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The VA Loan Process in California: A Step-by-Step Guide

VA loans are a popular mortgage financing option in California. There are two main reasons for this:

  1. The VA loan program allows eligible home buyers to buy a house with no money down, and usually without mortgage insurance.
  2. Secondly, California has a huge military population, especially among Navy and Marine Corps personnel.

But how does the home-buying process work, when a VA loan is used? What are the steps to buying a home in California with a VA-backed mortgage loan? That’s what we will explore today.

The VA Loan Home-Buying Process in California

Note: Bridgepoint Funding specializes in VA loans. We are passionate supporters of this program. Please contact us if you have questions about anything covered below, or if you’d like to start the process.

The VA loan process in California can vary a bit from one borrower to the next. Every home buyer is unique, and the mortgage process reflects that. But in most cases, the VA mortgage and home-buying process follows a certain series of steps.

1. Obtain your Certificate of Eligibility.

The Certificate of Eligibility, or COE, is a government document that tells mortgage lenders you are eligible to use the VA loan program. So the first step in the process, from a borrower’s perspective, is to obtain your COE.

Most California military members and veterans are qualified for the VA loan program. But lenders still need an official COE to initiate the process. You can obtain this document through the Department of Veterans Affairs website. Please contact us if you have any questions about it.

2. Determine your monthly housing budget.

Before you start talking to mortgage lenders or shopping for a home, it’s a good idea to figure out how much money you can spend each month on your housing costs.

Fortunately, you don’t have to be an accountant or financial planner to do this. All you need is some basic math.

Begin by adding up your current monthly expenses and subtracting them from your net income (or take-home pay). That’s your starting point. You can then work down from that number to determine where you want to draw the line, in terms of monthly housing costs.

This process can vary from one person to the next. Some people are comfortable taking on a higher level of debt, while others are more “debt averse.” The key is to work it out in advance, before you take on mortgage debt. It’s an important, but often overlooked, step when using a VA loan to buy a home in California.

3. Get pre-approved for a VA loan amount.

You can think of mortgage pre-approval as a kind of pre-screening process. Mortgage lenders use this process (among other things) to determine how much they are willing to lend, in the form of a VA loan.

It makes sense to go through this step before you start house hunting. It can help you narrow down your search to a specific price range.

Additionally, having a VA loan pre-approval letter can work to your advantage when it’s time to make an offer on a house. Sellers view offers that are supported by a pre-approval letter more favorably, compared to those without a pre-approval.

4. Start the house-hunting process.

It’s wise to work with the real estate agent when using a VA loan to buy a home in California. You don’t have to. But there’s a lot to be said for professional advice, especially if you’re a first-time buyer.

Your agent can help you find a suitable property within your preferred location, and can also help you evaluate the asking price. Real estate agents are experts in market analysis, negotiations, and purchase-related paperwork.

When house hunting, you’ll want to focus on properties that fall within your budget and your pre-approval range. Viewing homes that exceed those thresholds could end up being a waste of time.

5. The home gets appraised by a VA-approved appraiser.

Once you’ve signed a purchase agreement with the seller, the property will then be appraised by a VA-approved home appraiser.

This person’s job is twofold:

  • First and foremost, they must evaluate the property to determine its current market value. The goal here is to prevent a situation where the loan amount exceeds the value of the home.
  • Secondly, the appraiser will ensure that the home meets the minimum property requirements used for VA loans.

6. The loan goes through an underwriting process.

During mortgage underwriting, a specially trained underwriter will review the loan to ensure it meets both lender and government requirements. The Department of Veterans Affairs has specific guidelines for borrowers who use VA loans. The underwriter will make sure the borrower meets those requirements.

He or she will evaluate the paperwork, the appraisal, the borrower’s credit score, and other aspects of the loan.

As a home buyer, there isn’t much for you to do at this stage. But there may be some additional requests for documentation, letters of explanation, and the like. So be aware of that possibility.

7. Have a home inspection completed (optional).

California home buyers who use VA loans are not required to have an inspection. But it’s generally wise to do so.

It’s important to realize that a home inspection is different from an appraisal. As mentioned earlier, the VA-approved appraiser is primarily concerned with the home’s market value and general condition.

The home inspector, on the other hand, will conduct a more thorough examination of the property to determine any safety issues, mechanical flaws, structural problems and the like.

The home inspector works for you, the buyer. He or she will deliver a detailed report with any issues uncovered during the inspection.

It’s generally a good idea to have a home inspection when using a VA loan to buy a house in California. It gives you detailed and valuable insight into the property you’re purchasing, and for a relatively low cost.

8. Go through the closing process, and get your keys!

From a home buyer’s perspective, closing represents the last step in the California VA loan process. Both the buyer and seller have tasks to perform on closing day. But they can be done separately.

For the buyer, the closing process involves reviewing and signing documents and paying all remaining costs associated with the loan. After that, you get the keys to your new house!

The VA loan process in California can vary slightly from one borrower to the next, for a number of reasons. But it generally follows the sequence of events outlined above. Just know that you could encounter additional steps that are not covered in this article.

Please contact our staff if you have questions about how to buy a home in California with a VA loan. We look forward to helping you!

Mike Trejo

Mike Trejo is a Bay Area mortgage broker with 20+ years of knowledge and experience.

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