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A Quick Guide to VA Loans
CLOSING THE LOAN (FINAL SETTLEMENT)
After the house is ready and the financing has been arranged, the lender will set a date for
"settlement" or "closing." Settlement day is the day when the property officially becomes yours.
You will also remember it as the "papersigning day." It generally occurs 30 days or more after
the contract has been signed. It is a good idea to have a lawyer attend the closing with you.
At this time the closing agent or attorney delivers closing statements to the purchaser and the
seller. The closer will ask the purchaser to sign the promissory note, bond, or other evidence
of indebtedness, promising to repay the purchase money loan; and a security instrument (mortgage
or deed of trust) in favor of your lender which makes the property security for the loan. Be
sure you understand what you are signing. If you do not have a lawyer, the closer or lender's
or title company's representative will help you with the legal terms. Do not be afraid to ask
questions. The closer will ask the seller to execute a deed to convey title to the property
to the purchaser. When the documents are in order you will pay the balance of the downpayment,
if any, and your share of the closing costs. After the closing, the closer will record the deed
and mortgage or deed of trust in the local property records. When recorded, the deed will be
mailed to you as grantee and the security instrument to the lender. The security instrument
remains on record as a lien or claim against the home until your loan has been paid off.
The promissory note which you will sign on the settlement day is a negotiable instrument which
the lender may sell, assign or transfer to another investor without prior notice to you. Such a
sale would transfer the lender's right to repayment of the loan and you might be advised of a
change in the procedures to be followed in making your loan payments. However your rights and
obligations under the security instrument would remain unchanged as would those of the loan holder.
At settlement you will receive important papers for your files, such as the builder's warranty
(if you are buying a newly constructed house); receipts for the payments you make; a copy of
the survey, if required, showing the boundaries of your property, and purchaser's closing
statement or settlement sheets. If title insurance is common in your area, you may wish to
consider purchasing an owner's title policy for your personal protection.
Your closing statement will show the amounts you owe for the downpayment, if any, and for other
settlement costs, and any amounts you have already paid. VA regulations place certain limitations
on the fees that may be charged. In general, you should expect your settlement charges to include
those which were mentioned earlier in this pamphlet.
FREQUENTLY ASKED QUESTION # 21 [ -more VA Loan questions- ]
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Q: The VA Loan for Home Equity Refinancing - Can I refinance with the VA?
A: " If you own a home and are considering refinancing, VA refinancing may be just what you need. Under the terms of VA refinancing, your current real estate debt is paid out of the proceeds of a new VA mortgage. The requirements? The same borrower must use the same property as before. This type of refinancing is also known as a 'Cash Out"" refinance, and is only good for homes that are used as the owner's residence.
Refinancing is available for up to 90% of the appraised value plus all closing costs in many cases. Your home must have enough equity to cover the loan. These terms may not be available in all states, depending on local lending laws. Check with your local VA rep to learn more."
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