Organize Yourself before Applying for VA Loan

Written by Lynn Goya

One thing that is the same between VA and conventional loans is the paperwork.  Before you begin looking at homes, it is a good idea to get your loans preapproved so that you can act quickly if you find a home you like and help you target homes that you can afford.  Many real estate professionals can steer you toward a good VA loan expert.

But even before you start gathering your loan processing paperwork, you need to obtain a Certificate of Eligibility from the VA.  Certificate forms (VA FORM 26-188) are available on line or you can call 888-244-6711.  Have your proof of military service (NGB Form 23 or NGB Form 22) ready.

Once you establish that you are a qualified VA Loan recipient, you will need to find a lender.  The lender will ask for permission to check your credit report, verify employment and banking information and have you write down a list of assets and liabilities.  From this financial data, the lender will determine your loan amount and the interest  that you will be charged on the life of the loan.  Remember, the longer the loan, the more interest you will pay.  Try to qualify for a 15-year loan, if possible.  You can come close to paying a 15-year interest rate on a 30-year loan by paying an extra payment per year or selecting a bi-weekly payment schedule (which results in two extra bi-weekly payments per year). 

All banks will require an appraisal before releasing the funds, which is a difficult process in itself in these times of decreasing home values.  However, the VA requires a VA Appraisal as well that will determine the market value of your prospective home from which it will issue a Certificate of Reasonable Value that establishes the maximum loan amount that you will qualify for through the VA.

Most buyers want – and many states require – a series of inspections before closing.  Typically, you will want to inspect for Radon, have a home inspector certify that the home is free of defects and have a termite inspection to ensure that any wood is sound.  If you find any undisclosed flaws in the home, you can renegotiate the price, ask the homeowner to fix them or back out of the deal.