With 2012 seeing the highest volume of VA-backed mortgages in 18 years, it’s becoming more and more apparent that VA loans are the best choice of home loans for veterans. Private, more conventional loans can be extra difficult and much more expensive for veterans to acquire.
VA-backed loans were literally made for veterans. Being backed by the VA allows lenders to offer things like no money down, competitive rates, and make it easier to qualify for a loan. It’s no wonder why there’s been a rise in loan numbers. But how does the VA loan process work?
The first thing you want to do is research lenders. Find a company that you like, and contact them. If you are getting a VA-backed loan, working with VA-specific lenders will make the home-buying process easier for you. A VA lender is used to working with the VA and can help you navigate veteran-specific guidelines and qualifications better than a private lender would be able to.
Once you’ve contacted your chosen lender, you’ll give them your personal and financial information, your loan needs, and any other information they might require. They can usually get you prequalified in less than ten minutes.
A lot of people think that you have to have a Certificate of Eligibility (COE) before you contact your lender. This isn’t true; you can get prequalified before receiving your COE. Later in the loan process, your lender will contact the VA directly for this so you don’t have to worry about trying to get one on your own.
Fill Out an Application
After your initial pre-approval, your lending company will send you a packet of documents to fill out. After you’ve complete this paperwork, you’ll send it back to your lender. Once they’ve received your completed documents, they will issue you a letter of preapproval, and you can start looking for your dream home.
After your lender has received and started processing your paperwork, they’ll use a copy of your DD-214 to obtain your COE from the VA. This is the preferable method of getting a COE; your lender will have your COE within seconds, compared to the 6-8 weeks it would take you if you tried to get it from the VA yourself.
Once you’ve picked out your new home and met VA loan guidelines, you’ll be asked to sign a Contract of Sale, or Purchase Agreement. Your lender will tell you if there are any details left to sort out, and they’ll assist you in getting those taken care of. This is the last step before your loan is sent to an underwriter.
Underwriting and Closing
After you’ve signed your Contract of Sale, your loan will be sent to an underwriter for review and approval. Your underwriter will verify your personal and financial information, and request additional details and history if necessary. After they’ve approved your loan, a closing date will be scheduled. At closing, you’ll sign the final paperwork for your home and get your keys.
Chris Birk is the director of content development for VA Loans Insider, a resource for military families and veterans on the latest news and information for homeownership using their VA benefits. Connect with him on Google+.