The home loan program of the U.S. Department of Veterans Affairs (VA) was designed to reward those who either are serving or have served their country by helping them become homeowners. Unfortunately, knowing that doesn’t necessarily make the process of applying for VA loans any less intimidating or nerve-wracking for people who are eager to finally own their own homes. However, knowing exactly what to expect during the application process may help reduce some of your stress.
Applying for VA Loans
As Time explains, VA loans are backed by the VA and issued by approved private lenders. Eligible borrowers will enjoy relaxed standards as they qualify for their loan, and they won’t need a down payment. Interest rates on VA loans also tend to be lower than those on comparable conventional loans, which can produce substantial savings over the life of the loan. As an added bonus, borrowers won’t need to purchase mortgage insurance. They’ll also be protected with limits on their closing costs.
Determining Your Eligibility
VA loans aren’t an option for everyone. They are a benefit earned with service. Generally, they are available to veterans, active-duty service members, reserve members, National Guard members, and some surviving spouses. The exact requirements vary depending on the nature of your service. If you’re wondering whether you might be eligible, the VA offers more information online.
Requesting a Certificate of Eligibility
The Certificate of Eligibility (COE) is a document issued by the VA. It serves as proof of your eligibility to participate in the VA loan program. It also contains information your lender will need to process your loan. Applying for your COE is one of the first steps you should take if you hope to use a VA loan to purchase a home. The documentation that you’ll need varies depending on your service, but the VA provides an explanation of what you’ll need. When you’re ready, you can apply online or via the mail. If you prefer, you can also wait and ask a lender for assistance.
Finding a VA-Approved Lender
Because VA loans are issued by private lenders, it’s fairly easy to find a lender who offers them. However, it’s important to choose a lender who is knowledgeable about the program. VA loans have their quirks, and working with an experienced lender is the best way to maximize your benefits and avoid missteps that could add time, costs, and stress to the process. As Credit Karma indicates, you’ll need to submit a loan application and provide the necessary financial information when you’re ready to apply.
Qualifying for a VA Loan
While the VA’s guarantee means that the qualification standards for VA loans are relaxed, borrowers who hope to qualify for this form of financing must have the income and credit to secure the loan amount that they are seeking. As MoneyGeek reports, lenders generally want to know that your income is stable and sufficient for the loan. This means that you make enough to pay your new mortgage payment, your other bills, and still have enough left to support your family. As for creditworthiness, the VA doesn’t set a minimum credit score, but some lenders might. Likewise, the VA doesn’t set a maximum debt-to-income ratio, but most lenders have internal guidelines.
Getting Appraised and Approved
What happens after you’ve found a property and had your offer accepted? As the VA explains, you’ll need to await the outcome of a VA appraisal, which your lender orders. This isn’t a home inspection, and it shouldn’t be considered a substitute for one. It’s conducted to determine the market value of the property and to verify that it meets the VA’s minimum property standards. Once it’s completed, the lender reviews the results of the appraisal and your loan application to decide whether to proceed with the loan. If the decision is in your favor, you’ll be able to move toward closing. If not, you’ll need to chart a new course. That may include choosing a different property, finding a different form of financing, or challenging the VA appraisal.
Are you wondering if a VA loan could help you achieve your housing goals? Whether you have questions about applying for VA loans, how VA appraisals work, or what you can accomplish with a VA loan, the experienced team at PrimeLending Kansas City is prepared to help. Contact us today to get started.