Buying your first home is exciting. If you are a veteran, it can be even more exciting because you have the opportunity to use your VA financing benefit. This could mean putting no money down on a home and paying low closing costs.
As a new homebuyer, you probably have many questions. We created this guide of the six important steps you must take to get your home with VA financing.
Finding a Lender
The first step is the most crucial. Not only do you need to find a VA approved lender, but you must find one you work well with. A few questions to ask lenders include:
- How many VA loans have you done?
- What’s your turnaround time?
- Do you have experience with VA appraisals?
You want a lender that understands the process well. It’s not that VA loans are hard to get, but they have some particular rules that if misunderstood could leave you in the lurches right before you are supposed to close on your loan.
Prove Your Eligibility
Next, you’ll need to prove to the lender that you are eligible for VA financing. This doesn’t mean qualify – you must prove that the VA will provide you with benefits. In other words, the VA will guarantee your loan.
The only way to prove your eligibility is with a Certificate of Entitlement. You can get the certificate in a few ways, but the easiest is to let the lender request it. Lenders can get their hands on the certificate in a matter of minutes. You also have the ability to order it through the mail or online through the eBenefits portal. These methods take longer though.
Get a Pre-Approval
Once you have your COE, you should secure a pre-approval from your chosen VA lender. You can even secure a few pre-approvals so that you have several quotes to compare. The important part about the pre-approval is that you know how much you can afford. If you take this step before you shop for a home, you can then tailor your hunt for a home within your price range.
If a lender pre-approves you, it will be based on the condition that the property you choose passes the VA appraisal, among other things. In other words, it’s not a guarantee of a loan, but it lets sellers know that you are a serious homebuyer and that you have the ability to secure financing if everything falls into place.
Look for a Home
Finally, you can do the fun stuff and look for a home! With your pre-approval in hand, you can have your realtor (or yourself) find homes within your price range. Keep in mind, some sellers might balk at the fact that you have VA financing. Many people still believe the VA makes it hard to pass the appraisal. This is no longer true and with the right realtor and/or lawyer, you should be able to see the homes that you want to see.
Another myth that many sellers think is that they have to pay your closing costs on a VA loan. While it might be helpful if the seller pays them, he certainly does not have to pay them. You can negotiate it into the contract, but that is between you and the seller. If the seller cannot or will not pay them, you also have the option to ask the lender for a no-closing-cost loan.
Process the Loan
Once you sign the purchase contract, the lender goes to work approving your loan. They already did some of the legwork, but they’ll have to re-verify all of your information. They may ask you for more documents. The quicker you provide them, the faster you will get the approval you need.
As a part of this process, the lender will order an appraisal. This is probably the most important part of the process. You need the home to be worth at least as much as the price you bid. If it doesn’t, you‘ll either have to renegotiate the price or put money down on the home to make up the difference.
The Closing on Your First Home
The final step is the closing on your first home! This is an exciting day. You will sit down with the lender, a closing agent, your real estate agent, and a lawyer. You will go over a lot of documents and sign them. Once everything is signed and the money exchanges hands, the home is yours, making you a homeowner.
These are the basic steps to buying your first home. The process can go seamlessly if you take them step by step. Make sure you have the right professionals in your corner and that you make sure you get the best rate and term possible for your loan.