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Quick Overview of the VA Mortgage Loan Process

There are a number of steps involved in successfully financing a new home purchase through VA loan program. The entire process can be handled with ease by veterans that understand and know what to expect at every stage.

Before submitting an application for loan pre-qualification, either the veteran or the lender must obtain the Certificate of Eligibility (COE). The COE which certifies a veteran’s eligibility for VA home loan benefit based on their military service can be processed over the internet at VA’s website. A lender can also request the certificate or validate it electronically.

Certificate of Eligibility

After COE is in place, the home loan application process begins. During the pre-qualification stage, the lender will request the borrower (veteran) to provide them with supporting documentation to evaluate their credit worthiness, assets, income and affordability. Real estate agents generally require a pre-approval letter as proof to ascertain a borrower’s ability to secure funding for their new home purchase.

Find a Property and Sign the Contract

Depending on the approved loan limits, a veteran should work with a buyer’s agent to buy a residential property that fits these parameters in the locality of their choice. REO homes and foreclosure properties should be considered as they are generally priced to sell with the seller (bank or distressed borrower) willing to negotiate. Access to local MLS listings through sites like zillow.com, trulia.com and Realtor.com make it easy for a prospective home buyer to sort and filter through all local residential real estate listings.

After locating a suitable property, the contract shall be signed. The buyer can negotiate with a seller a slightly higher price to allow for the inclusion of the seller-paid closing costs and pre-paid charges (insurance, taxes). This allows a veteran to obtain a VA mortgage without any need for down payment. The contract sales price must be closely aligned with appraisal value otherwise a lender underwriting and funding the VA loan may stipulate the buyer to either lower the purchase price to appraisal value or put a down payment to cover the difference.

Pre-Qualification and Mortgage Loan Application

After the contract has been signed, the lender begins underwriting the loan according to VA guidelines. VA doesn’t involve in the loan underwriting process. Once all conditions have been satisfied the mortgage lender funding the VA loan schedules a closing and funds the loan.

Upon closing, the lender submits the entire package for VA guaranty. As you can see, VA doesn’t finance the property; it only guarantees the lender up to a certain amount against any default by the veteran who purchased a primary residence. The VA loan process might differ only slightly from the above mentioned steps in almost all cases.