The VA Loan
The Veterans Administration provides a home loan program for veterans and active duty military personnel. The program provides a guaranty on up to 100 percent financing for the sale price of a home. The VA does not provide the loans directly; the loans are made by private lenders to eligible veterans. The guaranty protects the lender against defaults to the loan. The veteran benefits by not having to pay a down payment. The house has to be for the primary resident of the veteran and his family. There is a process to apply for a VA loan.
Steps to Processing a VA Loan
Home selection is the responsibility of the veteran who will occupy the home. Then,
a purchase and sales agreement that contains a VA option clause is created. This clause stipulates the veteran can back out of the contract without penalty if he is unable to obtain the VA loan.
The veteran chooses a lender and applies for the loan. The lender sets its interest rates, discount points and closing points. The lender provides a certificate of eligibility for the veteran to complete. Meanwhile, the lender accumulates all credit and income information and orders a VA appraisal of the property. When the lender receives all of the information, it decides whether the loan will be approved. If the loan is approved, the lender chooses a lawyer or title company to conduct the closing, which is when the transfer of ownership occurs.
Important Points
According to the Veterans Administration Home Loan program, the veteran should remember these important points:
The veteran may contact the Veterans Administration representative at any point in the home loan process if she has a question the lender cannot help with.
he veteran must meet income and credit qualifications.
The veteran does not have to be a first time home buyer.
An up-front VA funding fee is charged. It may be financed in with your loan. If the veteran receives monthly compensation for a service related disability, this fee will be waived.
The VA appraisal is conducted by a third party contracted by the Veterans Administration. This appraisal is for the estimated market value of the home at that time. It is not the same as a home inspection and does not add or deduct for cosmetic details.
A home inspection specifically details what is wrong with the house before a purchaser makes an offer on the home. This is a service contracted by the potential purchaser.
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