So, you're thinking about buying a home and getting a VA home loan. Do you know what steps are involved? How much time should you allow for the VA home loan process?
Step 1 - Initial Meeting with Lender
The first step in buying a home is getting pre-qualified with a lender. Even if you are not planning on buying a home for a couple of years, it is never too early to make a plan.
- First, talk with your lender and fill out a loan application. This can be done by scheduling an in-person meeting, phone call, filling out an online application, or a combination of the three. In-person meetings are often best for first-time home buyers because it's easier to get all of your questions answered.
- You and your lender will discuss your credit/credit score, debt to income ratio, costs, down payment, loan options, etc.
- Generally, a person can be prequalified within an hour or so, although it may take longer in some situations. For example, self-employed borrowers may take longer because the lender has to look at tax returns to calculate income.
- If you're applying for a Veteran’s Administration (VA) loan, you’ll want to get a Certificate of Eligibility. This is a confirmation from the Veteran’s Administration that you have met the minimum requirements for VA loan eligibility. Your lender can help you determine whether you meet the VA eligibility requirements.
Step 2 - The Home Search
You can search for homes online, by driving around your desired neighborhood, or by using a realtor in your area.
Realtors have access to more homes than you can find on the internet or by simply driving around. They access the Multiple Listing Service (MLS) and help buyers find the right home for their needs and budget.
As the buyer, you shouldn’t have to pay the realtor directly for helping find the home. Generally, the home seller pays all of the realtor's commission out of the proceeds of the sale of the home.
The VA has specific standards for home appraisals. Lenders hire VA-approved appraisers to make sure the home is worth the asking price and to ensure that it meets the VA’s Minimum Property Requirements (MPRs). Buying a home that is move-in ready and requires few fixes will help the process go faster and smoother.
Step 3 - After You’ve Found a Home
Your realtor will help you make an offer on your dream home. The offer outlines the purchase price and other stipulations. If the seller accepts your offer, you have a contract! This process usually takes a few days.
Then, your realtor works with you to schedule home inspections. Most lenders require pest/termite inspections, but do not require a home inspection. However, home inspections are recommended by nearly everyone in the industry because they help protect the buyer from purchasing a home with hidden problems. The inspection timeline is usually about 10 days.
If inspections go well, the next step is ordering the appraisal, which your lender will do for you. Most appraisals are completed within about 10 days. They verify the home's monetary value and that home meets the VA’s Minimum Property Requirements (MPRs) in terms of safety, sanitation and structural integrity. In general, the home must have a working heating system, safe water quality, a structurally sound roof, no mold problems, and a safe, working electrical system. They also check for smaller safety items like handrails on stairs and broken windows.
Your lender will ask for a number of documents to finalize your loan and prepare for closing. The faster you get the lender your documents (paystubs, tax returns, etc.), the faster you can move toward closing. In many cases, the buyer's procrastination is the primary reason for slowing down the closing process.
Step 4 - Closing
Finally, it’s time to “close” on your home. This is when ownership of the house is officially transferred to the buyer.
On closing day, all parties involved meet at the title company to review and sign papers that explain the mortgage, note, and other documents. The closing process on a VA loan will be about the same as with any other loan. However, you will likely not need as much cash at closing since no down payment is required.
While every situation is different, buying a home usually takes around 30 to 45 days.
Start planning a home purchase well in advance. The process takes time, so it helps to do much of your preplanning before you even start your home search.
While Lincoln Lending (NMLS 398026) cannot give financial advice, our lending experts have years of experience in helping clients work through the step-by-step process and timeline of buying their first home. We would be happy to schedule a no-cost, no-obligation information session to review your specific situation and options available. Please call us at (405) 799-5363 or email us at info@LincolnOK.com. to schedule a time to discuss your home purchase options.