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VA HOME LOAN EXPLAINED IN 5 EASY STEPS

Often we are asked by veterans and realtors for easy to understand instructions on how to apply for a VA home loan. Eligible veterans can obtain up to 100 percent loan financing of a property's appraised value on mortgages as high as $184,000. Our interest rate is 9 1/2 percent.

Several years ago, our employees developed a handout for veterans which we call the 5 Easy Steps to a VA Home Loan, a copy of which is printed below.

STEP 1: Obtaining a certificate of eligibility. Veteran must establish his eligibility for a VA-guaranteed loan. A certificate of eligibility may be obtained from any VA regional office.

"Walk-in" Procedure: Veteran brings discharge or separation paper(s), DD Form 214, WW II veteran brings discharge, Korean or Vietnam veteran brings separation paper(s) to the VA regional office and completes VA Form 26-1880 (Request for Determination of Eligibility and Available Loan Guaranty Entitlement), the application for the Certificate. An eligibility clerk reviews the application form and discharge or separation paper(s) and if the veteran is eligible issues certificate of eligibility, VA Form 26-8320.

Mail Procedure: Veteran writes or telephones VA regional office and requests an application for the certificate of eligibility. He/she completes application form and mails it with discharge for WW II or separation paper(s) for Korean or Vietnam Conflicts to VA regional office. VA Eligibility Clerk reviews service paper(s) and application and if the veteran is eligible returns the discharge or separation paper(s) with certificate of eligibility to veteran by mail.

The issuance of a certificate of eligibility does not mean that a loan application will be approved. The applicant must also meet requirements of the governing law with respect to credit and income.
STEP II: Select your home. Veteran selects home and discusses purchase with seller or selling broker and signs a purchase contract with condition that the agreement is subject to the availability of a VA-guaranteed loan.

Before signing a contract, the veteran should be sure that the property is suitable for his/her needs, is a good buy and that he/she is financially able to meet the payments on the loan. We advise veterans to consult their attorney before signing any contract, including the purchase contract.
STEP III: VA appraisal. The veteran selects a lender of his/her choice who requests VA to appraise the property in order to establish the value for a loan.

VA assigns a fee appraiser to appraise the property and submit an appraisal report. VA reviews the appraiser's report and if the property is acceptable, issues a certificate of reasonable value, which establishes the maximum permissible loan and the estimated remaining economic life of the property.

The term of the VA-guaranteed loan may not exceed 30 years or the estimated remaining economic life of the property.

If the certificate of reasonable value is acceptable to the veteran and the seller, the veteran is now ready to complete his/her loan application. (Some of the loan application procedures may have already been completed by the lender and the veteran by the time VA's certificate of reasonable value has been issued.)
STEP IV: Apply for the loan. The lender assists the veteran in completing his/her application for a VA-guaranteed loan. The application is sent to the VA for approval, accompanied by a credit report, sales contract, (amended to conform with the certificate of reasonable value if necessary) and employment and bank deposit verification(s).

The VA loan processing section reviews the loan application and supporting papers and prepares a loan analysis. If the veteran has stable income sufficient to meet the loan payments, maintain the property, pay the taxes, insurance, utilities, other expenses and obligations and has enough left for family support, and if it can be established that the veteran is a satisfactory credit risk, the application is approved and a VA certificate of commitment is sent to the lender.
STEP V: The loan is closed. When the lender receives the certificate of commitment from the VA, a loan closing date, acceptable to the buyer and seller, is established. The veteran and spouse are usually required to attend the loan closing and sign the papers relating to the loan. The lender will explain the loan terms and requirements. The veteran will also be instructed as to the procedure for making loan payments.

The seller signs the deed to the veteran and spouse and the deed is recorded with the County Clerk. After the deed is recorded, it will be mailed to the veteran. The lender keeps the signed note, mortgage and original hazard insurance policy. The veteran receives a copy of the hazard insurance policy with instructions on reporting any loss covered by the policy.

For information on VA benefits, including home loan guaranty eligibility, telephone (716) 846-5191 in Buffalo or, toll free 1-800-462-1130.

Keith C. Boerner is loan guaranty officer for the VA regional office in Buffalo and is responsible for the delivery of VA home loan benefits and services in Western New York.

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