Steps in Getting a VA Loan
There are 8 basic steps to getting a VA-backed home loan. Each step contains a few details, and some steps may overlap. What follows is just a quick overview.
- You find a real estate professional to work with. Ask your friends for recommendations or search the internet for a knowledgeable Kauai real estate professional.
- You locate a lending institution that participates in the VA program. You may want to get "pre-qualified" at this point – that is, find out how big a loan you can afford. Lenders set their own interest rates, discount points, and closing points. So you may want to shop around.
- You obtain your Certificate of Eligibility. The lender can probably get you a certificate online. Or, you can apply online yourself. To get your Certificate of Eligibility (COE) online, please go to the eBenefits portal at this link. If you already have login credentials, click the Login box, and if you need login credentials, please click the Register box and follow the directions on the screen. If you need any assistance please call the eBenefits Help Desk at 1-800-983-0937. Their hours are Monday-Friday, 8am to 8pm EST. If necessary, you can download a hard copy application form:
You find a home you want to buy:
When you negotiate, make sure the purchase and sales agreement contains a "VA option clause" Here’s a sample wording:
"It is expressly agreed that, notwithstanding any other provisions of this contract, the purchaser shall not incur any penalty by forfeiture of earnest money or otherwise of be obligated to complete the purchase of the property described herein, if the contract purchase price or cost exceeds the reasonable value of the property established by the Department of Veterans Affairs. The purchaser shall, however, have the privilege and option of proceeding with the consummation of this contract without regard to the amount of the reasonable value established by the Department of Veterans Affairs."
You may also want the agreement to allow you to "escape" from the contract without penalty if you can’t get a VA loan.
- You formally apply to the lender for a VA-backed loan. The lender will complete a loan application and gather the needed documents such as pay stubs and bank statements.
The lender orders a VA appraisal and begins to "process" all the credit and income information.
(We want to stress one point here. VA’s appraisal is not a home inspection or a guaranty of value. It’s just an estimate of the market value on the date of the inspection. Although the appraiser does look for obviously needed repairs, VA doesn’t guarantee the condition of the house. The appraiser, who is licensed, is not a VA employee. The lender can’t request a specific appraiser; assignments are made on a rotating basis.)
- The lending institution reviews the appraisal and all the documentation of credit, income, and assets. The lender then decides whether the loan should be granted.
- Finally, the closing takes place and the property is transferred. The lender chooses a title company, an attorney, or one of their own representatives to conduct the closing. This person will coordinate the date and time.
If you have any questions during the process that the lender can’t answer to your satisfaction, please contact VA at your regional loan center.