St. Louis Real Estate Tip of the Week: 6 Steps to Obtain a Veteran's Loan by Beverly Taki

The VA loan can be the best mortgage choice for a purchase for eligible US home buyers. The loan is backed by the U.S. Department of Veterans Affairs and made possible by the G.I. Bill. These loans require little to no money down, no mortgage insurance and give applicants access to flexible mortgage guidelines and the interest rates are often lower as compared to other home loan products. Here’s a step-by-step guide to get one of these loans

1. Confirm Your Eligibility for a VA Loan

Most U.S. military veterans are eligible for a VA loan. But vets aren’t the only ones who qualify. Most active-duty service personnel, National Guard and Reserve members, surviving spouses of deceased veterans and others can also be eligible. Refer to the VA Home Loan Center to determine whether you fit the VA loan requirements.

2. Obtain a Certificate of Eligibility (COE) for a VA Loan

A COE is a simple document that proves to the lender that you are eligible for a VA loan. Your lender can help you get this document through an online system that can tap into the VA records to confirm your service. In most cases, a COE can be generated in seconds. All VA loans require a COE except for the VA Interest Rate Reduction Refinance Loan (IRRRL), which lowers your interest rate by refinancing your existing VA home loan.

3. Get Pre-Qualified for a VA Loan

The VA establishes the rules and guidelines for VA loans. It doesn’t set interest rates, points or other loan closing costs. This is one reason it can be a good idea to shop for the "best deal" -- something the VA actually encourages. As part of getting pre-qualified, the lender will check or “pull” your credit history and may ask to see recent pay stubs, bank statements and other basic financial paperwork. The more information you provide, the better your lender can explain your available loan options. In addition, your lender can:                                                                             

a.)   Help you compare different VA loan options that might fit your needs

b.)   Tell you how much you can borrow and how much your monthly payment will be.

b.)   Help you complete an application for a VA loan.

c.)   Provide you with a prequalification letter to help you buy the home you want.

4. Find a Home to Buy

After you’ve obtained your COE and prequalification letter, you’ll be ready to look at for-sale homes with a REALTOR®. Your agent can help you find a home that you like (and can afford) based on the loan amount for which you’ve been pre-qualified. Remind your agent to include a VA loan contingency in your purchase agreement which will protect you in the event you cannot close your loan. Even if you already have a VA loan, there are instances whereby you might have entitlements to get a second VA loan. Further information can be found on military.com. (link below)

5. Complete the VA Loan Process with your Lender

Once you've found a home, your lender is tasked with most of the work, which happens behind-the-scenes, to ensure your loan is approved and ready for closing. You might be asked to supply additional financial paperwork during this part of the purchase, and the lender will also arrange for an appraisal of the home to make sure you haven't over-paid as compared to the market.

For home purchases, the VA also recommends that you hire a home inspection, so you’ll be informed about the condition of the home and its major components, such as the roof, foundation, appliances, major systems, electrical wiring and plumbing. You may want to test the home for lead-based paint, radon and other substances, too.

Note that appraisals are not required for the VA IRRRL program, which is sometimes called the VA Streamline Refinance.

6. Closing Your VA Loan

When your mortgage approval is complete, you can sign your VA mortgage note and other loan documents at your "closing". Closings often take place at a specially-designated location known as a title company close to your home or office. At closing, you will receive information about where to send your monthly payments. Home buyers will also be receiving new house keys to begin this new adventure.

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Beverly Taki is a Missouri-licensed real estate broker who has successfully represented clients for 25 years.  She is a broker salesperson at Keller Williams Realty St Louis. 10936 Manchester Road, St. Louis, MO   63122. Beverly has earned a certificate in dispute resolution from Pepperdine University, specializing in negotiation and mediation. Taki can be reached at beverlytaki@kw.com or 314.677.6366.  Her website is beverlytakistlouis.com. Her blog is realestatestlou.com.