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Myth Busting: California VA Loans Usually Don’t Take Longer to Close

At Bridgepoint Funding, we are passionate about the VA loan program because it rewards our brave service members and veterans. So today, we will be addressing a common misconception relating to VA loans and how long they take close.

Surveys conducted in the past have shown that some military members and veterans believe that VA loans take a lot longer to close, when compared to conventional mortgages. But the truth is, the average processing time for VA and conventional loans is nearly identical.

The Terminology Being Used Here

Before we get to the myth-busting part of this article, we should cover some of the basic terminology being used here:

A VA loan is simply a mortgage loan that receives a partial guarantee from the federal government, through the management of the Department of Veterans Affairs. This guarantee gives mortgage lenders and extra layer of protection from financial losses relating to borrower default.

While this federal backing protects the lender, it provides benefits to the borrower as well. Through this program, mortgage lenders can offer very flexible qualification criteria for borrowers. This includes the ability to buy a home with no down payment, while also avoiding mortgage insurance.

In contrast, a conventional mortgage loan is one that does not receive any form of government insurance or guarantee. The term “conventional” is used to distinguish these fully-private-sector loans from the FHA and VA programs, which are built around government backing.

Generally speaking, conventional mortgage loans tend to have stricter qualification criteria. That’s because the lender does not have the additional layer of government protection that’s associated with VA home loans.

The closing timeframe in this context refers to the amount of time that passes between the initial loan application and the final closing. The closing is when the borrower signs all of the finalized documents and takes possession of the home.

California VA Loans Don’t Take Longer to Close

The U.S. Department of Veterans Affairs once published an article designed to debunk some of the most common myths or misconceptions relating to VA loans.

One of their fact-checks confirmed something that we’ve stated in the past. On average, California VA loans don’t take any longer to close when compared to conventional mortgage financing. In fact, the typical processing timeline is nearly identical.

Regarding the lingering myth that “VA Loans take forever to close,” the article stated the following:

Fact: They close as fast as the others, and they’re also more likely to close than both conventional and FHA loans.

The VA’s researchers used mortgage processing data provided by Ellie Mae. This company, now known as ICE Mortgage Technology, provides loan processing software to the mortgage industry. Their software is used to process the majority of home loans within the United States. So it also offers insight into the average processing time and related metrics.

The VA determined that both conventional and VA purchase loans had an average closing timeframe of 44 days. That was the length of time from the loan application to the final closing. The researchers also determined that VA loans are more likely to close than their conventional counterparts, which is good news for both home buyers and sellers.

Twenty or 30 years ago, VA home loans in California might have taken longer to close, when compared to conventional mortgage financing. But these days, that does not appear to be the case. Based on the data cited above and similar reports, these two mortgage options are very similar when it comes to the average closing time.

In order to keep up with the times, the VA continues to modernize their technology and streamline their procedures. This in turn keeps their loan program running smoothly.

How You Can Help Keep Your Closing on Track

As a home buyer, you don’t have direct control over every aspect of the VA mortgage lending process. But there are certain proactive steps you can take to help ensure that your closing stays on track.

1. Round up your financial documents.

When you apply for a VA loan in California, you will be asked to provide a wide variety of documents relating to your financial situation, employment and income. This is true for all types of mortgage loans, including FHA, VA and conventional.

You could expedite the process and streamline the path to closing by rounding up some of these documents early. At the very least, figure out how and where to obtain these documents, so that you’re ready to go when the time comes.

Commonly requested documents for a VA loan include pay stubs, bank statements, IRS W-2 forms, tax returns, and statements relating to investment accounts such as IRA or 401(k).

You will also need to obtain a Certificate of Eligibility (COE) from the Department of Veterans Affairs. You can request this document on your own, through the website, or have your mortgage lender do it for you. But you’ll need it in order to complete the application process and proceed toward the closing.

2. Keep the communication flowing.

You can also help keep the process on track by staying in close contact with your mortgage broker or loan officer. Good communication is the glue that holds everything together. For instance, you could check in with your mortgage company’s point of contact throughout the process, to make sure they have everything they need from you.

3. Handle additional requests in a timely fashion.

Borrowers sometimes receive additional requests from the mortgage underwriter. The underwriter is the person who reviews all of the loan documents to make sure they are accurate and acceptable. The underwriter will also ensure that the borrower meets all mortgage guidelines for the VA loan program.

If you receive a request for additional information, try to handle it as quickly as you can. This will help you reach the final closing stage, while avoiding unwanted delays along the way.

To recap, VA loans in California don’t really take any longer to close than conventional mortgage financing. But there are steps you can take to make sure that the loan process proceeds as smoothly as possible.

Mike Trejo

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

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