Steps of The VA Mortgage Process For Homebuyers

Gustan Cho Associates are mortgage brokers licensed in 48 states

In this blog, we will cover and discuss the steps of the VA mortgage process for homebuyers. In the following paragraphs, we will cover the steps of the VA mortgage process for homebuyers of VA loans. At Gustan Cho Associates we understand that life happens and sometimes your credit will be less than perfect. We are experts when it comes to VA mortgage lending. The U.S. Department of Housing and Urban Development (HUD) oversees VA mortgage guidelines and they do not have a minimum credit score requirement. If you are a veteran, we are not worried about your credit score for qualification purposes. We are interested in your credit history. Of course, the higher your credit score is, the lower your interest rate will be, but sometimes it is best to start building equity and stop renting. In this blog, we will detail some important steps to prepare for a VA home loan if your credit is not ideal. Using your benefits from the U.S. DEPARTMENT OF VETERANS AFFAIRS can be a life-changing tool to buy a home. In this article, we will discuss and cover the steps of the VA mortgage process for homebuyers.

What Are The Steps For a VA Loan?

Step 1: Preparing your credit profile for a VA loan:

  • Your credit report is a major factor when qualifying for a mortgage, including a VA loan
  • We did mention there is no minimum credit score requirement however there are payment history requirements
  • The easiest way to prepare for a VA mortgage is to have a clean 12-monthly of payment history on your credit report
  • Meaning no late payments or NON-MEDICAL collections in the most recent 12-month period
  • An underwriter will go through your payment history with a fine-tooth comb
  • They want you to demonstrate on-time payments for at least the past year to show financial responsibility
  • If you do have late payments in the past 12 months, it will not necessarily disqualify you, but it will be harder to obtain a mortgage
  • When there are late payments in the past 12 months, they will require a very strong letter of explanation with supporting documentation
  • For instance, if you missed a vehicle payment because you were in the hospital, and we can prove the dates you were in the hospital, and underwriter usually will allow the late payment
  • If you missed a payment and there is no valid explanation, this may hinder your qualifications

If there is an apparent pattern of missing payments, it will be very hard to qualify. You will want to start from scratch and start making all payments on time for at least a year.

What Are The Correct Steps of The VA Mortgage Process?

Can You Get A VA Loan Approval With Late Payments?

The key to getting an approve/eligible per the automated underwriting system on VA loans is to have timely payments in the past 12 months. If they cannot get an AUS approval and get a refer/eligible per automated underwriting system, they can be eligible for manual underwriting. However, manual underwriting guidelines apply. To be eligible for manual underwriting, you need 12 months of timely payments. Depending on your mortgage qualifications, you may need to complete a verification of housing payments. If you have a mortgage, this payment history will be done on your credit report. If you are currently renting, this will be completed with a VERIFICATION OF RENT. With a VA mortgage, the underwriter can look as far back as 24 months on housing payments. Any missed housing payments at this time may disqualify you from VA mortgage financing. If you live with a family member and do not pay rent, they will complete a rent-free letter on your behalf.

Do You Have To Have Money To Saving For VA Loan?

What Do Mortgage Underwriters Look For on A VA Loan?

What does the repayment option look like?

The next step to take when purchasing your home with a VA mortgage is to figure out what you can afford. It is time to go through the pre-approval process. It is important to understand that just because you may qualify for a certain payment, that may be outside of your budget. A VA mortgage allows a high debt-to-income threshold compared to conventional mortgage lending. Just because you may qualify for a high payment does not mean it is the right decision for you and your family. You will want to come up with a financial budget. Here is an example BUDGET to keep you in a safe payment. You want to make sure your housing payment correlates with your lifestyle and your budget. Stretching your housing payment can put you in a bad financial situation when the unexpected happens. Owning a home comes with a lot of responsibility. For example, if your furnace goes out and costs $800 to fix, you will not rely on homeowner’s insurance to fix it, this will be an out-of-pocket expense. Most homeowner’s insurance deductibles are $1,000 or more, so paying $800 to fix the furnace is your responsibility.

Steps of The VA Mortgage Process With Bad Credit

Contacting a lender who are experts with bad credit and low credit scores is the key to a stress-free mortgage process on a VA loan. VA loans do not mandate a minimum credit score requirement. There is no maximum debt-to-income ratio on VA loans. It is important to research VA mortgage lenders and find a lender you are comfortable with. We encourage you to check out our reviews on popular real estate sites such as ZILLOW.COM. We have numerous success stories from fellow Veterans. The team at Gustan Cho Associates has a national reputation for being able to do loans other lenders can’t do. Over 75% of our clients are borrowers who could not qualify at other lenders.

Hiring A Real Estate Agent After Being Pre-Approved For a VA Loan

Once we have you pre-approved, you will now need to find a licensed real estate agent. The real estate agents will give you access to the MLS database and show you homes available for sale in your area. You will want to find a realtor who is familiar with VA mortgage lending. If you are relying on the seller to pay your closing costs, you will want to find a realtor who knows this process. You will also want to find a realtor who will guide you through the paperwork and be able to help with any issues that may come up.

Submitting A Real Estate Purchase Offer

Once you narrow down a specific address, you will now submit an offer. Shopping for a home after being pre-approved is probably the most exciting time of the Steps of the VA mortgage process. Armed with a pre-approval letter, the homebuyer can enter into a real estate purchase contract. Once your offer is accepted, the fun begins. It is important to remember this is a long-term investment. You will want to complete a HOME INSPECTION to make sure you’re buying a structurally sound property.

Documents Required To Process VA Mortgage Loan

What mortgage documents required to process a VA mortgage

Completing and collecting the mortgage documents steps of the VA mortgage process. Once you have selected a property, your mortgage team will send you electronic disclosures to start the mortgage process. Your loan officer will go through these papers with you and answer any questions you may have. Once these papers are returned to the lender, the mortgage process will begin. Your mortgage processor will now go ahead and order your VA appraisal and require verification.

VA Mortgage Underwriting Process

One of the most important she steps of the VA mortgage process is the mortgage underwriting step. This part has many borrowers nervous. Underwriting will go through all your documentation and make sure you qualify for a VA loan. You may need to send additional items such as an updated bank statement or pay stub to receive your clear to close. Please see our blog on TIPS FOR UNDERWRITING for more information. Once you have sent in all the required documentation, your underwriter will issue you your official clear to close.

Clear To Close and The Mortgage Closing of VA Loans

The final steps of the VA mortgage process is the mortgage closing. It is now time to sign the final paperwork. You will go to a title company and sign the mortgage documents. Once all the paperwork is signed, your lender will fund your mortgage loan. Once the funding slash wire transfer hits the title company, you are officially a homeowner. Congratulations, this is an incredibly exciting day.

Getting Approved With The Best VA Lenders With No Mortgage Overlays

Not all VA lenders have the same requirements on VA loans. It is hard to believe how lenders have different requirements on government-backed VA loans. VA loans do not have minimum credit score requirements but most lenders require a 620 credit score or higher FICO scores. VA loans do not have maximum debt-to-income ratio caps but many lenders have front-end 40% and back-end 50% DTI requirements. The steps of the VA mortgage process are very streamlined. The best VA lenders are mortgage lenders with no mortgage overlays on VA loans. Gustan Cho Associates have helped hundreds of veterans achieve mortgage financing when they did not think it was possible. We do not have LENDER OVERLAYS to cloud the process. We even offer a TBD underwriting process to save you from many headaches down the road. We are the VA mortgage experts and encourage you to reach out to us today. For questions surrounding your VA qualifications, please call Mike Gracz on 630-659-7644. We pride ourselves on customer service and are available seven days a week. Many veterans call in with questions and our homeowners before they know it. We look forward to hearing from you.