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HallDoran Realty
HallDoran Realty
HallDoran Realty
HallDoran Realty
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Lender Process Application and Orders VA Appraisal

Step 5 VA Loan Process

Step 5 In Obtaining A VA Loan

Step 5 In The 6-Steps of the VA Loan Process

GO BACK TO STEP 4 GO BACK TO VA PURCHASE & FINANCING JUMP TO STEP 6

By now you’ve found the home you want to buy and submitted your purchase contract to your lender. From here on out, your lender does a considerable amount of work, and will be asking you to find and gather documents, documents and more documents. Try not to get frustrated; this is typical during the mortgage application process. Your lender just wants to try and make sure you have the ability to pay for your loan and that you get the most out of your benefits.

To help you get through what can be one of the most challenging steps of the VA loan process, here are some “dos” and “don’ts” to follow for Step #5:

1. DO PROVIDE ALL THE DOCUMENTS THAT YOUR LENDER REQUESTS

Your lender is working hard for your approval. So, by them asking for additional documents, they most likely need them. It may seem like overkill, but your lender needs to document the facts you’ve provided. If you’re asked for an extra pay stub or bank statement, just know that your lender is working to get you approved. Some borrowers think tips, rental income, annuities and other types of cash flow aren’t important, but in fact, they can help strengthen your file.

The lender will look at both your debt-to-income (DTI) ratio and your residual income. Think of DTI as simply a comparison of your debt to your income, and residual income as money you have left over after paying your foreseeable expenses. The VA recommends VA borrowers have a DTI ratio at or below 41 percent, but a higher DTI can be considered within the context of other compensating factors.

If your DTI is high, your residual income may help with approval. Borrowers with more residual income than what’s listed on the VA’s chart may get approved even if their DTI is above the suggested ratio.

2. DO KEEP IN CLOSE CONTACT WITH YOUR LOAN OFFICER

·         Ask your loan officer to give you regular progress reports as your loan is being underwritten. A good loan officer will without asking.

·         Taking care of issues as they occur, and not waiting until the next business day, can help speed up your loan and help you close on time.

·         If your loan officer doesn’t reach out to you on at least a weekly basis, be sure to email or call to check on the status of your loan.

·         A good loan officer will keep a client informed every step of the way and answer questions thoroughly and professionally. If you aren’t receiving responses in a timely manner, you should contact a manager to relay your concerns.

3. DO UNDERSTAND THAT YOU LENDER ORDERS THE VA APPRAISAL

Once you submit your purchase contract, your lender can contact the Department of Veterans Affairs to order the VA appraisal. Homes financed with VA loans need to be appraised by someone who is qualified by the U.S. Department of Veterans Affairs. While the VA estimates an appraisal should take 10 days from the time it is ordered, there are some instances when the process takes longer.

The VA limits to how much you can be charged and how long it should take. An online map at va.gov offers borrowers a way to find out the fees and number of days to expect for an appraisal in their state.

4. DON’T TAKE PERSONAL QUESTIONS PERSONALLY

Your lender may ask personal questions such as:

·         Are you separated or divorced, or

·         Have you had some credit issues in your past

Generally,

·         You can show court documentation to prove a bankruptcy or foreclosure has been satisfied.

·         A divorce decree and/or tax returns can show income or liability where alimony and child support are concerned.

This is standard procedure. In any case, it’s not a bad idea to ask your loan officer about the lender’s practices for keeping your information secure.

5. DON’T FORGET THE INSPECTION

1.       A home inspection is one of the most important processes, and

2.       A VA appraisal does not substitute for an inspection.

Yes, the VA-certified appraiser will check to make sure the home you are under contract to purchase meets VA minimum property requirements for safe living. But, the appraiser’s findings may not help you later if you discover a problem. The appraiser works to value the home and determine if the home meets VA requirements, not necessarily to protect a borrower.

Because of this, it is recommended that borrowers also hire a licensed inspector for a thorough check of appliances, plumbing, heating, cooling, roof, windows, structure, signs of water damage and any other issues that may require repair.

6. DON’T PANIC IF THE APPRAISAL COMES IN LOW

Lenders almost always require an appraisal to be at or above the purchase price to approve a loan. If your appraisal happens to come in under the purchase price you’ve agreed to pay, you may have options.

1.       You and your real estate agent might be able to go back to the seller and renegotiate a new purchase price based on fair market value.

2.       Or, you might be able to cancel your purchase contract if your real estate agent included an “escape” contingency in the document.

The VA Option Clause is one that is often included in purchase contracts associated with VA financing. This allows military borrowers to get their earnest money back should the contract fall through due to a low appraisal. Real estate brokers who are familiar with the VA loan process often ensure this language is added before a purchase contract is signed.

GO BACK TO STEP 4 GO BACK TO VA PURCHASE & FINANCING JUMP TO STEP 6