Category: Loan Officer

How Long Does a VA Loan Take to Close?

Post author By Ahmad Azizi, Branch Manager at Option Funding, Inc.
Post date August 28, 2023

Being able to buy a home of your own is the ultimate dream. And for many who have served in the US military, VA loans can help.

How long does a VA loan take to close, though?

Unfortunately, over the years, VA loans have been tainted with a reputation that they take forever to close. In reality, it takes an average of 40 to 55 days for these loans to close – from contract to closing. This isn’t much longer than the 30-day average closing for buyers with a conventional mortgage.

Below you will find a closer look at the timeline and what you can do to speed up your VA loan process.

VA Loans: The Timeline

How long does a VA loan take to close? The exact amount of time will depend on just how quickly you make it through the timeline of events. After all, there are certain steps you have to take to successfully make it to the closing.

Get Pre-Approved For a VA Loan

Although it is not a mandatory step, getting pre-approved for a VA loan before moving forward with your home search is always a great idea. There aren’t many things worse than finding the home of your dreams and losing it because you took too long to qualify for a loan.

Keep in mind that getting pre-approved does not guarantee you a loan, but it does prove that you have met basic requirements set forth by the lender and, as long as you are able to meet a few additional conditions, you will likely be able to secure the loan.

Obtaining the Proper Appraisal

VA loans require getting an appraisal done by an appraiser that has been approved by the VA. Setting this up is often handled by the lender, but it is worth knowing in case you decide to hire your own appraiser.

To get through the process, you will have to consider the time it will take the appraiser which seems to be about 10 days, on average.

Response to Appraisal

Once the appraisal is submitted, two things can happen. The file can continue to move forward as is because all is well with the property and it is valued appropriately. Or, there may be repairs that need to be done before the loan can be approved. Depending on the size of these repairs, it has the potential to significantly disrupt your closing timeline.

What’s more, VA loans require the home to be appraised at or above the loan amount. If it is not, this could also throw a wrench in the process. If the seller does not agree to reduce the price to meet the appraised value, the buyer may have to come up with money to make up the difference or let the home go.

Final Underwriting

After the home has been appraised, you are moving into the home stretch of the closing process. The underwriter will take care of all the specific details that they are responsible for and this can take some time – especially if additional documentation is needed or other issues arise.

If all goes well, the file will be ready to close sooner rather than later.

Personal Timelines

A seller may list a home and want to sell it, but perhaps they won’t be willing to move for a few months. They could, after all, be waiting on their new home to be ready and a buyer would have to be understanding of this.

On the flip side, buyers may be looking to purchase a home but need to wait until their current home is sold to complete the sale.

There are many different personal factors and timelines that can interfere with the overall length of time it takes to get through the home-buying process. Rest assured that most often, both parties are anxious to get through the process as quickly as possible.

Reduce the VA Timeline

Getting a VA loan means going through some structured steps. You cannot get out of going through them or avoid a step or two. However, there are a couple of things you may do that will reduce the timeline for VA loans, including:

Choose an Experienced Realtor

There are certain criteria that the VA requires their properties to meet. They are referred to as Minimum Property Requirements or MPRs. Without them, you may run into issues with your funding – even if you do have pre-approval. Working with a realtor who is experienced in the VA’s requirements will help you avoid these issues.

Obtain a Certificate of Eligibility (COE)

If you have a COE, then you can feel confident in the fact that you have a piece of proof for your lender showing that you qualify for VA home loan benefits.

Getting Pre-approved

How long does a VA loan take to close if you have pre-approval? Knowing that you have already gone through the application process and have pre-approval means that there are fewer hiccups to encounter after you make an offer, thus reducing the timeline.

Is a VA Loan Right For You?

If you meet the requirements to be eligible for a VA loan, you may find that they are a great option. However, they are not the only option. VA loans can be great for those who take the time to get pre-approved, work with an experienced lender and realtor, and find a home that doesn’t need repairs. They offer a lot of perks.

How long does a VA loan take to close? How does this compare with your other mortgage options?

It is important to note that VA loans are not the only mortgage option you have. Working with Option Funding, Inc. will open you up to many different choices for funding your home purchase.

Before you make a move, talk to Ahmad Azizi and his team of mortgage experts. See if a VA loan is right for you or if there may be a better option to meet your needs.

Contact Ahmad today!

Loan Officer

Clear to Close: Everything You Need to Know

Post author By Ahmad Azizi, Branch Manager at Option Funding, Inc.
Post date July 17, 2023

It can take some buyers months to find the perfect property. And once they do, the mortgage application process can seem endless—especially when you’re anxious to get the keys to your new home.

Before that can happen, you’ll need to hear from your lender that everything has been approved and that everything is good to go.

Then, with just a few simple steps remaining, you will finally be able to exhale. In other words, you will have the loan you need to buy the home you want.

So, what exactly is clear to close in terms of your mortgage? Here is everything you need to know.

What Does it Mean When You Get the Clear to Close?

Getting a “clear to close” means that your loan has passed all the requirements and has met all the conditions set forth by the lender – allowing the file to move forward to the closing.

Your lender carefully reviews all the documents you have provided and verified that the mortgage you have chosen, as well as the amount, are all a good fit for you. They are, after all, taking a huge risk in loaning you the money and want to do their due diligence to make sure they are making a wise decision in doing so.

Once your file has been dubbed “clear to close”, the lender will then move into the next phase of prepping for your closing. This is when you will sign all your loan documents, as well as the documents provided by your title company so that they can officially transfer the title to you.

How to Achieve Clear to Close Status on Your Mortgage

When applying for a home loan, the goal is to get approved and cleared to close on the property. While a lot of the work rests on the shoulders of the loan officer and underwriter, there are things that you can do, too, to make this a much smoother process.

The more thorough and swift you are at providing the following information, the greater chance you have of your mortgage application getting approved.

Provide All Documentation

Your lender will require quite a bit of documentation along with your application. This is because they are trying to determine whether you have the money to pay back the loan. Documents often required include pay stubs and bank statements in order to prove your income and your assets.

A list of your monthly expenses and debt is also needed. Most lenders will look at your debt-to-income ratio to determine whether you are a good fit for your loan. And granting permission to pull your credit report is also necessary.

Don’t overlook anything when providing your documentation or you could be denied.

An Accepted Offer

When you find the home of your dreams, you need to make an offer on it – and get the seller to accept it. Your lender will need to know exactly how much you need for the purchase, as well as whether it makes sense.

Before you make your offer, consider the market, how long the property has been listed, any work that needs to be done to it, and how many other interested parties there are. If you are not sure how to strategize and come up with the right offer, your realtor will be able to help.

The Appraisal and Inspection

The home will need to be appraised and inspected before you will be approved for a mortgage—and both should be handled by third parties.

The appraisal determines the fair market value of the property while the inspection will uncover any problem areas or issues with the property’s interior and exterior.

The results of these are used by the lender to determine what the property is worth and if the amount of your accepted offer makes sense.

Underwriting Approval

Many borrowers fear underwriters. After all, without the underwriter’s approval, you likely will not get approved for the loan.

These are the individuals who go over everything with a fine-toothed comb. They look at all your documents, your debt-to-income ratio, your credit history, your current income, your assets, the details of the loan you are seeking, and so forth.

They let the lender know if you are a good fit.

How Long Does it Take to Get Clear to Close Status?

There are many steps – and many people – involved in gaining loan approval from your lender. Each of the above steps must be completed. While you may turn over all your documents right away, you may still have to wait on the appraiser and inspector based on their schedules, as well as the review of the underwriter.

On average, you can expect the entire process, from your initial application to being cleared to close to take about 30 to 45 days. Then it should only be a couple more days until you have the closing and get the keys – if things flow smoothly. Stay in contact with your lender so that you can address anything that comes up without delay.

Your Mortgage is Now Clear to Close: What’s Next?

Once you are cleared to close, you are almost there. When you have reached this stage, you can feel quite confident that you are going to be purchasing your new home. However, there are still a couple of things that need to be handled.

A Closing Disclosure outlines the terms and conditions of your new mortgage agreement and explains what you are going to be responsible for. You must review this carefully, make sure you fully understand it, and then sign it before you can close.

Lastly, a final walkthrough will take place to make sure that the home is still in proper condition. A lot can happen in 30 days, so this is always a good way to protect yourself.

Get through all of this and then you can celebrate your closing day.

Ready For Your Mortgage to Achieve Clear to Close Status?

At Option Funding, Inc., we make sure you have mortgage options available to you that will give you the greatest chance for a clear to close.

Contact branch manager Ahmad Azizi when you are ready to get started.

Homebuying Loan Officer

Using a VA Loan For a Second Home

Post author By Ahmad Azizi, Branch Manager at Option Funding, Inc.
Post date February 17, 2023

Paper with words va loan on a wooden background.

VA loans are a valuable tool for many veterans and active-duty service members looking to buy a home. However, many people are unaware that VA loans can also be used for a second home purchase. In this blog post, we will explore the requirements for using a VA loan for a second home and answer frequently asked questions about this topic. If you’re a veteran or active-duty service member considering buying a second home, keep reading to learn more.

Questions we’ll address in this post:

Can you use a VA loan for a second home?
Can I use a VA loan to buy a vacation home?
Can I use a VA loan for an investment property?
How does the VA bonus entitlement work?
What is the difference between full vs. remaining entitlement?
What is an example of a bonus entitlement?
How can one best understand loan limits?
How many times can I use a VA loan?
How can I restore my eligibility after I sell my home?
What do I need to know if someone assumes my VA loan?

Now, let’s dive into the details and answer these questions individually.

Can You Use a VA Loan for a Second Home?

If you’re a veteran or active-duty service member looking to buy a second home, you may wonder if you can use a VA loan for a second home. The answer is yes, but there are some conditions you must meet:

To use a VA loan for a second home purchase, you must first satisfy your initial VA loan requirements, which means you must have served at least 90 consecutive days on active duty during wartime, or 181 days during peacetime, or served for at least six years in the National Guard or Reserves. You must also have a certificate of eligibility (COE) from the VA.

In addition to these requirements, you must meet other conditions to use a VA loan for a second home. The property must be in the United States and be used as a residence for at least a portion of the year. The VA does not specify that the property must be a primary residence, so it can be a vacation home or a rental property if you occupy it for some portion of the year.

Remember that the VA loan amount may be limited for a second home purchase, and you may need to make a down payment to cover the difference between the loan amount and the purchase price. However, a VA loan for a second home can still be an excellent option for many veterans and active-duty service members.

The following section will explore whether you can use a VA loan for vacation homes or investment properties.

VA Loans for Vacation Homes and Investment Properties

While VA loans are primarily intended for purchasing a primary residence, there are some circumstances in which they can be used to buy other types of properties, such as vacation homes or investment properties. However, there are some additional requirements and limitations to keep in mind.

To use a VA loan for a vacation home, the property must still meet the exact occupancy requirements as a second home. You must use the property for at least some portion of the year as a personal residence. The property must be in the United States and be a single-unit property.

Using a VA loan for an investment property is more complicated. The VA does not allow VA loans for purely investment purposes, meaning the property must be primarily used as a personal residence. Additionally, you can only use a VA loan to purchase a property with up to four units, and you cannot use a VA loan to purchase a property with more than one acre of land. If the property has more than one unit, you must occupy one of the units as your primary residence.

While using a VA loan for a vacation home or investment property can be an attractive option for some veterans and active-duty service members, there are some limitations and potential drawbacks to keep in mind. The loan amount may be limited, and you may need to make a down payment to cover the difference between the loan amount and the purchase price. Additionally, if you use the property as a rental, you will be subject to the VA’s rental income requirements.

In the next section, we’ll explore how the VA bonus entitlement works and how it can affect your ability to use a VA loan for a second home purchase.

Understanding VA Bonus Entitlement and Loan Limits

When you use a VA loan to purchase a home, you are given a certain amount of entitlement – the maximum amount the VA will guarantee on your loan. If you have used your VA loan entitlement before, you may still be able to use a VA loan for a second home purchase using your remaining entitlement or bonus entitlement.

The full entitlement is the amount of entitlement the VA guarantees for every eligible veteran. As of December 2022, eligible veterans, service members, and survivors with full entitlement no longer have limits on loans over $144,000, meaning no down payment is necessary. The VA will guarantee your lender that if you default on a loan over $144,000, the VA will guarantee up to 25% of the loan amount for a borrower with full entitlement. One qualifies for full entitlement if they meet at least one of the following requirements:

You’ve never used your home loan benefit, or
You’ve paid a previous VA loan in full and sold the property (in this case, you’d have your full entitlement restored), or
You’ve used your home loan benefit but had a foreclosure or compromise claim (also called a short sale) and repaid us in full.

You may have the remaining entitlement if you have used your VA loan entitlement before, meaning that you can use your remaining entitlement to purchase a second home as long as the total amount of the VA loan is within the remaining entitlement amount.

You may also have bonus entitlement, an additional entitlement that the VA provides to borrowers who meet specific requirements, such as purchasing a home in a high-cost area. Bonus entitlement can sometimes be used to purchase a second home, but the loan amount cannot exceed the bonus entitlement.

For example, let’s say you used your full entitlement to purchase your first home, which you later sold. You now have a remaining entitlement of $68,250. If you want to use a VA loan to purchase a second home for $300,000, you could use your remaining entitlement of $68,250 and your bonus entitlement of $89,062 to cover the guarantee on loan.

It’s important to note that VA loan limits vary by location and are based on the conforming loan limit set by Fannie Mae and Freddie Mac. In most areas, the VA loan limit for 2023 is $726,200. However, in high-cost areas, the loan limit can be much higher.

If you use a VA loan to purchase a second home, the loan amount may be limited by the remaining entitlement, the bonus entitlement, or the loan limit for your area. Sometimes, you may need to make a down payment to cover the difference between the loan amount and the purchase price.

In the next section, we’ll explore how many times you can use a VA loan and how to restore your eligibility after selling your home.

Using VA Loans Multiple Times and Restoring Eligibility

If you’re a veteran or active-duty service member, you may wonder how many times you can use a VA loan to purchase a home. You can use a VA loan as often as you want if you meet the eligibility requirements and have remaining entitlement.

To restore your eligibility for a VA loan after selling your home or paying off a VA loan, you must apply for restoration of entitlement. To do this, you will need to submit a completed VA Form 26-1880, along with proof of the sale of your home or the payoff of your VA loan. You will also need to provide proof of your current military status, such as a statement of service or discharge papers.

Restoring eligibility can take some time, so starting the process early is essential if you intend to use a VA loan for a second home purchase. Additionally, keep in mind that you will need to satisfy the exact requirements as you did for your initial VA loan, including having served the minimum length of time and obtaining a certificate of eligibility.

It’s important to note that if you default on a VA loan, you may lose your entitlement and be unable to restore it. Additionally, if you have a VA loan in default, you may only be able to use your remaining entitlement for a second home purchase once the default is resolved.

What to Know if Someone Assumes Your VA Loan

If you have a VA loan and you’re considering selling your home, you may have the option to allow the buyer to assume your VA loan. Here’s what you need to know about VA loan assumptions:

A loan assumption is when a buyer takes over the payments on an existing mortgage instead of obtaining a new mortgage to purchase the property. In the case of a VA loan, the buyer must also be a veteran or active-duty service member and meet specific eligibility requirements.

To qualify for a VA loan assumption, the buyer must have a good credit score and sufficient income to make the payments on the loan. The buyer must also obtain a certificate of eligibility from the VA and meet other underwriting requirements.

One advantage of a VA loan assumption is that it can save the buyer money on closing costs and may provide a lower interest rate than a new mortgage. However, the buyer will be assuming the remaining term and balance of the original loan, which may only be ideal if the buyer plans to keep the property for a short time. Additionally, the seller will still be liable for the loan if the buyer defaults.

Before agreeing to a loan assumption, it’s essential to consider the pros and cons carefully and to work with a qualified mortgage professional who can help you make an informed decision.

Apply for a VA Loan Today at Option Funding Inc.

In this blog post, we’ve explored the use of VA loans for second homes, vacation homes, and investment properties and the requirements and limitations of each. We’ve also discussed how the VA bonus entitlement and loan limits work, how to restore eligibility for a VA loan, and what to consider if someone assumes your VA loan.

If you’re a veteran or active-duty service member considering purchasing a second home, a VA loan can be a valuable tool to help you achieve your goals. Contact me, Ahmad Azizi of Option Funding Inc., if you have any further questions or are ready to apply for a VA loan for a second home purchase.

Loan Officer Mortgage Broker

Mortgage Broker vs Loan Officer: What’s the Difference?

Post author By Ahmad Azizi, Branch Manager at Option Funding, Inc.
Post date October 11, 2022

Do you know what the difference is between a mortgage broker vs loan officer?

When it comes to investing in a piece of property, the entire process can leave your head spinning – especially if you are a first-time buyer. There are many steps, quite a few different people involved, deadlines to meet, inspections to be done… and the list keeps going. Plus, if you intend to take out a mortgage to purchase the property, how do you know where you turn?

You have to make a choice of whether to use a mortgage broker or loan officer. This is a crucial step in the whole loan process. On the surface, both of these individuals may appear to do the same thing. But a deeper dive will show you that they are, in fact, very different. Let’s take a look.

Mortgage Brokers

The role of a mortgage broker is to get you the best loan for your real estate purchase – and that means one that is a perfect fit for you. They have access to loans from many different lenders and, thus, many different loans. They work with banks, credit unions, and other financial institutions/mortgage lenders.

Linking Lenders and Borrowers

In their role, mortgage brokers act as liaisons and bring together the lender and the borrower. These individuals may work for a brokerage firm, or they may work on their own. In other words, when you work with a mortgage broker, you work with a third party. And while this may make you hesitant, it can actually be very beneficial. After all, you will have access to loans from different lenders – which can land you some great deals.

The Power of a Network

What’s more, everyone has a different situation. One borrower may have polished credit, verifiable income, a good debt-to-income ratio (DTI), and even money sitting in the bank for a down payment. Another borrower may have the income and the down payment but not the best credit. And still, another borrower may not have any of these things. But because a mortgage broker has a large network of lenders and familiarity with their requirements, they can save you a lot of time in finding a loan. Filling out loan applications can be very tedious and time-consuming. And going through this process on your own with lenders you aren’t even sure will approve you can be very frustrating.

So, How Do They Get Paid?

Mortgage brokers receive a commission for their services from the borrower or the lender. Sometimes both. The borrower needs a loan, the lender wants more approvable clients, and the broker brings them together for a fee. This commission is referred to as the origination fee, and it is roughly between 1% and 2% of the loan amount. This will be disclosed upfront.

Loan Officers

A loan officer works directly for a financial institution and is also referred to as the mortgage lender. You would apply for a mortgage through them, whether a bank, credit union, or online financial institution, and, if approved, be offered any of the products they offer. You won’t have the opportunity to access different products from other lenders with a loan officer because, remember, this person is an employee of one particular finance.

Developing Relationships

Because you are working with the lender itself, you will be able to develop a relationship with them over time – for as long as you make your mortgage payments. Note that you won’t encounter any brokerage fees since you aren’t working with a broker, but you will still have an origination fee.

Ability to Choose Your Mortgage Company

If you decide to work with a loan officer, then you have control over choosing just what mortgage company you want to work with. While this may seem like the perfect choice, it also means that you will have to go through the entire application process, gathering all the necessary documents needed, without any guarantee of loan approval. And this can be a time-consuming process. If you are only applying for one loan at a time, you may waste a lot of time. Yet, applying for more than one can be overwhelming. It also means more marks on your credit.

Any downfalls with working directly with the lender aren’t because of the loan officer but the overall process itself. Deciding if this is the route for you should be backed with a lot of research before you take the first step.

Let’s Recap

A mortgage broker does not work for a lender. In fact, they may not work for anyone. These individuals work independently or may work with a mortgage brokerage firm. Mortgage brokers are not stuck working with one lender, which gives them the freedom to find you the best rate amongst a long list of lenders.

A loan officer is someone who works for the lender and can only provide loans through the lender they work for. Depending on your situation and the current market, a loan officer may potentially be able to get you a reduced rate or provide you with down payment assistance programs.

Mortgage Broker vs Loan Officer: What is Right for You?

A home is one of the biggest investments you will make. So, when it comes to a mortgage, you want to make sure you are getting the best deal possible.

So, who do you choose to work with? The answer is quite personal. But by doing your own research on a mortgage broker vs loan officer, you’ll be able to narrow down the best fit.

If you have a relationship with a particular financial institution and you want to stick with them – or apply to – then you may want to contact their loan officer. On the other hand, if this is your first time purchasing real estate, you may find that you don’t know where to turn. You may not understand the process, which lender caters best to your situation, or the documentation needed to make it happen. Or you may even be under time constraints and want to be sure you get the best rate – without wasting precious time. A mortgage broker can guide you through the process and connect you with the lenders that will appeal most to your situation. This may be the best option.

Apply for Mortgages and Loans at Option Funding Inc

Are you looking for mortgage programs or loan options? Contact us today at Option Funding Inc in Westlake Village, California. Branch manager Ahmad Azizi and his team of mortgage brokers and loan officers can help you find the perfect home loan today!