Why a VA Loan is the Veteran's Best Choice
- No Down Payment
- Freely Negotiable Fixed-Interest Rate
- Limitations on Closing Costs
- Varied Repayment Terms
- Right to Repay Without Penalty
- Refinancing Options
- No Monthly Mortgage Insurance Premium
VA Home Loan in Five Steps
Step 1 - Determining the Eligibility
A military veteran, active duty person, or a member of the national guard or selected reserves needs to request
VA’s review of discharge documents or statements of service, and VA’s determination of eligibility for the guaranteed
home loan benefit. Based on the applicant’s length and type of service, VA issues a certificate for each person
determined eligible to apply for a home loan which will be guaranteed by VA. VA loans require no down payment on
a home purchase, and there is no upper limit or required cap on the income of the borrower. The VA Certificate
of Eligibility can be obtained by the veteran or active duty person by mail or visit to a VA regional office. The
request is made on a VA Form 26-1880, Request for Determination of Eligibility and Available Loan Guaranty Entitlement,
available from VA regional offices, and many lenders. Evidence of satisfactory military service, usually a DD
214, or a statement of active duty, or proof of participation in the national guard or reserves, must accompany
the request to VA.
Step 2 - Viewing and Inspecting the Home
Home buyers usually use the services of state-licensed real estate agents or brokers to determine an affordable
price range, suggest certain home features suitable for the buyer, arrange house hunting schedules, view homes
for sale, negotiate sales contracts and hold earnest money deposits. Your state-licensed real estate professional
can explain the many legal requirements for buyers and sellers, and can refer buyers to local lenders who originate
VA guaranteed loans, and to local home inspectors. Buyers should accompany their preferred home inspector during
the inspection of the property to ask questions about the condition of the foundation, roof and other parts of
the structure, as well as the heating, cooling, plumbing, and electrical systems.
Step 3 - Requesting the Loan
Home buyers who wish to obtain a VA guaranteed loan should make sure that the sales contract includes a phrase,
sometimes called a financing contingency, making the contract subject to approval for a VA loan. Home buyers may
even want to contact a lender before they sign a contract for a home, so they can be pre-approved to borrow a certain
maximum amount. Lenders verify and review the past and present job and credit of home loan applicants and compare
this information with loan approval guidelines (credit standards) published by VA. If the documents with the loan
request indicate that the application cannot be approved, then additional written information should be presented
to the lender or VA in order to request reconsideration of the loan request.
Step 4 - Appraising the Property
When an eligible veteran contacts a lender to request a VA guaranteed loan, the lender obtains the name of a VA
fee appraiser and loan number for the request by computer and monitors progress of the appraisal and loan application.
The fee appraiser who will visit the property is state-licensed and will furnish the lender and VA an opinion of
the market value of the property by way of a written appraisal report. The appraisal tells the lender and VA whether
the property is expected to be adequate collateral for the requested loan. Neither the appraisal of the home nor
the VA guaranty of the loan is a warranty that might protect the buyer from latent construction defects and resulting
repair costs. Builders and brokers can issue warranties for the condition of the home and operation of the home
systems.
Step 5 - Closing the Sale
If the loan and the home are approved, the buyer needs to contact a state-licensed insurance agent to obtain an
insurance policy (homeowner’s policy) that will protect the owner and lender from property damage and loss. Title
to the property is usually examined and insured by a title insurance company which may also prepare closing documents
and enter them into public records after the closing. After the home is purchased and the loan originated, the
lender usually sells the active loan to another company which will receive the loan payments and pay the real estate
taxes and insurance premiums.
Advantage of VA Loans
The advantage of a VA guaranteed loan is that the buyer does not need to make a down payment, and that the lender
receives a certificate of guaranty from VA to protect against loss from foreclosure. In this way the VA guaranty
takes place of a down payment which is normally required by lenders to make a loan an acceptable risk.
- Lighthouse Financial Group
- 4001 Main St
- Vancouver, WA 98663
- Office: (360) 737-3150
- Toll Free: 1-866-737-3150
- Fax: (360) 737-3347
- Vancouver, WA 98663
