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There are five basic steps when obtaining a VA backed home
loan. Although there are lots of details within each step and
some may overlap, here is a basic overview of how the process
works.
Step 1 - Certificate of Eligibility
A veteran must establish eligibility for
a GI Home Loan. He or she can obtain a Certificate of Eligibility
by
submitting a completed VA Form 26-1880 and
the most recent discharge or separation papers from qualifying active
duty, or other acceptable proof of military service.
To learn more about the process of acquiring a
VA Certificate of Eligibility, click
here to fill out a request form and G.I. Home Loans
will complete the paperwork for you at no cost or obligation.
You may obtain your Certificate from one of two VA Eligibility
Centers. For information on their areas of jurisdiction, click
here.
A veteran who has previously used his/her loan guaranty benefits
may apply for the Restoration of these benefits if:
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the
home has been sold and;
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the
loan is now paid in full or assumed by a veteran who
has entitlement to substitute for the amount of entitlement
originally used on the loan
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To apply for restoration, submit a VA Form 26-1880 and the
original Certificate of Eligibility. If the home was recently
sold (within the last year), it
would be helpful to submit a copy of the HUD-1 or Closing Statement (certified
by
the title company) or the recorded Grant Deed showing Sale and the Deed
of Reconveyance
showing loan payoff.
Click here to gain a better understanding of the Requirements
for Restoration of your Entitlement.
The Federal Housing Administration (FHA) is a federal agency
within the U.S. Department of Housing and Urban Development
(HUD). FHA's primary objective
is to assist in providing housing opportunities for low to moderate income
families.
FHA has both single family (1-4 unit homes) and multi-family (5 or more
units)
mortgage lending programs. The agency does not generally provide funds
for the mortgages, but rather insures home mortgage loans made by private
industry
lenders
such as mortgage bankers, savings and loans and banks.
VA can also evaluate your eligibility for the FHA Program
and issue a Certificate of Veteran Status to FHA-eligible veterans.
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Step 2 - Selecting a Home
The Veteran selects a home that meets his/her
needs. Loan Guaranty benefits may be used to purchase a single
family home, a condominium,
a multi-unit residential dwelling or a manufactured home.
Benefits may also be used to obtain a refinanced loan (up to
90% of the
value).
Note: The veteran
is required by law to certify that he or she occupies or intends
to occupy the home as his or her
principal
place of residence.
Note: VA does not recommend that a veteran move into a
home he or she is buying before the loan has been closed.
If the
loan fails to close, the veteran may be put to considerable
expense and inconvenience in vacating the property
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Step 3 - Applying for a VA Loan
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the
home has been sold and;
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the
loan is now paid in full or assumed by a veteran who
has entitlement to substitute for the amount of entitlement
originally used on the loa
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The veteran must contact a VA-approved lender to apply
for a VA-guaranteed loan. Often, the veteran's real estate
agent or broker may suggest a lender. In addition, the
veteran may find a lender by consulting the "yellow pages" in
the local telephone book under "Real Estate Loans" or
by looking in the Real Estate section of the local Sunday
newspaper. |
To find a VA lender in your area, click
here to use the VA E-Lenders Nationwide Query.
The lender will process the necessary
paperwork to obtain the loan.
Loan approval is based on a satisfactory credit history, income
stability and whether the established income is sufficient
to meet the loan payments, maintain the property, pay the
taxes,
insurance, utilities, other monthly obligations and have
enough left for family support.
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Step 4 - Appraisal and Verification
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If the lender determines that the
veteran will qualify for the loan amount requested, the
lender will order an appraisal to establish the reasonable
value of the subject property. Please note that the loan
amount may not exceed the reasonable value as established
by VA. While the lender is waiting for the appraisal,
the lender will also verify income and assets by contacting
the employers and depositories.
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Note: The Appraisal only gives an estimate of value--it
does not guarantee the condition of the property.
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Step 5 - The Loan is Closed
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Once the loan application has been
approved, the lender will establish a loan closing date.
The lender will request that a title company prepare the
loan documents which usually consist of a Deed of Trust
and Deed of Trust Note to be signed by the buyers and
a Grant Deed to be signed by the sellers. There must be
other related documents to be signed, but veterans are
warned not to sign any blank documents.
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At
closing, the lender should explain the loan terms and
requirements and the procedure for making the loan payments.
After the
documents have been signed and the lender has prepared the check for the
transfer of funds, the loan documents are recorded. The
recorded grant deed will be mailed to the veteran. The
lender then
submits documentation regarding the loan application and loan closing
to VA for review. VA will review the documents for completeness
and accuracy. When VA has determined that the loan was
properly closed, a VA Loan Guaranty Certificate will
be issued to the
lender. The Certificate of Eligibility will be annotated
to show the VA case number and the amount of entitlement
used
on the loan and will be mailed to the veteran at the subject property
address. This Certificate should be safeguarded for future
use or reference.
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