As a veteran, you may be eligible for a VA loan. This means a loan with no down payment and flexible guidelines. However, the VA does not write the loans. You have to find VA approved lenders. This does not mean just any lender will do. The VA only approves certain lenders to write the loans.
Keep reading to learn what to look for when you need a VA loan.
Finding VA Approved Lenders
Lenders willing to write VA loans must get approved by the VA. Because the VA does not oversee the process, the lenders must have knowledge of the VA’s requirements. This is why you can only get a VA loan from VA approved lenders. These are entities that went through the training process to understand the VA’s rules.
If a lender underwrites a loan in the VA’s name that does not mean the minimum requirements, the VA won’t guarantee it. This hurts the lender more than anyone else. If you default on the loan, the VA will not pay the lender the 25% guarantee that they provide approved loans.
When you shop for a VA lender, make sure you ask them about their experience. Just because a bank is approved to write VA loans, doesn’t mean they have experience in doing so. Finding a lender that has enough experience can help your process go as smoothly as possible.
Understand the Benefits
You want a lender that understands the VA benefits. Lenders without a lot of expertise in the area, may try to convince you to take another loan program. This won’t necessarily work in your benefit. The VA loan does not require you to put any money down. It also only requires a 620 credit score and allows a debt ratio as high as 43%.
Finding a lender that knows the VA’s rulers and benefits well can help you make the most of the program. They will know exactly what the VA needs and what you need to get approved for the loan. They won’t make the process any harder than necessary since VA loans are one of the most relaxed programs available.
VA loans require one unique aspect – a Certificate of Eligibility. While you can complete VA Form 26-1880 and request the form yourself, it doesn’t always work to your benefit. The process can take a while, especially if you don’t complete the form right or send the right information.
The right lender can request your COE for you. They do this online and get an answer in the same day. If you already put a bid on a home and signed a contract, this can work to your favor. The quicker you get your financing going, the quicker you can close on your home purchase.
An experienced VA lender will also understand the VA funding fee and how it will impact your bottom line. There is nothing worse than finding out your closing costs are several thousand dollars more than you anticipated right before your closing date.
Working with a VA-approved lender can also provide you with the following benefits:
- Help you understand your entitlement even if you already used some of it
- Help you get the funding fee waived if you are eligible to do so (disabled veterans)
- Properly complete the application process
- Obtain the right loan terms
The VA loan can provide you with many benefits, but without the right lender, it may end in disaster. Shop around and ask the right questions of the lenders. It’s not enough for them to say that they are VA approved. No, not all lenders can say they are, but experience in the loan speaks volumes. You want a lender that understands all of the nuances of the VA loan so that you can get the most out of the program.