We're under contract as of yesterday.
We were preapproved by our bank for a VA Home Loan.
How long does it take to do final approval from bank and VA?
For "closing," we have determined that May 5th is a good day to move. The builder (home is not complete yet) says he needs 8 weeks to finish. We have a lease that ends May 31st. We need time to pack anyways. Plus arrange for the moving containers to come here and after we load it ("we" means we have to hire someone because we're disabled) the moving container people said it will be delivered to the new home (out of State) in 3 days. It will probably take us 2 days to make the drive.
If all goes well, we should be in the house and moving container unloaded.
What IF: Builder is not finished on time?
We don't find out until after our stuff has been loaded and left?
The bank wants to change the closing date?
The bank tells us that the pre-approved loan is rejected.
Will we: Be able to get the keys on the date that we close?
First off, CONGRATULATIONS!!! Glad you got the home!! Now, I'm still going through the same process as you - first time buyer of new construction with a VA loan. It sounds like you will be done before us, since we won't close til the end of June. Off topic- how'd you end up paying above list price on a new construction?! But I had gotten a little confused when people were saying they were waiting for VA approval. I was nervous that even though we had full bank approval with a comittment letter and all, the VA would somehow come behind it and disapprove here. So here's what I've learned from the VA website- VA has little if anything to do with the actual loan approval. That is all up to your bank. VA for the most part, cannot step in and "make" someone approve you. According to them, your approval or disapproval is entirely up to the bank you choose to use, that participates in the VA loan program. Not all banks and mortgage companies participate in VA home loans. Also, it makes it clear that VA DOES NOT DO an inspection. They do an APPRAISAL but recommend that you get ANY home- new construction or not- inspected by a qualified, licensed inspector. Once the VA appraises your home, the VA's amount may differ from the Bank's appraised amount. It's the VA's appraised amount that really matters, because the VA is looking out for the interest of the Veteran. IF your home's purchase price is MORE than what VA deems the home is worth, you have the right to walk away with no penalty, meaning you would get back your earnest money in full. BUT you also have the right to continue with the loan and pay in cash at closing the difference of the purchase and the VA appraised value. So if you are paying $185,000 but VA says the home is worth $180,000, at your discretion you can pay that $5000 at closing and still have the VA backed loan. Also, be aware that there is a $3655 VA funding fee that will be added to your loan, UNLESS the veteran has a service connected disability that he or she is receiving VA benefits for, then that funding fee will be waived. For example, our original loan approval good faith estimate (i believe that's what it's called) had the approval amount plus the $3655 making that the total loan amount. My husband used to be airborne and now has a 10% disability rating for his knees. Once we provided documentation to the bank that he has that disability rating, the funding fee was waived.
So you've got the pre-approval, it will go to underwriting and then you will get notice that you have full approval. If there is anything the underwriter is concerned about - like a ding or two on your credit report in the last two years, the underwriter may ask you for a Letter of Explanation. Hubby had a credit card payment that was 30 days late in 2007 that was merely an oversight, and had a $100 collection from a book club or something that was not his. I wrote the letter and explained it, the underwriter was satisfied and we got the full loan approval and comittment letter. Once your home is built, the appraisers and should you choose to hire an inspector (and you SHOULD choose to hire an inspector) will come out and do their thing. I can't tell you after that, cause we haven't gotten there ourselves.
OH! But I can say, even after you get your full approval from the bank, be very careful... DO NOT put anything on your credit- no new furniture, no new cars, no new credit cards- no NUTHIN. And don't change jobs! You can pay down some items, but DO NOT add anything. A friend of mine built new construction and had her approval, then went and bout new furniture for her new house--- when her bank did a final check before closing and saw the new stuff they DENIED her and she had to scramble to find new financing at the last moment!
Again, CONGRATS! I know it's an exciting and scary time. We're on this ride together!
Oh, one more thing- as if my last post wan't long enough, right? LOL About getting the keys ON the closing date- from what I hear, that depends. Some people give you keys at closing, and some wait until the loan has funded and the wire transfer is complete. SO, if you can, try to get your closing for a morning time frame so that hopefully it will have funded by the afternoon and you can get your keys. At least that's what my realtor has stressed to me.
My husband is a 100% service-connected disabled Vet. So we knew going in that the funding fee is waived. And we are happy about it. Very happy.
The reason the contract price is higher than his initial asking price is that we are having the master bathroom reconstructed in order to put in a walk-in shower (after pulling out the tub that's already in there) and replacing the standard toilet with an ADA compliant toilet for my husband. In the second bathroom, we're just having the toilet replaced and leaving the tub as-is.
So there was the issue of the price of the toilets, demoing the master bath, redoing the tiling and floor tiles, drainage for shower floor, etc.
Here's how it went: $149,900 was the asking price. Closing costs are $5,475.58 and we already gave a $1500 earnest money deposit ... so in the end the loan amount will be $154k and seller/builder will pay $5,000 of closing costs.
We will have to give a check at the closing for 2 months mortgage payment (I think) plus closing. We have been approved at 5.0% interest rate.
I think we did really well. Our mortgage payment will be without PMI (of course because of VA) and without property tax (a benefit -if you will - of being a disabled Vet). It comes out to about $804 a month ... $250 less a month than we pay for rent right now.
We're hoping everything goes smoothly from this point forward.
Thanks so much for responding. I learned so much from you today. And I'm breathing a little easier.
We applied for a loan with our bank here and not there (3 States away).
We thought it would be easier to be able to go back and forth to a bank here rather than having to drive for 2 days down and back.
Not sure if this applies to a VA loan, but on a conventional loan, you have to pay prepaid interest thru the end of the month so for you that would be almost a full month. If you do the closing towards the end of the month, you will not only have to pay less prepaid interest but you solve the issue of if the builder takes longer. Inspection is done by you, but Appraisal is done by lender.