It’s the home buying season when many people will be out searching for a home to buy, either new or existing. Some have already contacted their VA lender and discussed their options. Others have gone through the procedures of submitting documentation and have received their VA pre-approvals. Although you may be ready to make a home purchase, you need to know what to do before signing a VA home purchase sales contract.
Too often, homebuyers get caught up in the excitement of choosing a home. They come across what they think is their perfect home and want to quickly sign on the dotted line even though they have been advised to (1) take their time while choosing a home, (2) look at several homes and (3) really consider the home itself and the financial obligation attached to its purchase.
The Importance of Keeping in Touch with Your VA Lender
– While it is always advised to have a VA loan pre-approval, having one is not the end of the mortgage process. Although it may indicate how much you can borrow for a VA home purchase, some of the numbers are only estimates. For instance, at this stage, home insurance costs, real estate taxes and homeowners association dues are only estimates of what it will really cost. Since every home is different, these numbers are not known until the home has been chosen. If a home buyer signs a purchase sales contract without discussing these costs with their lender, these expenses can make them ineligible for the mortgage. It is better to discuss this possible purchase with your VA lender prior to signing the sales contract once a property address is identified. At this point, more accurate numbers can be calculated to see if the mortgage is within the home buyer’s budget. Very often, these costs come as a big surprise as they can be higher than expected. Too high and it can have adverse affect on the mortgage approval. Before making an offer to a home seller, definitely make sure to speak with your VA lender first so that he can run the real numbers.
– When a home buyer is looking for a 100% no down payment VA loan, there is more work that needs to be done in addition to the pre-approval. In this case, seller concessions must be considered and be made part of the home purchase sales contract before the home buyer makes an official offer. Your VA lender should be contacted right away so a more accurate number for seller paid closing costs can be determined, especially when the home buyer wants a 100% financing VA loan. It can be difficult to include seller paid closing costs in a VA home purchase sales contract once an offer has been made and accepted by the home seller. This can result in the home buyer bringing money to closing or accepting a higher mortgage rate in exchange for lender credits to cover the closing costs.
These are an example of why your VA lender must be kept in the loop of communication when you are making a buying a home and what to do before signing a VA home purchase sales contract. VA loans are one of the best mortgages available because they offer eligible borrowers 100% financing. However, there are steps that need to be taken to make sure this happens. Always keep your VA lender notified at every stage of the home buying in order to avoid issues later down the line in the mortgage process.
Feel free at any time to contact me for more information about a VA loan and how you can achieve a 100% VA purchase.
My loan process was very easy and quick. Not to mention a great loan rate. I couldn't be happier!
Capt Sam T. - US Army
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