Ten Steps for Applying for a Veterans VA Home Loan
The VA home loan program is a great benefit. With a VA home loan, it is easier for veterans to finance a home than most commercial loan programs, and there is no required down payment and no required private mortgage insurance (PMI) for the loan.
Just follow these easy steps:
This isn’t required under the VA Home Loan Program, but it’s certainly a good idea — especially for the first-time home buyer. Pre-purchase counseling gives you information on
The process of buying a home
The key players in the home-buying process
Housing counseling is usually free. The Department of Housing and Urban Development (HUD) maintains a toll-free number and website for this purpose. To locate a nearby housing counseling office, call 800-569-4287, or visit HUD’s website.
Find a home.
Some people love the hunt for a new home; others hate it. But regardless of which camp you fall into, you can’t proceed until you find that potential home, sweet home.
Make an offer.
After you’ve found the place, discuss the purchase with the seller or selling agent. It’s perfectly okay to sign a purchase contract at this point, as long as it’s conditioned on approval of your VA home loan.
Select a lender.
Finding a lender who participates in the VA Home Loan Program isn’t difficult because virtually all of them do. It’s a good idea to shop around to find the best possible terms. Remember, all lenders are not created equal.
Obtain a Certificate of Eligibility.
To obtain a VA home loan, the VA must first certify that you’re eligible for the program. This is done by issuing a Certificate of Eligibility.
Many lenders can obtain this certificate for you, easily and almost instantly, through the Automated Certificate of Eligibility (ACE) system. This Internet-based application can establish eligibility and issue an online Certificate of Eligibility in a matter of seconds.
Not all cases can be processed through ACE — only those for which the VA has sufficient data about the applicant in its records. However, be sure to ask your lender about this method because it can save weeks of time.
If your lender doesn’t have access to ACE, you can apply for a Certificate of Eligibility by submitting a completed VA Form 26-1880. You can obtain this form from any VA regional center or print it from the VA’s website.
Provide proof of your military service.
When applying for a Certificate of Eligibility, you should include proof of your military service along with your request. In some cases it may be possible for the VA to establish eligibility without your proof of service.
However, to avoid any possible delays, it’s best to provide such evidence. Mail the completed application to VA Loan Eligibility Center, P.O. Box 20729, Winston-Salem, NC 27120. For overnight delivery, VA Loan Eligibility Center, 251 N. Main St., Winston-Salem, NC 27155.
Get a VA appraisal.
The lender will ask the VA to assign a licensed appraiser to determine the reasonable value for the property. The appraiser will issue a Certificate of Reasonable Value.
Although the VA appraiser must view the property from both the exterior and the interior to determine its overall condition, the appraisal process isn’t an inspection of the property. You should hire your own licensed inspector to satisfy yourself that the home you intend to purchase is in a condition that is acceptable to you.
The VA guarantees only the loan, not the condition of the property. It’s your responsibility to be an informed buyer and assure yourself that what you are buying is satisfactory to you in all respects.
You may be required to pay for the appraisal unless the seller agrees to pay. However, many lenders allow you to include this fee as part of the loan.
Play the waiting game.
The lender will let you know the decision on the loan. You should be approved if the home’s established value and your credit and income are acceptable.
Sometimes it may take longer than you expect for the lender or VA to process your loan application. For instance, your current or former employer may be slow in returning an employment verification form, or it may take some time to obtain a credit rating from out-of-state creditors. Ordinarily, you should plan on four to six weeks to obtain a decision on your application.
Do not make any commitments based on an expected approval of your loan. You should not, for example, give notice to your landlord until the loan is approved by the lender and the VA. If you jump the gun, you may find yourself without a place to live.
Attend the loan closing.
You (and your spouse) need to attend the loan closing. The lender or closing attorney will explain the loan terms and requirements, as well as where and how to make the monthly payments. During this meeting, you sign the note, mortgage, and other related papers.
You can now move into your new property. The loan is sent to the VA for guaranty. The VA annotates your Certificate of Eligibility to reflect the use of entitlement (the $36,000 or whatever amount was approved and returns it to you. Congratulations! You’re now a homeowner.