A Veterans Affairs (VA) home loan is one of the best benefits service members enjoy during and after duty. It can be used by service members or surviving spouses and families for buying, building, or refinancing a home.
VA loans are issued by private banks with a guarantee provided by the U.S. Department of Veteran Affairs. It is among the last zero percent down home loans nowadays and has the lowest average fixed interest. Additionally, VA loans will not require you to pay for Private Mortgage Insurance (PMI).
It can be easier to qualify for a VA-backed home loan compared to other mortgage options. The process comprises several necessary steps.
Assess Your Eligibility
Before plunging into home buying, gauge your eligibility for the right VA-backed loan amount based on your income, credit score, and entitlements. You can use an online calculator for VA home loan to easily determine possible mortgage conditions. An initial assessment of your eligibility is necessary to prequalify for a VA-backed loan.
Apply for Pre-Approval
After assessing qualifications, approach a certified lender and apply for pre-approval. A pre-approval is provided in the form of an official letter displayed to homeowners and real estate agents. This document, in turn, gives you solid footing when bidding for a home.
Applying for pre-approval is essential as credible proof that lenders acknowledge your purchasing power and can grant you a loan once you have a property to buy. This will let real estate agents and home sellers know that you are in it and prepared to close the deal.
Find the Right Agent
When looking for a home, proper representation can make a world of difference. Find a real estate agent that is experienced with using VA loans for clients. You don’t have to do much leg work for this. There are great sites that can help you find VA-specialized real estate agents online. After finding the best match, be sure to specify your preferences, so they can find the best VA loan-approved home that’s right for you.
Get a VA Appraisal
After finding a home with your agent, it is vital to acquire a VA appraisal. VA appraisal is an assessment of the property’s overall condition and value. Although a VA appraisal is not an official inspection, these audits allow the mortgage lender to review the property’s list price to ensure it is within a reasonable market range.
Your lender will hire an appraiser. You will be required to pay an appraisal fee and wait for it to be processed to receive a Notice of Value (NOV). Appraisal fees, schedules, timelines, and requirements vary per state, which you can check via the U.S. Department of Veterans Affairs published list.
What to do with the appraisal result?
If the VA appraisal is processed and the asking price is approved, you can close the deal and buy your new home. However, there will be instances when the appraisal results may turn out lower than what is needed. Don’t worry if this happens; it’s not the end. There are still several options that you can consider when your VA appraisal comes in low, like getting a second appraisal, negotiating with the seller, or paying the difference if you can.
Closing
Last but not least, it’s time to close on your home. It’s crucial to understand closing arrangements while applying for your VA loan, as some lenders include closing costs in the loan. Read everything and ask your real estate agent and lender when things are unclear to you.
You will be signing legal documents, so be sure to understand the terms and conditions written. Also, take note of the mandatory VA funding fee, which for 2021 is 2.3 percent of the loaned amount. For those who already know of the VA program and are using it again, the fee is at 3.6 percent. It can be reduced by putting at least 5 percent down at closing, so discuss this with your agent and lender, as well.
Get the Most Out of Your VA Loan
A VA-backed loan is one of the best mortgages one can acquire. With all the benefits it provides, it can really help you save your hard-earned money. VA loans are designed to help service members and their families as they become homeowners. If you’re qualified, follow this process to make the most out of your VA-backed loan.
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