The VA Loan Process Explained (Step-by-Step)
Have you ever questioned what it really takes to get a VA loan? Has anyone ever laid it out step-by-step so it actually makes sense? Well, today’s your lucky day because I’m going to walk you through the seven main steps to securing a VA loan.
Who am I?
I’m Rick Elmendorf, a mortgage loan officer with 30 years under my belt. I do not mean to show off, but I’ve been ranked in the top 1% of loan officers nationwide. I’ve spent decades specializing in helping veterans and military members just like you.
By this end, you’ll know exactly what should happen when you’re looking to get a VA loan. No more surprises when buying your first home or refinancing.
Ready to demystify the VA loan process together? Let’s get started and ensure you have all the necessary know-how.
Step 1: Always Know Your Numbers
So, you want to buy a house? The first step is getting a clear picture of what you can afford. And I’m not just talking about rough calculations. I mean getting a real, accurate assessment of your financial situation.
Here’s the deal: many people jump straight to online calculators, punch in a few numbers, and think they’ve figured out their budget. But here’s a little insider tip. Those online calculators, like the ones you might find on Zillow, they often undercut you.
They often underestimate your budget. They’re not customized to your financial situation and can mislead you about what you can really afford. That’s why I always say, “Know your numbers for real.”
To help you out, I’ve put together a free Google Sheet calculator. This isn’t just any calculator. It’s designed to give you a true understanding of your financial picture. Here’s the link to use it. Use it to plug in your own info and see the real numbers.
While you’re at it, check out my rate app to see how my loan rates stack up against the competition. They’re usually way lower.
The first question I always ask is, “How much can you afford?” It’s not just about what you qualify for on paper. It’s about what fits into your life without stretching you too thin. We need to start with what you’re comfortable with, find a house that fits those numbers, and then modify everything to fit you perfectly.
If you’re just getting started and feeling a bit overwhelmed, don’t worry. I’ve got you covered. Join my free community and take my free mini-course to get you up to speed. This isn’t just about getting a loan. It’s about making smart decisions that set you up for long-term success.
Step 2: Set Your Goals and Get Preapproved
Now that you’ve got a grip on your numbers, it’s time to set your goals and know exactly what you aim for. This isn’t just about finding a house. It’s about ensuring that the house you find aligns with your long-term financial and lifestyle goals. A crucial part of this step is getting preapproved.
Now, when it comes to preapproval, here’s a pro tip: make sure the preapproval process doesn’t impact your credit score more than necessary. You might not know this, but there’s a way to handle this without causing a dip in your credit.
Insist on a soft credit pull, not a hard one. A soft pull gives lenders the info they need to preapprove you without affecting your credit score, unlike a hard pull, which can temporarily lower your score.
Preapproved is not Approved
Remember, getting preapproved is different from being fully approved. When I talk about preapproval, I’m referring to a preliminary review of your finances. It’s your ticket to show sellers you’re serious and capable of completing a purchase.
But it’s not a final approval. Think of it as the step that prepares you for the home buying journey. It sharpens your focus and refines your search to properties that are truly within your reach.
Step 3: Have a Detailed Strategy Call
Once you’ve nailed down your numbers and secured your preapproval, strategizing is the next crucial step. This isn’t just about selecting a house. It’s about crafting a smart, structured offer that positions you competitively in the market.
Who better to help you with that than a loan officer who’s a pro with VA loans? I am here to help you plan each step, ensuring that your offer stands out and aligns perfectly with your financial goals.
The Importance of a Strategy Call
A strategy call with a knowledgeable VA loan officer like myself can make all the difference. We’ll sit down, virtually or in person, and discuss your financial situation in detail.
Together, based on your preapproved amount, we’ll discuss how to structure your offer to make it as attractive as possible to sellers while safeguarding your financial stability.
Protect Your Assets
During our call, I’ll also help you look closely at your assets, particularly your retirement funds. One key piece of advice: avoid tapping into your retirement savings unless absolutely necessary. It’s crucial to preserve these funds for your future.
The goal of a VA loan is to aid veterans in becoming homeowners without undue financial burden, not to lessen the resources they’ve worked hard to accumulate.
Understanding VA Loan Benefits
Why was the VA loan program created? To help veterans like you get into homes without needing a down payment or perfect credit and without requiring a renter or existing VA lender in the property.
I can help you utilize this flexibility to structure your offer strategically, maximizing the benefits of your VA loan.
Tailoring Your Offer
In our strategy call, I’ll walk you through the specifics. We’ll determine how much to offer, decide if escalation clauses make sense, and manage contingencies. We’ll work on everything to ensure it aligns with market conditions and your financial comfort.
Learn From Past Mistakes
If you’re curious about what not to do, I recommend checking out my other video on the “mistakes people make before buying a house.” It’s packed with insights that can save you from common pitfalls and help ensure your home-buying process is smooth.
By the end of our strategy call, you’ll feel empowered and prepared to move forward confidently. I always emphasize that the right preparation and knowledge can put you in the best position to make your home buying dream a reality. Let’s get you ready to make that offer with the full backing of a solid strategy.
Step 4: Organize and Submit Your Financial Documents
Once we’ve got your strategy nailed down from our call, the next big step is to gather and submit all your financial documents. This part is crucial. I help you verify everything we’ve discussed and ensure we’re on solid ground to move forward with your VA loan application.
Gather Your Documents
You’ll need to gather all relevant financial information. This includes recent pay stubs, bank statements, tax returns, and other documents that prove your income and assets. I’ll help you ensure everything is thorough and up-to-date, accurately reflecting your financial situation.
Avoid Red Flags
I want to highlight an important point. Large, unexplained deposits in your bank statements can be red flags. We’ll need to document the source if you’ve irregular income patterns or large deposits.
This helps us ensure there’s no issue of money laundering or borrowing against undisclosed loans, which can complicate your loan process.
Credit Score Insights
Your credit score is a snapshot of your financial trustworthiness. If there are issues, let’s address them head-on. Sometimes, we can make strategic moves to optimize your credit score before finalizing the loan application. This might involve paying down certain debts or correcting any inaccuracies on your credit report.
Speed is Key
Get these documents in as fast as you can. The quicker we have all your information, the quicker we can move to the next step of the process. Delays in documentation can lead to delays in your loan approval, which we want to avoid at all costs.
So, gather up those documents, and let’s get everything squared away. It’s all about ensuring we’re as prepared as possible to push forward without any hitches. I’m here to help guide you through every step, ensuring we do everything right the first time.
Step 5: Make Aggressive Offers
Now that your finances are squared away and we’ve strategized, it’s time to start making offers on homes. I’m talking about aggressive offers that make you stand out to sellers.
Going All-In With Your Offer
When we talk about being aggressive, we mean making an offer strong enough to beat the competition but still feels right to you. In a competitive market, one strategy is using an escalation clause.
This means your offer will automatically outbid others up to a certain limit. For example, you might say, “I’ll beat any competitive offer up to $585,000.” But what happens if someone comes in at $586,000?
That’s tough to take, right? That’s why setting no cap can sometimes work in your favor, although it’s risky.
Flexibility to Back Out
Here’s the kicker: making an aggressive offer doesn’t mean you’re locked in, no matter what. Typically, you have a few days, like three days, to reconsider the deal if the negotiations don’t end up where you want them.
This means you can step back if things aren’t looking as good as you hoped or if the final negotiated price doesn’t sit well with you.
Step 6: The Loan Process
Let’s get into the details of the loan process. This step is about ensuring everything is correct and ready for a smooth closing. I’ll help you through every part to ensure it all goes smoothly.
Locking in Your Rate
First up, we’ll lock in your interest rate. During our strategy call, we would’ve discussed whether you’re going for a high, middle, or low rate.
Once decided, it’s about securing that rate to protect you against any market fluctuations. You’ll receive an email packet with all the necessary documents, which you can sign electronically using DocuSign.
One of the key documents here is the Loan Estimate, which outlines the expected costs associated with your mortgage.
Intent to Proceed
The intent to proceed is crucial. Nothing happens without this. Moving forward with the loan under the terms provided is your go-ahead.
Home Inspection and Appraisal
At the same time, I’ll help you schedule a home inspection and start the appraisal process. We’ll make sure to work with a VA-approved appraiser to ensure everything meets the VA’s standards.
If there are any issues with the appraisal, we might need an expedited review, but we’ll tackle that if it comes up.
Underwriting and Approval
Next, your loan goes to underwriting for formal approval. This step can be automated, but ultimately, it needs a human touch to get the official stamp of approval.
During this phase, I’ll coordinate with the loan coordinator to make sure your insurance policy is in order, and we’ll verify any renter income, which means you’ll need to submit the necessary tax documents.
Closing Preparations
Once your loan is approved and all documents are collected, I’ll help you submit the initial closing document. This outlines the final figures and sets expectations for closing.
My goal is to achieve a Clear to Close (CTC) status, indicating that all financial and appraisal contingencies have been satisfied.
The Closing Day
On closing day, you’ll sign all the necessary documents electronically, a process we aim to make quick and efficient. It often wraps up just about 15 minutes before the closing. This swift approach is something my clients really appreciate, and I’m here to make sure it goes smoothly for you, too.
Final Steps with the Closer and Title Company
As we near the end of your VA loan process, our closer works accurately with the title company to finalize the numbers, ensuring everything from the VA funding fee to the last decimal is accurate.
It’s not uncommon for last-minute pluses or minuses to occur, depending on factors like the previous owner’s obligations that might affect the final price.
This step is crucial and must be handled accurately and carefully to avoid delays. It can be fast-paced and, admittedly, a bit messy if rushed, so it’s important to stay on top of everything to ensure the numbers align correctly at the end.
Remember, the faster the process, the messier it can be—accuracy is key to a smooth closing.
By the end of this step, you’re essentially done, and the keys to your new home are almost in hand. Just a few signatures away from moving into your new place and maybe, just maybe, inviting me over for that BBQ to celebrate your new home.
Step 7: Move in and Refer Others
There you have it. The finish line. You’ve got the keys in hand, and it’s time to step through the door of your new home. The joy of this moment isn’t just in the new beginning it represents but also in the successful conclusion of the VA home loan process.
Moving into your new home is a huge achievement, and it’s one definitely worth celebrating. If your experience with me was positive, and you felt supported through each step of your VA loan journey, why not share that success?
I’m here to help your friends and family just as I’ve helped you, ensuring they can enjoy the benefits of a smooth VA loan process.
