Apply for your VA-backed home loan Certificate of Eligibility (COE)
You’ll need to show your COE to your lender as proof that you qualify for the home loan benefit. The lender that you choose to work with should be able to assist with providing this document, or it can be obtained in your E-benefits.
Look at your current finances
Go over your credit profile, income, expenses, and monthly budget to make sure you’re ready to buy a home. Decide how much you want to spend on a mortgage—and be sure to include closing costs in the overall price.
Choose a lender (Obtain a Pre-Approval)
Remember, you’ll go through a private bank, mortgage company, or credit union—to get your loan. Lenders offer different loan interest rates and fees, so shop around for the loan that best meets your needs. Getting this approval early in the process is important so you can have the documentation needed to submit a offer if you should find the right home. Be prepared to pay lender fees. Many lenders charge Veterans using VA-backed home loans a 1% flat fee (sometimes called a “loan origination fee”). Lenders may also charge you additional fees. If you don’t know what a fee is for, ask the lender. In some cases, lender fees are negotiable. Our team is here to ensure you are not charged unnecessary fees.
Choose a real estate agent (Sign representation documents)
Read all agreements before signing with an agent. Make sure you understand any charges, fees, and commissions as well as your rights and obligations in the buyer-agent relationship.
Shop for a home (Set up a custom home search)
Look at houses in your price range until you find one that works for you. When comparing homes, be sure to consider what factors are most important to you and your family. These may include factors like how far you’ll need to commute to work and the quality of local schools, or if the mortgage fits in your budget. Our team will set you up with a custom home search and begin to show you homes that meet your needs.
Work with your agent to put together and sign a purchase agreement
Be sure the sales contract includes the “VA escape clause” or “VA option clause.” This provides an option to void the contract if the property doesn’t appraise for the contract price. This has already been included in Minnesota Purchase Agreements.
Ask your real estate agent for advice on other options for voiding the contract you may want to include, such as if the property fails a home inspection. These options are called contingencies.
Our team in most cases will draft an offer that protects you as the Veteran with these contingencies. We typically cover you on financing, appraisal, and inspection contingencies.
Submit your Earnest Money (Typically 1% of the purchase price)
This money is used as a good faith that you intend to perform on this purchase agreement. In the event that you walked away, you could forfeit this money to the seller to assist them with the time they lost on the market.
You would NOT lose this if we could not pass our inspection contingency in the time that we agreed on, or if the home did not appraise at or above the agreed price or buyer and seller could not come to an agreement. Also, if you could not obtain financing from your current lender.
This earnest money will be applied towards your closing costs, unless it’s already covered by the seller. If this is the case, our title closer will cut the Earnest Money back to you at close.
Have the house inspected and appraised
We strongly recommend that you get an inspection to check for any major defects before you purchase your home. A VA-approved appraiser will also appraise the house to make sure it meets basic property condition requirements (called minimum property requirements, or MPRs), and will provide an opinion of value on the house. Please note that an appraisal isn’t the same as an inspection.
Review pre-closing paperwork and give your lender any other needed information or documents. Your lender must give you a Closing Disclosure at least 3 business days before closing. Be sure to read it carefully. It includes loan terms, fees, closing costs, and your estimated monthly mortgage payments. Your lender may also ask you to provide more information or documents at this time. They will also typically require more documentation for the under writing dept to get the clear to close..
Close on your new home
Your closing may be held at a title company, escrow office, or attorney’s office. Be prepared to sign a lot of documents—and be sure to take the time to read everything before you sign.