Regardless if you already own a home or are looking to make a purchase, the timing of your VA loan is critical. Let’s examine WHEN you need to go to your local bank and apply for financing.
60 days is a good rule of thumb.
In today’s market, closing on a VA mortgage will take somewhere in the neighborhood of 45 to 60 days. While it IS possible to make a closing in 45 days or less, I always suggest to err on the side of caution. Appraisal issues, termites, and slow insurance companies can add to your delay. By staying a step ahead and planning for the worst, you’ll be stress free and sleep soundly.
If you are selling your home AND buying another home
I suggest applying for financing when YOUR home goes under contract. This means you have a rock solid buyer and have collected a cash deposit. With your property under contract and knowledge that your financing will take 60 days, this is now the perfect time to start shopping for your next home. In today’s target rich environment (and by that I mean the market is flooded with homes for sale) you should have no problem finding your next home.
Nobody wants to move twice
When you put your home up for sale, you may find a buyer that wants to close quickly. This could be a problem if you still have not found your NEXT home or the buyer wants to close in less than 60 days. (Remember you need 60 days for YOUR financing.) If this is the case, I suggest you put into your sales contract the right to lease back your home AFTER it sells. This allows you to finalize the transaction but still remain in the home.
Putting your next home under contract
After you locate your new home, try to negotiate for the longest possible close date. This is a DELICATE process of give and take. Make sure you don’t give the seller the impression that you can’t close or that you aren’t serious. Show the seller your VA Loan pre-approval to inspire confidence. After you have the set closing date, say it’s April 1st, 2009, make your contract read, “closing to commence on or before April 1st, 2009.” That way you have the OPTION to close any time up until the final day of April 1st, 2009. I would also suggest putting into the contract the right to extend the contract should you need more time. You may need to offer the seller some cash for the extension rights, but it’s definitely worth having.
In a nutshell- get your VA loan financing started and plan on closing in 60 days. Make all your other arrangements around this time frame and you’ll enjoy a seamless hassle-free closing.
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