VA loans refer to loans that are partially guaranteed by the United States Department of Veterans Affairs. VA loans may feature no down payment, reduced closing costs, low interest rates and no need for private mortgage insurance. VA loans can provide attractive benefits, but most potential buyers also want to know how quickly a sale will close. Given the unique features of a VA loan, that answer can vary quite a bit.
What Is Unique About a VA Loan?
VA loans have a reputation for taking longer to process than regular mortgages. In recent times, concern has arisen around the requirements for VA loans. Some believe the requirements for VA loans make them less competitive as demand for housing has grown. As a result, some sellers may refuse VA loan offers.
In reality, most VA loans take only a few days longer to process than regular mortgages. A few unique features of VA loans can determine processing times. A VA loan process timeline may close in as little as 30 days, but that is dependent on a few key items.
VA loan requirements have some unique features, such as the VA loan fee. They are only available to people who have performed the minimum service requirement set forth by the VA. This means that a VA borrower must have served the minimum length of time as active duty or a reservist. Discharge status can impact eligibility. Surviving spouses can also be eligible for VA loans.
What Are VA Loan Requirements?
The essential consideration is when the buyer and seller are interested in transacting. This will determine the timeline for the VA loan closing process. Perhaps a seller is not interested in moving until after a specific date, or the buyer is planning their move further in the future.
The appraisal process is another area that can introduce uncertainty to the timeline. Only VA-designated appraisers can fulfill this function, and they can be in short supply in certain areas. If the property is deemed as requiring repairs before the sale can transact, it can slow the process. The secondary issue is whether the property value is impacted after repairs.
The VA loan underwriting timeline unsurprisingly presents another major bottleneck in the loan process. Many buyers consider the underwriting process to be a stressful part of the home buying process. This is when a lender will verify all information provided by the buyer. There is little that can be done at this point aside from being responsive and helpful.
COVID has unfortunately also created obstacles to a swift closing. There is not much that can be done here, but a knowledgeable professional can help buyers navigate related obstacles.
How to Speed Up the VA Loan Process
Having a clear direction and understanding of VA loan requirements will go far in moving the process along more quickly. This enables planning ahead for the peculiarities of VA loans.
Good resources for gaining a better understanding of VA loans are VA.gov or MilitaryOneSource.mil. These are government-run resources expressly for service members, veterans and their dependents.
Getting preapproved for a loan can shorten the VA loan process quite a bit. In fact, getting preapproved a few months before starting a property search is ideal. This will eliminate much of the suspense around buying a home. Preapproval allows buyers to set a realistic budget and shows sellers that a buyer can obtain funding.
Selecting a property that is in good condition can help. Many first-time homebuyers consider purchasing a "fixer-upper" property, but at may not be an option with a VA loan. Houses purchased with VA loans require inspections, which can slow down the VA loan process. A house that does not pass VA inspection may require repairs prior to the sale, and this part of the process can lead some sellers to consider VA loans as being more expensive to close.
Working with an experienced real estate agent and VA lender can help with reducing the timeline for a VA loan.
Hashaw Elkins is a financial services and tax professional, as well as a project management consultant. She has led projects across multiple industries and sectors, ranging from the Fortune Global 500 to international nongovernmental organizations. Hashaw holds an MBA in Real Estate and an MSci in Project Management. She is further certified in organizational change management, diversity management, and cross-cultural mediation.