First-time homebuyers get the greatest benefits from VA loans because it’s easier to buy a home with no down payment, and they pay a lower funding fee since it’s their first time using their benefit.
Buying your first home can feel overwhelming, but VA loans make it a lot easier for you. Here are the steps to buying your first home with a VA loan.
Get Pre-Approved
Getting pre-approved is the best way to start the homebuying process. Why shop for a home that’s outside of your budget? It wastes everyone’s time and can be stressful.
Instead, contact us to get pre-approved. When you’re pre-approved it means we evaluated your qualifying factors and determined you can afford the loan amount on your pre-approval letter.
To get pre-approved, you must provide the following:
- Paystubs for the last 30 days – If you’re working for someone, provide your paystubs that cover the last 30 days of your employment.
- W-2s for the last 2 years – If you worked for someone, provide your W-2s from the last two years to show your average income over that time.
- Tax returns for the last 2 years – If you own your own business or freelance, you must provide your last 2 years of tax returns to prove how much money you make including the deductions you take.
- Asset statements for the last 2 months – Provide your bank statements for the last two months to show that you have the funds necessary to close the loan, such as the closing costs.
- Proof of employment – Provide information to verify your employment with your employer. It’s usually just a phone call to verify you work there.
A pre-approval pre-approves you for the loan – not the property. When you get pre-approved, we’ll issue you a letter that states how much loan you can borrow, at what terms, and what conditions you must satisfy to close on the loan.
Find a Real Estate Agent
Once you’re pre-approved, you can find a real estate agent to help you find the perfect home. We recommend interviewing at least three agents to see which one will work with you the best. Fortunately, buyers don’t pay the real estate agent’s commission – sellers pay it, so you can just focus on finding the right person for the job.
When you talk to real estate agents, ask questions like:
- How much experience do you have?
- How long have you been working in this area?
- How do you communicate when there are new listings?
- What services do you provide when we find a home?
Work with an agent that is on the same page as you, understands your budget, and will help you find the perfect home without trying to pressure you into spending more money than you intended.
Make a List of Needs and Wants
When you work with a real estate agent or even look at homes on your own, you should have a list of needs and wants to ensure that you stick to what you want and can afford.
Your list of needs are features you must have in the home – it’s non-negotiable. For example, the number of bedrooms you need, or the amount of living space is non-negotiable. It’s what keeps you and your family comfortable or what will grow with you as you grow your family.
Your list of wants are things that aren’t dealbreakers but would be nice if you had them. Examples could be granite countertops or a finished basement, for example. They would be nice to have, but you could live with the home if they didn’t have them.
Your real estate agent can then focus on the properties that have your ‘musts’ and not focus on the wants that might put you over budget.
Create a Budget with the Mortgage Payment in It
Sometimes it’s not enough to get pre-approved. You need to physically see your mortgage payment in your budget.
It’s easiest if you put the mortgage payment in your budget and ‘pay it’ but really just transfer the money to a savings account or other external account. This way you can see what it feels like to make the payment each month to make sure it fits in your budget.
You aren’t obligated to borrow as much as your pre-approval says you can afford. You should only borrow what you think you can afford because you’ll have this mortgage for the next 15 to 30 years. You want a payment you can afford no matter the circumstances so that you don’t default on it.
Find your Dream Home
Once you’ve done the legwork, it’s time to find your dream home. Work with your real estate agent to find the home that meets your needs and your budget.
Your agent will help you with pricing and even place the offer for you. If the seller counteroffers your bid, your real estate agent can help you decide if you will accept it, counter back, or walk away and find another home.
Finish Underwriting
Once you sign a sales contract, it’s time to get underwriting going again. If you’re pre-approved, you already did the preliminary work. Now you have to get the home approved and clear up any conditions you left outstanding.
The underwriter will order a VA appraisal and title work. The appraisal tells the underwriter if the home is worth enough money, and the title work tells the lender if the home is owned free and clear of any liens or claims of ownership.
The entire underwriting process from start to finish takes 30 to 45 days and depends on the level of cooperation from the seller for the appraisal and the outcome of the title search.
Close your First VA Loan
Once you finish the underwriting process, you’ll receive a ‘clear to close’ which means you can close on the loan. You’ll attend the closing with your loan officer, a closing agent, the sellers, and possibly attorneys.
At the closing, you’ll sign the mortgage deed, note, and other title paperwork that makes you the owner of the home. You’ll pay any money you owe at the closing for closing costs or other fees and receive the keys to your brand new home.
