I’ve been fortunate to meet with a couple starting their road to a home purchase this week with plans on using VA financing. I take it for granted that everyone knows the process for purchasing a home using this type of financing. As I explained the process I noticed more questions arose from my explanation of the process. I then thought it would be a great opportunity to share the process with everyone. Here’s the process overview:
You need to be pre-approved with a lender that does VA financing. Not all lenders do VA financing, and those that offer this type of financing may only do 1 of these loans every few years. Ask how many VA loans your loan consultant has done in the last 12 months.
Make sure your agent previews homes before taking you to see each property. Because the VA loan has special requirements, fixer uppers may not work. Your agent should be able to “weed” out properties that won’t qualify.
Once you find an acceptable property, understand that your agent may need to pitch your offer strongly to the seller’s agent. Some sellers and seller’s agents may not be aware of the process of the VA loan and may be scared off even though you have submitted a strong offer.
Once in contract expect to have to pay anywhere from $400-1000, depending on the homes size, out of pocket for inspections required by the Veterans Administrations underwriter. Also be prepared to pay anywhere from $400-$1000, depending on the home size, for a VA appraisal. The appraisal is a more in depth valuation than a standard appraisal and thus may have higher cost depending on your lender.
Once your reports are completed, understand that you will need to have roof and Section 1(which is defined as noted areas of active termite infestation or other wood-destroying insects or organisms like dry-rot fungus or likely caused by water intrusion.) clearance. If the home does have some defects in these two areas you will have to renegotiate this work to be completed by the seller prior to proceeding to the closing phase of the process. This is required by VA.
Once the last hurdled has been completed you can proceed to the closing phase, which is then like any other home purchase.
The VA loan is a great tool for our Veterans to purchase, buy a move up home (only 1 VA loan can be in use at a time), or refinance. The no down payment option is great for the borrower and rates on these loans are close if not equal to conventional financing. If you find yourself using this type of financing just be prepared for the process, and patience is the key. Work with a lender that has knowledge with the VA loan and a Realtor that has experience working with VA buyers. This will help your process move along smoother.
Good luck and happy house hunting!