Welcome to the VA Home Loan Guide

The purpose of the VA Home Loan Guide is to assist current and potential borrowers in becoming more familiar with VA Loans and other Government-backed Loan Programs. It is not intended as a complete description of any program.

The process of obtaining or refinancing a mortgage involves some important decisions. This ever-growing guide offers tips and topics that have helped homeowners.

 

Why a VA Loan?

Many people dream of buying and maintaining the home they have always wanted. VA home loans are structured from start to finish to provide you, the borrower, with special benefits and peace of mind.

Ease
The ease of a VA Home Loan is one of the first reasons an eligible borrower might choose this program. How much effort is needed to get a VA home loan? A few simple documents are all it takes to determine pre-approval. Beyond that, our department can handle your loan, and be there for you step by step, until your VA loan is closed and your documents are signed. Department Specialists will always be on hand, and will contact you regularly to make sure your questions and concerns are addressed. Quality of care is of utmost importance.

Assurance
Many borrowers have found assurance in the loan process by knowing their loan meets the requirements for the Veterans Administration Guaranty. If you obtain a VA Loan, your loan is guaranteed or insured under the Home Loan Guaranty Program, which is administered under the Veterans Benefits Administration (VBA). Lenders must obtain special licensing and follow specific guidelines and auditing requirements in order to do VA Mortgages.

Down Payment & Mortgage Insurance Not Required
The VA Loan allows Veterans 100% financing without private mortgage insurance or a needing to obtain a 20% second mortgage. The guarantee of a VA Guaranteed Home Loan means the lender is protected against loss if you fail to repay the loan. Because the guaranty replaces the protection that the lender normally receives by requiring a down payment or mortgage insurance, qualified borrowers are allowed to obtain favorable financing terms without a down payment.

Assumability
A VA loan can be assumable. For VA Loans committed on or after March 1, 1988, you may sell your home to someone who agrees to assume your loan if the creditworthiness of the new borrower is approved. This can be a significant selling point when it comes time to sell your home.

Interest Rate
VA loans rates offered to VA borrowers can often be lower than interest rates offered to the same borrowers for conventional loans.

No Prepayment Penalty
A prepayment penalty is a provision of your contract with the lender that states that in the event you pay off the loan entirely before the term has run out (as in the case of a refinance), you will pay a penalty. In the case of a VA Loan, if you pay off your loan early, your lender cannot require that you pay a prepayment penalty. A prepayment penalty can be an inhibiting factor in the early sale or refinance of a home. This policy has given many borrowers peace of mind for the future of their loans.

Late Payment Guidelines
One of the requirements for the servicing company of a VA Home Loan is that there be no late charge unless payment is more than 15 days overdue. Any late charge may not exceed 4 percent of payment amount. In addition, financial counseling is available from the VA in case of temporary financial difficulties.

Streamline Program
The VA Streamline Refinance allows qualified VA mortgage holders to refinance at a lower interest rate and/or term without having to re-qualify and obtain another appraisal. It provides an important ongoing benefit to borrowers who decided on a VA loan.

 

THE VA LOAN PROCESS

The VA Loan Process in a VA Purchase
As a Veteran, you are entitled to use your VA benefits to obtain a VA Home Loan. If you qualify, the program allows you to purchase your primary residence with 100% financing. This means all you would pay out of pocket at closing is the closing costs on the loan. However, it is possible, with seller concessions, to purchase your home with little or no money out of pocket. Unlike other loans, this loan does not have mortgage insurance.

There are some basic steps involved in obtaining VA Home Loans. The more information you have about the VA loan process, the more you will realize how uncomplicated the process is. Other than requiring a certificate of eligibility and an appraiser assigned by the VA, the VA mortgage loan process is very similar to the conventional loan process. Here are the steps you will need to take:

• Obtain a certificate of eligibility (COE). As a veteran you may obtain your COE by completing VA Form 26-1880, and mailing it, along with proof of military service, to an eligibility center. In a lot of cases, it may be possible to obtain your COE from your lender using the ACE (automated certificate of eligibility) system.
• Find and select a home for purchase. With your real estate agent's assistance, you may choose to sign a purchase contract conditioned on the approval of your VA home loan. A pre-approval from a VA lender will make this process easier, but does not necessarily replace the condition of final approval.
• Provide the lender with your COE and complete the loan application. The lender will compile all credit and income information. They will also arrange for the VA licensed appraiser to determine the reasonable value for the property.
• After the appraisal is completed, the lender will determine if the loan is approved. The lender will take into account the credit and income information, as well as the appraised value of the property and other factors to make a decision. If your lender is approved by the VA to process home loans through the automated system, as we are, the loan can be approved upon receipt of the appraised value determination.
• Finally, you'll close the VA loan and move into your new house. The lender and title company or closing attorney will coordinate the closing process and explain the key loan terms and requirements.

 

The VA Loan Process in a VA Refinance
A VA Refinance can be a very simple, quick process. You want to remember one thing: documentation. You can use your VA Benefits to refinance your home and get your payments down where you would like them, in as little as 2-3 weeks. What can help you speed things up is having all the documentation that you need.

The following is a list of some of the documents you may need when completing a VA Refinance program. This list does not apply to the Streamline Rate Reduction Program:

• A copy of your driver's license, or government issued photo I.D.
• A copy of your W2's for the past 2 years or complete tax returns if self employed
• Your last 30 days worth of pay stubs, showing your current year-to-date gross income.
• A copy of your DD Form 214 release paper or Statement of Service if active military
• The “Note” from your current mortgage
• Awards letters showing any disability, pension, or Social Security monies you are receiving
• A copy of the Declarations page from your Home Owner's Insurance policy

 

Before you apply for the loan, the first thing you should do is find as much of that paperwork as possible. This can cut significant time off of the total loan process. There may of course be other things you are asked for, but this should get you started on the right foot. After you have submitted your application, your loan is goes through an automatic underwriting system, which gives approval for qualified applicants to go ahead to process the loan.

Processing the loan is where the bulk of time goes into completing your loan. Our processors consider documents and information to see if the applicant qualifies. One of the first things needed — and also one of the most important — is the appraisal. An appraisal for a VA Loan is different from a conventional loan because the appraiser must be approved by the VA. The VA requires the lender to submit the request for the appraisal to them, after which the VA assigns a local VA licensed appraiser. Once the appraisal has been ordered, the appraiser should contact the borrower within 3-5 business days to schedule a good time for the appraisal to be done. When the inspection is complete, most appraisers will work as quickly as possible to get the report back to the lender.

There is one more inspection that must be completed: a wood-eating pest inspection. VA wants to make sure that there are no termites or other pests eating away at the home. Any licensed pest inspector of the borrower's choosing can complete this inspection, but the borrower needs to tell the inspector that this is for a VA loan, as they have some specific paperwork they are required to use. When the inspection is done, either the borrower or the inspector must send a copy of the report to the lender, along with the invoice.

Meanwhile, there are many forms that the processors will be ordering and completing such as: a current Certificate of Eligibility, a Verification of Benefits, verifying income and employment, obtaining various payoffs, and obtaining a preliminary title report on the property to make sure there are no additional liens on the house or lot.

Once all the paperwork and documentation have been gathered, the loan is submitted to an underwriter who will review the entire loan file. Our department has our own in-house team. The processing team is in close communication with the borrower's VA Loan Specialist during the process, and that Specialist will keep the borrower informed as these steps are completed.

Once approved, all that remains to be done is to schedule the closing time with the title company. Once closed, the loan will fund after 3 business days, and at that time the borrower would also receive any money he or she is getting from the refinance.

VA Refinance Loans can be an incredible benefit for you and your family. Whether you're looking to consolidate debt, take cash out for home improvements or other reasons, or get out of a bad loan and into one that's backed by the Federal Government, our team of VA Loan Specialists is happy to assist you in this process and make it as smooth as we can. We would love to help you and assist you in anything you need!