you have proceeded as directed in Step Two and you are “pre-approved,” you should be fine. The pre-approval process is a more extensive check performed by your VA loan specialist on your financial background and credit rating. After completion, your lender will provide a conditional commitment on the amount of your loan.

A home inspection can be a critical contingency provision, giving you the option to back out if repairs are costly and substantially decrease the fair market value of the property. Fact: VA fee appraisers are not required to step on the roof for inspection nor do they have the specialized knowledge that a certified home inspection can provide.

The VA appraiser’s job is to ensure that the home lives up to minimum property requirements. He/she establishes fair market value for the home and a Certificate of Reasonable Value is issued. However this VA appraisal does not take the place of a detailed inspection of the property. Although optional, it is highly recommended that your offer be contingent upon a detailed home inspection.

Contact your lender immediately and let them know that your offer was accepted. Congratulations! You are on your way to homeownership! If you have not done so already, you will need to provide the last two or three years of tax returns, pay stubs and bank statements. He/she will help you complete your application and submit it to processing and approval.

Subsequently, the lender will order a VA appraisal and the certified home inspection. Your VA loan specialist will complete the appraisal and perform a complete review and verification of your credit, income and assets to give a “clear to close.” This will initiate the date, time and place where you will close to sign all necessary documentation to have the title transferred to you.

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