Homebuying can be an intimidating process, and it is not uncommon for veterans to go into the VA purchase process without fully understanding the program.
Merely reading a guide about VA loans is a poor way to learn about it. So, to increase awareness on how this amazing program works, a Missouri-based home loan company called Veterans United created the following infographic to explain the basics of the VA home loan.
Navigating the VA Loan The VA loan process is not complicated, but, as a specialized product, it requires extra attention from an experienced lender to ensure closing is reached quickly. Results from this process hinge on both the lender and the borrower as well; this dynamic makes it absolutely necessary to understand what to expect from the process. Doing this can save a borrower much time and feelings of uncertainty or stress.
While following the procedures outlined in the above infographic, remember that borrowers can take steps to ensure there are no unnecessary delays as they proceed through the VA loan process.
Providing Accurate Information Double check your application to make sure it is free of errors. Loan underwriters are experts at ensuring that all information on loan applications is completely accurate. Most mistakes are caught early and can easily be fixed, but any problem that slips through the cracks can delay the loan process.
Keeping Credit Constant Before closing, underwriters will reverify your credit score to ensure that it has not changed and that you have not incurred any large debts over the course of the VA loan process. Changes in your debt-to-income ratio or defaulting on other obligations can result in delays or losing approval altogether.
Furnishing Forms and Statements Be prepared to furnish financial statements and forms such as pay stubs, your most recent W-2 and possibly other tax records, depending on employment status. Another necessary form is the Certificate of Eligibility, which can be acquired through an approved VA lender or the Department of Veterans Affairs.
Differences Between Conventional and VA Loans The most significant difference between VA loans and conventional borrowing options is that qualified borrowers can purchase a home costing $417,000 or higher in what the VA deems a high-cost county, without a down payment – a tremendous benefit for veterans. This – in addition to flexible requirements, lower fees and no private mortgage insurance – provides VA loan borrowers with a bevy of benefits they cannot find elsewhere.
Another major difference is the VA appraisal process. The VA ensures that homes purchased through their loans are safe and sanitary properties that can be considered move-in ready. To that end, the VA will assign an independent appraiser to assess the home. To prevent conflicts of interest, VA appraisers are randomly assigned and cannot be requested.
VA approved appraisers assess homes using a set of minimum property requirements that address mostly high-level issues that could pose health or safety hazards for veterans and their families. These issues include mechanical systems (heating and cooling), potable water supply, domestic hot water and a safe method of sewage disposal.
This rigorous appraisal process makes the VA home loan program one that is poorly suited for the purchase of fixer-uppers, and even some foreclosures can prove problematic depending on their condition. Additionally, it is important to remember that the VA appraisal does not replace the need for an independent home inspection.