A VA loan is a type of mortgage provided by private lenders issue and is guaranteed by the Department of Veterans Affairs. This guide will tell you how it works and some of the things most borrowers don’t know.
To understand everything, be sure to go through this piece in its entirety.
How Does a VA Loan Work?
There is a slight difference between conventional mortgages and VA loans. Note that it is not the duty of the Department of Veterans Affairs (VA) to originate loans. But, it backs the portion of each loan against default.
This guarantee or backing provides lenders with a lot of confidence to extend $0 down financing. Other than that, VA loans work almost the same way as ordinary mortgage loans. But there are some caveats. That said, here is how your VA loan will work.
- Get Prequalified
Get in touch with a VA lender, and you will prequalify for a loan. This is based on your monthly income and your credit history, among others. Prequalification is a good thing as it gives you the knowledge of the kind of house you can afford.
It is a powerful step that lets you know the types of houses to begin looking for. Thus, you can’t take it for granted.
- Get Preapproved
With preapproval, once you get a house you like, you can get into action. Your lenders will verify your financial and income information. They will use that to determine your purchasing power finally.
From there, your lenders will issue you with an approval letter. The sellers and realtors will determine how serious the buyer is after seeing a preapproval letter.
- Put in an Offer
Once you and your agent find a perfect VA loan-approved home, you will come up with an offer. Your negotiation with the seller will begin until you agree on one thing. It is vital to work with an agent who knows everything about how VA loans work.
- Go Through Appraisal and Underwriting
It is important to go through VA underwriting and approval. Once you have gotten under contract, your VA loans in San Diego lender will order the VA appraisal of that particular property. Note that this process is different from a home inspection.
But, it is a VA requirement put in place to determine whether the property in sale meets fair market value. It also touched on the VA’s minimum property requirements.
At the same period, the underwriters will begin to assess your income. If everything is clear, you will get a clear to close and head to your loan closing.
- Closing
In the closing process, you will have to sign all sorts of legal documents and paperwork. Once you complete everything, you will receive the keys to your new home.
Is It Hard To Get a VA Loan?
Many people tend to think that VA loans are hard to process. However, provided you are a qualified veteran, the process is easy and smooth. Note that there is no maximum loan limit with VA, which is why it is worth going for.
What You Didn’t Know About VA Loans?
Here are some of the fascinating things about VA loans you need to be aware of.
- They are Reusable
Provided you pay off your loan each time, you are free to use your VA entitlement as many times as you wish. You can still get another loan even if you currently have one.
- Only meant for certain types of homes
You can’t use your VA entitlement to get any type of loan you want. If you intend to get a working farm, a fixer-upper, or a downtown deli, then this type of loan might not be right for you.
- Only for primary residences
Don’t even attempt to use your VA entitlement to get an investment property. You will struggle, but the process won’t work. The VA loans are only meant for primary residences.
Closing Thoughts
To get the VA loan, you must start with looking for prequalification. From there, you will get preapproved to begin looking for the best house to purchase. It is an easy process with a 100% success rate as long as you have the necessary qualifications.
Article contribution by freelance writer Julie Carter.