Cleveland Regional Loan Center
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Steps to a VA Loan
1. Determining Eligibility
- VA guaranteed home loans benefit veterans because
they do not need to make a down payment and there is no upper limit
or required cap on the income of the borrower. Without a down
payment as security against foreclosure, lenders receive a certificate
of guaranty from VA. In essence, as gratitude for honorable
military service, the government is vouching for the veteran's trustworthiness to repay his/her debt.
- To determine eligibility, a military veteran, active duty person, or a
member of the national guard or selected reserves, must submit a VA
Form 26-1880 (2 pages) (Form is now in a FILLABLE format - but people with Adobe 5.0 seem to have trouble with it) along with proof of service (DD Form 214, a statement of
active duty, or proof of participation in the national guard or reserves) to
the VA Eligibility Center, P.O. Box 20729, Winston-Salem, NC 27120.
Based on the applicant's length and type of service, VA issues a certificate
for each person determined eligible to apply for a VA guaranteed home loan.
Check the status after ten days by calling 1 (888) 244-6711 between 8:00 - 4:00
Eastern time.
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- Viewing and Inspecting the Home
- Home buyers usually use the
services of state-licensed real estate agents to: determine an affordable
price range, suggest certain home features suitable for the buyer,
schedule home tours, negotiate sales contacts and hold earnest money
deposits. State-licensed real estate professional can explain the
legal requirements for buyers and sellers, and can refer buyers to
local lenders and certified home inspectors. Buyers should accompany
their preferred home inspector during the inspection of the property to
ask questions about the home's systems.
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- Requesting the Loan
- Home buyers may want to contact a
lender even before they sign a contract for a home, so that they can be
pre-approved to determine their maximum mortgage amount. Home buyers
who wish to obtain a VA guaranteed loan should make sure that the sales
contract includes a phrase, sometimes called a financing contingency,
making the contract subject to approval for a VA guaranteed loan. Lenders verify and review past
and present job and credit history of home applicants, and compare it with
VA loan approval guidelines. If the documents with the loan request
cannot be approved, then additional written information must be presented
to the lender or the VA for further consideration.
- VA
Lender Appraisal Processing Program (LAPP) lenders can process loans
faster than other lenders. VA LAPP lenders do not need to send any paperwork to VA
until after the home sale is closed. VA's long-standing policy is not to
recommend any specific lender.
- VA recommends that buyers compare lending terms among several lenders in
order to find the best combination of interest rates, discount points, and
other negotiable costs for a VA guaranteed loan.
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- Appraising the Property
- When an eligible veteran contacts
a lender to request a VA guaranteed loan, the lender obtains a VA number
for the request via the Internet. The lender uses the VA number to
monitor progress of the appraisal and loan application. The lender
also sends a VA form to a state-licensed real estate appraiser who will
visit the home to give the lender and VA an opinion of the market
value of the property. The appraisal tells the lender and VA
whether the property is expected to be adequate collateral for the
requested loan. Neither the appraisal of the home nor the VA
guaranty is a warranty from constructional defects and their resulting
repair costs. Builders and brokers can issue warranties for the
condition of the home's structure and systems.
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- Closing the Sale
- If the loan and home are approved, the buyer needs to contact a
state-licensed insurance agent who will provide homeowner coverage to
protect the owner and lender from property damage and loss. Title to
the home is usually examined and insured by a title insurance company that
may also prepare closing documents and enter them into public records after
the closing. After the home is purchased and the loan is originated, the
lender usually sells the active loan to another company which will receive
the loan payments and pay the real estate taxes and insurance
premiums.
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- Prequalifying Worksheet
- The Prequalifying Worksheet will give you a general idea of what you can afford, and whether you are within VA underwriting guidelines for approval. This Prequalifying Worksheet is not a commitment to lend, nor can it be used to determine whether a lender will approve the VA loan. Please note, the Prequalifying Worksheet is in Excel format.
Prequalifying Worksheet
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| Reviewed/Updated Date:
August 7, 2008
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