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Regional Loan Center - Loan Production 5 Steps to a VA Loan
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Five Steps to a VA Loan
1. Determining Eligibility
2. Viewing and Inspecting the Home
3. Requesting the Loan
4. Appraising the Property
5. Closing the Sale
For more general information see the national home loan guaranty information site.
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, 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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2. 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 contracts and
hold earnest money deposits. A 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.
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3. 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 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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4. 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 computer. 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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5. 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 which 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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