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There are two ways a lender may process VA home loans-on a "prior
approval' or "automatic" basis.
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Prior approval:
When the loan is processed on a prior
approval basis, the lender takes your application, requests
VA to appraise the property, and verifies your income
and credit record. All this information is put together
in a loan package and sent to VA for review. If VA approves
the loan, a commitment by VA to guarantee the loan is
sent to the lender. The lender then closes the loan and
sends a report of the closing to VA. lf the loan complies
with VA requirements, VA issues the lender a certificate
of guaranty.
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Automatic:
In automatic processing. the lender still
orders an appraisal from VA, but has the authority to
make the credit decision on the loan without VA's approval.
The biggest difference between prior approval and automatic
processing is the time saved by avoiding the need to await
VA's approval before loan closing.
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All lenders do not have the authority to process loans on
the automatic basis. Banks, savings and loan associations,
and certain
other lenders such as mortgage companies which are approved
by VA have the privilege of processing VA guaranteed loans
using the automatic procedure.
Lenders approved to participate in VA's Lender Appraisal
Processing Program (LAPP) are generally able to expedite
the processing
of VA appraisals.
If a lender is unwilling to accept a veteran's application for
a loan, what should the veteran do?
The veteran should see another lender. The fact that one lender
is not interested in making the loan the veteran wants does
not mean that other lenders will not make the loan.
What should a veteran do while waiting for loan approval?
Sometimes it may take longer than you might expect for the
lender or VA to process your loan application. For instance,
your current
or former employer may be slow in returning an employment
verification form, or it may take some time to obtain a credit
rating from
out of State creditors. Occasionally, the application VA receives
from the lender is incomplete in some important aspect and
requires that VA ask the lender to furnish additional information
before
a final decision can be made. Ordinarily, you should plan
on an average of 4 to 6 weeks to obtain a decision on your
application.
In any case, information on the progress of your application
should be obtained from the lender, who will be most aware
of developments as they occur.
It is most important that you not make any commitments based
on an expected approval of your loan. You should not, for
example, give notice to your landlord until the loan is actually
approved
by VA (or by your lender if the automatic processing procedure
is used). Generally, it is not advisable to move into the
home before the loan is approved. If for some reason the loan
is
not obtained, you could be faced with additional expense and
inconvenience.
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