Welcome to our in-depth guide on pre approved VA home loans! If you’re a veteran, active-duty service member, or surviving spouse, you probably know that the U.S. Department of Veterans Affairs (VA) offers housing benefits to help you buy, build, or improve a home. One of those benefits is a VA Home Loan, which can be pre approved before you start house hunting. In this article, we’ll explain what pre approved VA home loans are, how they work, and how you can get one. So, let’s get started!
What is a Pre Approved VA Home Loan?
Simply put, a pre approved VA home loan is a guarantee from a VA-approved lender that you’re eligible and qualified to borrow money from them to buy a home. This means that you can start house hunting with confidence, knowing that you’re already approved for a certain loan amount and interest rate. A pre approved VA home loan is not the same as a final loan approval, but it’s an important first step in the home buying process.
Why Should You Get Pre Approved for a VA Home Loan?
Getting pre approved for a VA home loan has several advantages:
Advantages |
Explanation |
|---|---|
Know your budget |
You’ll know how much you can afford to spend on a home, which will save you time and effort in your home search. |
Better bargaining power |
Sellers are more likely to take you seriously if you have pre approved financing, as it shows that you’re a serious buyer. |
Faster closing process |
A pre approved VA home loan can speed up the final loan approval and closing process. |
Peace of mind |
You’ll have the confidence to make an offer on a home with a pre approved VA home loan, without worrying about financing falling through. |
Who is Eligible for a Pre Approved VA Home Loan?
To be eligible for a pre approved VA home loan, you must be one of the following:
- A veteran who meets the service requirements
- An active-duty service member who meets the service requirements
- A surviving spouse of a veteran, who hasn’t remarried, or a service member who died on active duty or as a result of a service-connected disability
How Does a Pre Approved VA Home Loan Work?
Here’s how the pre approval process typically works:
- You’ll complete a VA loan application with a VA-approved lender.
- The lender will review your income, credit score, and other financial and personal information to determine your eligibility and pre approved loan amount.
- You’ll receive a pre approval letter from the lender, which you can use to show sellers that you’re a serious buyer with financing already in place.
- When you find a home you want to buy, you’ll complete a final loan application with the lender, which will include an appraisal of the home’s value.
- If the final loan application is approved, you’ll close on the loan and purchase the home.
How to Get Pre Approved for a VA Home Loan?
To get pre approved for a VA home loan, follow these steps:
- Gather your personal and financial documents, such as your military service records, pay stubs, tax returns, and bank statements.
- Find a VA-approved lender who specializes in VA loans and complete a loan application.
- Provide the lender with your personal and financial information, so they can determine your eligibility and pre approved loan amount.
- Wait for the lender to review and verify your information and receive a pre approval letter.
- Start shopping for a home with confidence, knowing that you have pre approved financing.
What are the Requirements for a Pre Approved VA Home Loan?
Here are the basic requirements for a pre approved VA home loan:
- You must be eligible for a VA home loan.
- You must have sufficient income and credit score to qualify for the loan.
- You must provide the lender with the necessary documentation, such as military service records, pay stubs, tax returns, and bank statements.
- You must agree to the terms and conditions of the loan, including the interest rate, loan amount, and repayment schedule.
What are the Benefits of a VA Home Loan?
A VA home loan has several benefits that make it a great option for eligible borrowers:
- No down payment required
- No mortgage insurance required
- Flexible credit and income requirements
- Limited closing costs
- Assumable by another eligible borrower
- Can be used to buy, build, or improve a home
What are the Drawbacks of a VA Home Loan?
While a VA home loan has many benefits, there are also some drawbacks to consider:
- Strict property requirements
- Funding fee required (but can be financed into the loan)
- Limit on loan amount (depending on location and type of property)
- May take longer to close than other types of loans
What is the VA Funding Fee?
The VA funding fee is a one-time payment that’s required for most VA home loans. The fee helps to offset the cost of the VA home loan program and keep it self-sustaining. The amount of the funding fee depends on several factors, such as your down payment, type of service, and whether you’ve used a VA loan before. The funding fee can be financed into the loan or paid upfront at closing.
Can You Use a VA Home Loan to Refinance?
Yes, you can use a VA home loan to refinance an existing mortgage, as long as you meet the eligibility requirements and the refinance makes financial sense. There are two primary types of VA loan refinances: the Interest Rate Reduction Refinance Loan (IRRRL) and the Cash-Out Refinance.
What is the IRRRL?
The IRRRL is a streamlined refinancing option for existing VA home loans, which allows you to lower your interest rate, monthly payment, or switch from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage. The IRRRL doesn’t require income verification, appraisal, or credit check, but it does require that you’re up-to-date on your mortgage payments and that you’ll benefit from the refinancing.
What is the Cash-Out Refinance?
The Cash-Out Refinance is a refinancing option that allows you to take cash out of your home equity, up to 100% of the appraised value of the home. The cash can be used for any purpose, such as paying off debt, home improvements, or education. The Cash-Out Refinance does require an appraisal, income verification, and credit check, and may have higher closing costs than the IRRRL.
Where Can You Find a VA-Approved Lender?
You can find a VA-approved lender by:
- Contacting your local VA Regional Loan Center
- Searching on the VA website for lenders in your area
- Asking for referrals from friends, family, or real estate agents
How Long Does it Take to Get Pre Approved for a VA Home Loan?
The time it takes to get pre approved for a VA home loan depends on several factors, such as the lender’s workload, your availability to provide documentation, and the complexity of your financing situation. However, the pre approval process typically takes a few days to a few weeks.
What Happens After You’re Pre Approved for a VA Home Loan?
After you’re pre approved for a VA home loan, you can start shopping for a home with more confidence. When you find a home you want to buy, you’ll complete a final loan application with the lender, which will include an appraisal of the home’s value. If the final loan application is approved, you’ll close on the loan and purchase the home.
Can You Lose a Pre Approved VA Home Loan?
Yes, you can lose a pre approved VA home loan if your financial or personal situation changes before closing on the loan. For example, if you lose your job, take out new debt, or have a negative credit event, the lender may rescind your pre approval or modify the loan terms. It’s important to maintain your financial stability and avoid any major changes until after you’ve closed on the loan.
Conclusion
Congratulations, you’ve reached the end of our comprehensive guide on pre approved VA home loans! We hope that we’ve provided you with valuable information and answered all of your questions. Remember, a pre approved VA home loan is a great way to start your home buying journey with confidence, but it’s important to choose a VA-approved lender who can guide you through the process and help you make informed decisions. If you’re ready to get pre approved for a VA home loan, contact a lender today!
Don’t wait! Take advantage of your VA home loan benefits and start searching for your dream home today!
Disclaimer
The information in this article is for informational purposes only and does not constitute legal, financial, or professional advice. Always consult with a qualified professional before making any financial or legal decisions. We make no representations or warranties about the accuracy or completeness of the information contained in this article, and we disclaim all liability for any errors or omissions, or for any losses or damages of any kind arising from the use or reliance on this article.