Are VA Loans Harder to Close?
While VA loans have plenty of perks for veterans, they are also notorious for being difficult to secure. You may have heard through the rumor mill that it is much harder to close on a VA loan than other traditional loans; however, interested home buyers should not let this conventional wisdom act as a deterrent.
Closing on a home with a VA loan has evolved from bureaucratic ball-dropping and become much easier to facilitate thanks to certified lenders with the ability to streamline the process in-house. Currently, there are no significant differences between closing on a house with a VA loan compared to other loan types.
With that in mind, Hero Loan is happy to illustrate how closing on a VA loan compares to closing on other types of loans.
How Hard is it to Close on a Regular Loan?
According to leading mortgage software company Ellie Mae, it takes an average of 47 days to close on Conventional and FHA loan types. Closing on a loan depends on several factors influenced by mandatory waiting periods and third-party service providers. Here is a timeline of steps that outline the typical closing process of a regular loan:
- Application. The interested home buyer submits an application on day one. You will need to provide your lender with your name, your Social Security number, your estimated gross income, the property address, the estimated value of the property, and the requested loan amount. Fortunately, Hero Loan is able to expedite this process.
- Disclosure. Creditors must provide a new Closing Disclosure reflecting the actual terms of the transaction at least three business days before a home buyer signs the mortgage documents. During this process, interested home buyers will receive a loan estimate. We recommend that home buyers give permission to correspond electronically to expedite the process.
- Documentation. Your lender will take a few weeks to look at the documents required, like your income and other financial assets, when determining your loan eligibility.
- Appraisal. As soon as you provide your lender with your signed intent to proceed form, a professional appraiser will take one to two weeks to appraise the value of the desired home for purchase.
- Underwriting. Your lender will take one to three days to conduct an initial review of your credit and financial background to determine your eligibility for a loan program.
- Conditional approval. Your lender will take 1-2 weeks for an additional underwriting review and clearing of conditions to determine if they are willing to loan a specific amount of money, provided the applicant meets certain criteria. A file may also be suspended as pending or denied entirely if the application does not meet the set criteria.
- Cleared to close. This is the step where your lender has verified you’ve met the requirements and conditions to close on the loan as a home buyer. During this time, there is a three-day mandated minimum to acknowledge the closing disclosure.
- Closing and funding. This is the last step in the closing process. It takes one to three days to receive and review the signed loan documents and disburse funds.
This timeline represents an average closing time on a loan but does not reflect the additional time needed for home buyers with more complex financial situations. The actual closing itself will only take one to two hours, but depending on the interested home buyer’s financial situation, the process may take longer if extra documentation or clarification is needed. To avoid surprises or complications, some home buyers may be interested in getting a pre-approval on a loan.
How is Closing on a VA Loan Different?
Closing rates on a VA loan are comparable to other loan types with a closing rate of 74.3%, compared to 74.1% of all mortgages. Conventional loans have a 75.2% closure rate. Selecting a VA-approved lender with in-house streamlined underwriting services will expedite the process. Using a non-approved lender means that the loan process will have to go through the VA Home Loan Center and will take more time.
Veterans and active-duty service people are required to produce a certificate of eligibility (CEO). This document verifies that service requirements are met in order to qualify for a loan as part of the VA entitlement program. As with other loan types, pre-qualifying on a VA loan will make the process faster and easier by showing your lender you are a seriously interested buyer. This can also prevent any surprise encounters with less than ideal financial blindspots later.
Additionally, closing times on VA loans are slightly longer. The appraisal process will also be a little different, as the VA requires the appraiser to check off on Minimum Property Requirements (MPRs) to ensure the property is sanity, structurally sound, and safe (the three S’s). Familiarizing yourself with the VA’s MPRs can expedite this part of the process as you will be aware of red flags to look out for when examining a property. For the most part, the process for closing on a VA loan follows the same procedures as other loans with comparable closing times so long as the interested home buyer has prepared their CEO, has their financial ducks in a row, and the house holds up to scrutiny under the VA’s MPRs during the appraisal process.
How Can Hero Loan Help You?
Hero Loan is the brainchild of its parent company, The Home Loan Expert, which quickly came to be a word-of-mouth success. It was created to address the rapid growth of the company to bring the same passion and level of service to active duty military, veterans, and their families. Our mission at Hero Loan is to provide fast, personalized service while supporting Veteran-Owned businesses and events. That’s why we are proud to support the efforts of our veterans by contributing to the Fisher House Foundation, which directly gives back to our veterans.
Our team of friendly lending experts uses a face-to-face approach to help our clients qualify for a loan in less than five minutes, with closings in as little as 14 days. As mentioned above, having the capacity to streamline the underwriting process in-house means faster closing times with less responsibility for bothersome paperwork. And, we’ll pay for your appraisal.
Let us help simplify your closing process by calling us today at (866) 222-0219 to speak with a VA loan representative, or reach out to one of our lending experts who will be glad to address any inquiries you may have through our live chat feature.