The VA Loan Process
How To Prepare For The VA Loan Process
Capital Bank is a national lender with expertise in veteran mortgage – so you feel like you are speaking to your local expert.
As 20 million Veterans and military personnel on active duty have found, a VA loan can open the door to homeownership more quickly for those who qualify. There is a process to follow, however, to get in the door. You must prove that you are eligible for the loan, must qualify for it, and must observe loan limits and other regulations. Capital Bank, N.A. will help you every step of the way, but it pays to know exactly how the VA loan process works so you can prepare to claim this benefit.
Establishing VA Loan Eligibility
Before you begin the VA loan process, you must obtain the proper paperwork from the military. You will need a DD-214 to prove your terms of service, as well as a Certificate of Eligibility (COE), to prove that you are eligible to claim VA loan benefits. For most Veterans, this is simply a matter of requesting the documents online. To speed up the process, Capital Bank, N.A. can request the documents on your behalf.
Most people become eligible for VA loans because of their service, although some other criteria may apply depending on your reason for discharge. Your loan specialist will be able to review your specific circumstance to determine eligibility.
General requirements include:
- Current military personnel who have served 90 days or
- Veterans who have served 90 days during wartime or 181 days during peacetime or
- National Guard members or Reservists who have served six years
- In addition, those who have been discharged due to hardship, the request of the government, reduction in force, certain medical conditions or disability may be eligible, along with spouses of service members killed, imprisoned, or disabled during their service.
Qualifying For A VA Loan
Being prequalified for a VA loan is simple if you have a good income matched with a good credit history. A VA-approved lender like Capital Bank, N.A. makes the determination of whether you are qualified and determines how much you can borrow. If your records do not indicate that you have a stable job and a pattern of paying your bills on time, you will not make it through the VA loan process easily.
Before you start looking for a home, obtain a copy of your credit report and take note of any potential problems. You may need to pay off some credit cards to lower your debt to income ratio so it falls under 41% and develop a pattern of on-time payments.
If you’re not sure whether you will qualify, a Capital Bank, N.A. specialist will be able to review your application and help you understand the various factors that go into qualifying for a VA loan.
Finding An Affordable Home
Once you know how much the bank will loan you, you have the direction you need to find homes in your price range. The VA will guarantee up to 25% of your mortgage so long as it does not exceed federal limits of $424,100 in most areas (some counties in more expensive parts of the country have higher loan limits). The amount of house you can buy depends on your prequalification amount, so if you are qualified for a $100,000 house, the VA will back $25,000 of it.
Success in the VA loan process also depends on the amount of entitlement you have. The VA grants Veterans a base entitlement of $36,000, but it may offer additional entitlement of up to $68,250 for qualified buyers of more expensive homes. The VA will back a loan up to four times the amount of your entitlement.
Completing The VA Loan Process
Once you have found the house in line with your prequalification amount, federal loan limits, and entitlment, you can make an offer and negotiate the price. The VA will appraise the property; if it does not appraise for the selling price you have negotiated, you will need to appeal the figures, get a second appraisal, or come up with money at closing to cover the difference between the appraised price and the sales price. As with any loan, you also have the option to walk away from the deal at this point.
The VA loan process may seem complicated, but most people who work with a VA-approved lender find out that there is much less red tape than they thought. Many lenders are approved to do automatic processing which means that they approve loans and close deals without the VA having to review the credit application.
Since its founding in 1944, the VA loan program has lent over $1 trillion to American homebuyers. Capital Bank, N.A. would like to see you added to this number. Contact us today for help in obtaining your eligibility documents or completing your online prequalification application. Our qualified loan specialists await your call at (866) 216-3577 to help you navigate the VA loan process.