VA Loan Process
This BLOG On The VA Loan Process Was Written By Gustan Cho
The VA Loan Process is similar like other mortgage loan programs, however, there are few extra steps in the VA Loan Process because VA Loans are limited to Veterans with Certificate of Eligibility. VA Loans is the best loan program in today’s market. Unfortunately, VA Loans are only limited to Veterans with Certificate of Eligibility. The Certificate of Eligibility is often referred to as COE.
What Is A Certificate Of Eligibility And How Does It Play In The VA Loan Process?
The very first stage in the VA Loan Process for a VA borrower is to locate the COE, or Certificate of Eligibility. The Certificate of Eligibility is what determines the Veteran’s qualification requirements for a VA and documents and verifies the Veteran’s military past and career. For a Veteran to be eligible for a Certificate of Eligibility from the United States Department of Veterans Affairs or VA are the following:
- The Certificate of Eligibility is proof that the borrower is a veteran
- The COE determines the eligibility and depends on the category of the Veteran’s service
- In order for a Veteran to get a COE, the Veteran needs an honorable discharge from the United States Armed Services
How Can I Get My Certificate Of Eligibility?
Your mortgage loan originator will often get your Certificate of Eligibility for you if you applying for a VA Loan early on the VA Loan Process. Here are the ways of going about getting your Certificate Of Eligibility:
- You visit the United States Department of Veteran Affairs eBenefits portal.
- However, the best way to get it is by having your loan officer get it for you. Loan Officers do have accessibility to the VA-Guarantee Home Loan System Online Portal.
- VA borrowers can also go COE snail mailed to you after filling out VA Form 26-1880 Request for a COE. Then send the form and the required supporting documents to the United States Department of Veterans Affairs.
The Pre-Approval Stage Of The VA Loan Process
The Pre-Approval Stage is the most important stage of the VA Loan Process. 70% of the borrowers who contact me are borrowers who either are going through a stressful mortgage process or have recently gotten a last minute mortgage loan denial due to one reason and one reason only. That reason is because they were not properly qualified by their loan officer prior being issued a pre-approval letter. Borrowers should make sure that their loan officers has properly pre-approved them before they go out and get an executed real estate purchase contract. The following steps needs to be taken by a loan officer before issuing a pre-approval letter on a VA Loan:
- Thoroughly review mortgage loan application
- Thoroughly review credit scores, payment history, and overall credit report
- Make sure borrower does not have any credit disputes
- Make sure to check and double check with loan officer lender’s overlays
- VA Loans do not have minimum credit score requirements so check to see if the lender has its own lender overlays
- VA Loans do not have maximum debt to income ratio requirements. Make sure the loan officer lender does not have lender overlays on debt to income ratios
- Make sure you run the mortgage loan application through the Automated Underwriting System and get approve/eligible per DU FINDINGS
- There is no reason why a VA Loan should not close with a solid pre-approval letter
The Home Buying Stage Of The VA Loan Process
Once you have a solid pre-approval letter by your loan officer, you can now shop for a home and can enter into a real estate purchase contract. Your realtor will show you homes and once you find a home that you want to purchase, your realtor will submit an offer to the sellers real estate agent, or listing agent. Here is how the home purchase stage works with the VA Loan Process:
- Pre-Approval Issued
- Realtor will submit real estate purchase offer to the listing agent with contingencies
- Contingencies includes appraisal contingencies, home inspection contingencies, finance contingencies
- VA allows up to 4% sellers concessions by home seller for home buyer to use it for closing costs. This is part of the negotiations and most times, sellers will give sellers concessions. With no down payment requirement and sellers concession, the Veteran home buyer can purchase a home with no money out of pocket with a VA Loan
The VA Mortgage Loan Process
Once you are armed with an executed home purchase contract signed by you and the home seller, the real VA Loan Process is about to start. Here are the docs required during the VA Loan Process:
- Executed Real Estate Purchase Contract
- 2 Year Tax Returns
- 2 Years W-2s
- 30 days paycheck stubs
- Certificate Of Eligibility
- 60 days bank statements
- Other Mortgage Documents click on the link to see the comprehensive list of docs required to process your VA Loan
A mortgage loan processor will be assigned to process your VA Loan. The role of a mortgage processor is extremely crucial. It is the processor that makes sure that there are no missing information and make sure that all documents are complete with no missing pages. A file that is not complete will get kicked back from the underwriter and the whole process needs to get restarted again. The processing of a mortgage file is what takes the longest. Most experienced mortgage processors will not submit any incomplete files to an underwriter. Once a mortgage processor deems that a file is complete and to her satisfaction, the processor will then turn the file to a VA mortgage underwriter for a VA Loan Approval.
The VA Underwriting Loan Process
The underwriting stage of the VA Loan Process is the stage where the VA Loan Approval is issued and the most exciting time of the VA Loan Process. The Underwriting VA Loan Process is where the decision is made of whether the borrower gets a loan approval or a loan denial. Here is what a VA mortgage loan underwriter considers when looking for a file and issuing a VA Loan Approval:
- Does the borrower meet all of the VA Guidelines?
- Does the borrower have the ability to repay the VA Loan?
- Is the borrower employment likely to continue for the next three years?
- Has the borrower demonstrated good past payment history? Good payment history is the best predictor for future payment on behalf of the borrower
- If the borrower had prior bad credit and derogatory credit, has the borrower re-established his or her credit?
- If the borrower has little or no credit and poor past payment history, does the borrower have strong compensating factors?
Once the VA mortgage underwriter has deemed that the borrower has met all VA Loan Requirements, the mortgage underwriter will issue a conditional mortgage loan approval .
Conditional VA Loan Approval
Once a VA mortgage loan underwriter feels confident about the borrower and sees that the borrower meet all VA mortgage guidelines, the underwriter will issue a conditional VA Loan Approval. A conditional loan approval is when the VA Loan underwriter will sign off on a clear to close once the conditions has been met. A clear to close or CTC is when the underwriter signs off on the loan where it gives its blessing to send out closing docs to the title company and fund the VA Loan. Here are examples of conditions from a conditional loan approval:
- Updated bank statements
- Updated paycheck stubs
- Letters of explanations on recent credit inquiries and other derogatory credit items on credit report
- Request additional documentation on the documents that has been provided
- Final Verification Of Employment: Most likely a verbal verification of employment
- Proof of funds on cash to close
The mortgage processor will be in charge of gathering all conditions and the processor with work with the loan officer in gathering documents from the borrower and/or title company. Once the processor gathers all the conditions, the processor will submit the mortgage conditions in to the underwriter for a clear to close. Once a CTC, clear to close is issued by the mortgage underwriter, the file is ready for closing and the Closing Disclosure is prepared where it is then sent to the title company. The title company will gather figures required and docs from both the buyers side and sellers side and schedule the mortgage closing.
Closing In The VA Loan Process
The closing is when the buyers and sellers gather and is normally scheduled in a title company. The title officer is the quarterback of the closing and prepares all the docs prior to the closing date. The closing docs are signed and notarized. Funds are dispersed and once the closing is over, the buyer gets the keys and the sellers gets the proceeds from the sale. Here are the docs that will be signed:
- Promissory Note of the mortgage
- Deed of Trust is signed and the title company records the deed with the county
- The Final Closing Disclosure is signed
Getting Pre-Approved For VA Loan
If you need to get pre-approved for a VA Loan with no lender overlays, contact Gustan Cho at 262-716-8151 or email The Gustan Cho Team at email@example.com . We specialize in VA Loans down to a 580 FICO Credit Score and just go off the automated findings per Automated Underwriting Approval. We are available 7 days a week, evenings, weekends, and holidays. Text us at 262-716-8151 for faster response.