It is one of the most common questions asked by future VA home buyers or home owners looking to refinance with a VA loan.
“How long will it take to close?”
There are many factors that go into determining how long it takes to close a VA loan. Each factor can add days to the process. A VA loan should be easily closed inside of 30 days. However, several things can slow the process down, such as your lender’s processing time, VA state appraisal delivery times and more importantly than anything, how quickly you return the loan disclosures authorizing the bank to process the loan.
Most common factors that affect how quickly you close a VA loan:
How quickly you return your VA loan disclosures
Once you lock your interest rate in (generally 30-45 days to give enough time to process the loan), the clock starts ticking. Your lender should get the disclosures to you that same day. At that point it is your job to gather the information needed by the lender to process your loan and send it in along with the signed authorization documentation. The longer this takes, the more files other customers are turning in get in front of you. So you definitely want to get a quick start and be in front of the line.
How popular is the lender?
This may seem like an odd reason for slower VA processing times but this can have a severe impact on how long it takes to close a VA loan. In fact, it often has a negative impact on rates and fees as well but we’ll stick to the turn times here.
What makes one lender more popular than another?...advertising. How much a lender advertises on television, the radio, or even on the internet can cause a huge spike in business.
Because there are extreme ebbs and flows in the mortgage business due to fluctuating rates, lenders can’t forecast the levels of business that will occur. This combined with large advertising budgets creates a mass influx of files at one time. A lender just can’t increase their workforce at a moments notice. As a result major bottlenecks occur in the workflow, thus slowing down every aspect of the business. Choosing a lender because you see them on TV all of the time is like going to a movie on opening day. It generally won’t be the best experience.
Is the lender LAPP certified?
A lot of veterans don’t know what LAPP is or realize how much quicker this can speed up the process.
LAPP stands for Loan Appraisal Process Procedure. It basically means VA has authorized the lender to review the appraisal certify the value. In short, it is a review of the appraisal for accuracy. This assures the veteran is getting a fair value for the home and not over paying or borrowing more than the home’s worth.
If a lender is not LAPP, they have to let VA issue the NOV (Notice of Value). Keep in mind, there are thousands of lenders nationwide that don’t have this certification. All of these lenders are turning appraisals into VA for review. This of course causes a backlog and delays the NOV. It can take as long as two weeks depending on the number of appraisals coming in at one time whereas a LAPP lender can turn it around the day they receive the appraisal.
Appraisal delivery times
VA gives appraisers a specific time frame to complete their appraisals. This VA appraisal delivery time is based on the state where the property located. In most states, the appraiser is given 10 business days and it’s not uncommon for the appraisers to take the entire 10 days. If the home is located in rural area, the appraiser may need additional time as well, to gather the necessary information to complete the appraisal.
Repairs to the property
Often times, through the home inspection or as requested by the appraiser, the property requires repairs to bring it to your standards or the standards of VA. The level of repair can severely impact the loan process. How quickly these repairs are completed and if they are required by the appraiser or not could determine how quickly you close as well. If it’s required by the appraiser, it will have to be confirmed by the appraiser, which means an additional trip and amended report by the appraiser.
Water testing
If the home is not on public water, a water test will be required to assure it meets the local Health Authority’s standards. This process can take a couple days or a couple weeks. If you’re buying a home that does not have public water, you should have a water test immediately to assure it does not slow the process down at all.
You can help determine how long it takes to close a VA loan
All in all, this may seem like a long list of factors that can slow the process down. Keep in mind, as long as your file is moving along, most of these items can happen at the same time. More importantly, planning ahead, having due diligence, knowing the VA loan process and working with a bank that has quick turn times will all speed up the time it takes to close your VA loan.
Image courtesy of Suat Eman / FreeDigitalPhotos.net
