1. Obtain COE 

A Certificate of Eligibility (COE) can be obtained with your lender’s help or by you online at the Veterans Information Portal (VIP). The COE provides important information to the lender about your eligibility and entitlement.

2. Pre-Qualify

Give your lender all the information about your income, debts and assets upfront so you can get a good idea of how much you can afford to borrow.  Pre-qualifying is just an estimate.  The VA loan underwriter will verify that you are a satisfactory credit risk later in the VA loan process.

3. Property Eligibility

VA mortgages are for primary residences like single family homes, townhomes, VA-approved condos, multi-family dwellings (one fourplex per borrower) and some manufactured homes (secured to a permanent foundation).  Properties financed with a VA loan must have an appraisal and compliance inspection for value and safety.

4. Appraisal

The VA appraiser will evaluate the property to determine fair market value and safety compliance.  The home should appraise at or above the purchase or refinance price.  If it’s determined is unsafe, then safety issues are usually required to be fixed before closing.

5. Underwriting 

A VA underwriter uses income documents, credit reports, the appraisal and other documents to finalize your VA loan application process. The underwriter’s role is to certify to the VA that the borrower is a satisfactory credit risk.

6. Closing 

A title company will be used to close your loan.   You will sign loan, title and other documents at your VA loan closing.  If buying a home, you can move in within the time specified after closing – often within 24 hours.

1)  Interest Rates Haven’t Been This Low in nearly Half a Century!

Freddie Mac began collecting mortgage interest data in 1971 to calculate national averages.  Since then, the national average interest rate has never remained as low as it has recently.  Since mid November 2011, interest rates have been hovering at or below 4%.  Economic indications are that the rates should hold for the immediate future, but will eventually go up.

2)   Loan Terms Can BE Cut in half for almost the same payments!

According to a Freddie Mac report, a trend in refinance is 15-year mortgages.  If you obtained a 30-year fixed rate mortgage around 4 years ago, chances are you’re paying around 6% APR.  At today’s average rate of 3.16% for 15-year fixed mortgages, you could pay off your new VA loan in about half the time and save a small fortune in interest payments.  Here’s what the comparison of two $250,000 VA mortgages might look like:

1. 30-year fixed rate of 6% (4 years ago) = $1,499 per month and $289,595 in total interest

2. 15-year fixed rate of 3.16% (today) = $1,746 per month and $64,236 in total interest

3)  Some HOUSES ARE A STEAL IN TODAY’S MARKET

Let’s not beat around the bush — the housing market is depressed. According to an S & P home price index, housing prices have not increased annually since 2006.  Homes are priced as if it were 2003!  Buyers have their pick of an abundance of bank-owned properties, short sales and homes priced to sell.  Because VA borrowers can obtain VA-backed loans with no money down, coming up with enough cash to put down on a home is not an issue.

For more information on VA-guaranteed loans, contact an experienced lender.

It’s no doubt VA loans can save eligible borrowers money.  Military members stand to save the most with these unique VA loan features:

- Zero Down Payment
- No PMI
- Seller-paid Closing Costs
- Interest Rate Advantage
- Streamlines

Because VA home loans are backed by the federal government, the extra security of a down payment is not required.  Let’s compare conventional and VA purchase loans to show just how much a veteran can save.  Each borrower purchases a home for $250,000.  Many conventional lenders recommend 20% down payment – that’s up to $50,000 cash upfront from the conventional borrower vs. $0 from the VA borrower.

Another great benefit of VA loans is no private mortgage insurance (PMI).  This insurance premium is required with FHA and conventional mortgage programs if borrowers bring less than 20% down to the closing table.  To illustrate the savings, let’s compare the same $250,000 house purchase.  Assuming the conventional borrower puts $25,000 down for a 30-year loan of $225,000 at 4%, the estimated mortgage premium is $101. This premium must be paid monthly for 5 ¾ years until 80% loan-to-value is achieved.  That’s a total of $6,868 from the conventional borrower vs. $0 from the VA borrower.

With VA loans, the seller can pay up to 4% of the buyer’s closing costs and concessions. This can include the buyer’s VA funding fee, property tax and insurance prepayments, selling incentives such as appliance packages, interest rate reduction points, and payoffs of judgments and other debts.  Conventional loans only allow for 3% seller-paid closing costs.

In conventional lending someone with a credit score of 650 might qualify but may be considered higher risk than someone with a score of 720.  The borrower with the lower credit score may be given a “high-risk” interest rate.  According to VA guidelines, no minimum credit score is required for qualifying.  VA lenders often set their own minimums, usually lower than that of conventional qualifying. And, VA borrowers typically receive one low interest rate as long as they qualify.  This is known as the interest rate advantage. A veteran with a 4% interest rate on a $250,000 30-year fixed rate loan can save $73 per month and a whopping $26,343 over time vs. a conventional borrower with the same loan at 4.5% interest.

Finally, VA Streamline refinances are a quick and easy way for eligible borrowers to get a lower interest rate on an existing VA loan.  Little or no interest and credit re-qualifying is required.  And, the VA funding fee is just .5% for all Streamline loans.  Many conventional lenders no longer offer Streamline refinancing.

For more ways to save with VA loans, contact a specialized lender.

1. Signing a Power of Attorney document can enable someone else to act as Attorney in Fact on a VA loan transaction.
2. Military members deployed overseas or away from home can get an extension of up to 12 months to occupy the home purchased with a VA loan.

First, a VA-eligible borrower doesn’t necessarily have to be present for any of the VA mortgage process if he or she has a good reason.  Being deployed away from home would certainly qualify.  If a Power of Attorney document is signed and an Attorney in Fact is named, then this person can handle most of the paperwork involved with getting the loan on the borrower’s behalf.  This person is often a spouse, but can be anyone the borrower trusts.  An Attorney in Fact can obtain COE, fill out the loan application and sign closing documents.  The VA-eligible borrower must provide proof of intent to use home loan entitlement.

Second, an obstacle that prevents some from using their VA home loan benefits while deployed is the occupancy requirement.  Normally, a VA borrower has 60 days from closing to move into a home financed with a VA loan.  Borrowers can receive an extension of up to 12 months from the VA if they have a good reason for being away and can show a planned date of return.  Many borrowers who are deployed away from home are awarded such an extension if they plan to return home within 12 months.

For additional information about getting a VA loan while deployed overseas, contact an experienced VA-approved lender.

1) Certificate of Eligibility (COE)

Coming prepared with the right documents can save time in the VA home loan process.  If you already have your Certificate of Eligibility (COE), show it to your loan specialist.  If you don’t have one, your loan specialist may be able to get it instantly online, or you can use the Veterans Information Portal.  A COE is necessary to get the process rolling.  The COE tells the lender how much entitlement you have, which translates to how much “house” you can get if you qualify.

2) Financials

Have your income documents ready.  Bank statements, investment statements, W-2s, 1099s, divorce documents, tax returns, etc. will be needed to determine how much money you have coming in.  The lender will be able to get a good read on how much you have going out by obtaining your credit report. You should come prepared with ballparks of your rent and other expenses that may not show up on the credit report.  After assessing financials and entitlement, a lender can tell you how much VA loan you qualify for.   Getting pre-qualified will take the mystery out of how much you can borrow.

3)  Real estate

As soon as you know how much you qualify for, make an offer on a property.  A purchase contract is helpful when the lender begins to underwrite the VA loan.  The purchase contract can be written with the condition that you fully qualify for your loan.  The first two of these 5 tips will help your chances.

4) Appraisal

Once the VA loan application process is underway, the VA appraisal will be ordered. A specially certified appraiser will determine the value of your property and will look for any hazards that may deem the property unsafe to live in.  You’ll want to order an independent property inspection as well.  If through the VA appraisal or independent inspection it’s discovered that the property needs repair, then a solution between the buyer and seller will need to be arrived at before closing.   If the property passes VA appraisal for value and safety, then underwriting can proceed.

5) Closing

At this point, you’re very close to owning your home.  The VA loan closing process involves signing your VA mortgage and property title documents.  There shouldn’t be any surprises here.  You should be able to move in shortly after closing – sometimes within 24 hours.

With a VA-backed mortgage, 100% of your home can be financed with no private mortgage insurance required.  Being prepared is key.  For more information about VA-guaranteed loans, ask an experienced loan specialist.