The VA loan closing: what to expect
It starts off relatively slowly. You decide to get a VA loan to buy a home or you decide it’s time to refinance. Either way, your next step is to apply for the mortgage. You find a lender, speak with a loan officer, and finally choose your VA lender and the wheels start to turn. And turns. And turns. You provide tax returns, bank statements, paycheck stubs, and sign a seemingly endless pile of VA documents and documents required by the lender. You know it will end soon, but do you know how it will end?
Once you apply for a loan, you automatically trigger a full range of federal and state regulations. Lenders are required to provide you with a written estimate of closing costs, your annual percentage rate, and your fair share of loan disclosures.
Once you’ve picked a property, the wheels turn even faster. An inspection is ordered with an appraisal of the property. A closing date and place are selected and you begin to document your loan file.
As you provide your documentation and the lender has commissioned services from third parties such as title insurance and closing services, your loan is slowly put in a position to be submitted to an insurer who will decide. ultimately whether or not your loan meets VA guidelines. Even if your loan officer asks you for more information and you provide it, the loan is not assessed until the file is complete. Once completed, it then goes on for approval.
When your loan is approved, the lender says that your loan application and the included documentation meet the required VA loan guidelines. Sometimes, in fact usually, the lender has additional questions that must be answered before your loan documents can be ordered and sent to the closing table. These additional questions are called “loan terms” and simply mean that the lender will approve your loan “on condition” that you clear up any confusion in your loan file.
For example, you had a garage sale two weeks ago and deposited $ 800 in cash. That $ 800 shows up on your bank statement and the lender wants to know where it came from. At first glance, it seems a bit silly to document more money, but lenders ask that all undocumented deposits be well documented.
Perhaps your pay stub included in your request is older than 30 days. The lender will request a new stub because the guidelines require VA loans to have pay stubs on file for the most recent 30-day period. Once your conditions are met, your loan documents are prepared and submitted electronically to your closing agent.
But before you go, there is something you want to see first.
How much money do you need to bring?
24 hours before you are due to sign your closing documents, your lender will send you a copy of your estimated payment statement. This document details all charges, credits and payments to all parties associated with the sale. This includes not only the seller and you, but third party vendors such as attorneys and inspectors.
At the bottom left of the settlement statement you will see the exact amount you need to bring to the closing table. If there are any discrepancies or errors, contact your loan officer and have them corrected. A common mistake can be an appraisal fee that you paid up front but is still charged to you. Once you are satisfied that the numbers are correct, you move on.
At the closing table
This is the big day. The day you take possession of your new home. So what is going on? You will likely be asked if you would like a coffee or a soft drink, and then you will be shown to a room where the Closing Officer sits. This agent may be an attorney or escrow agent or any closing agent duly authorized and authorized to handle the transfer of real estate.
You will sign other documents, including some original copies that you have already signed. Your closing agent follows the “lender’s instructions” line by line, making sure you sign where you are supposed to sign and collect the correct amount of money from you. You can bring a cashier’s check with you or have your funds transferred in advance to the Closing Agent.
Once you have signed everything, you will provide two pieces of identification, at least one of which has a photo. The Closing Agent will copy your ID, verify your ID, scan your signed documents, and then electronically return them to the lender for review.
Once the lender determines that the closing agent has followed the instructions correctly, the lender releases the necessary funds to the closing agent and you get your keys. It all took about an hour.
The closing is a cathartic moment. It got a little hectic at times and you might feel like the VA lender had an endless avalanche of paperwork, but you did. You breathe out, smile and celebrate. Congratulations!
Still in the early stages?
It’s great that you have studied the loan process from inception to closing. If you’re ready to get started, the first step is to research the best rates. Our AV loan seeker matches you up to five – no credit check required.
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