Closing on your VA home loan is a huge accomplishment. Let’s take a closer look at some of the things you can expect at closing and shortly afterward.
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 "paper signing day." It generally occurs 30 days or more after the contract has been signed.
The law requires that you receive a Closing Disclosure at least three days prior to your loan closing. Your Closing Disclosure will show the amounts you owe for the down payment, 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.
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 down payment, 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 more. You may wish to consider purchasing an owner's title policy for your personal protection.
If you are buying a new house, you may make an agreement with the builder to move in before all outside work is completed. For example, the builder may not be able to complete the driveway or walks because of cold weather. In such cases, however, it is important that you have a clear understanding in writing that any uncompleted work of this sort will be completed properly by a specified date or within a reasonable time thereafter. It is usually desirable to check with your lender, or with the VA office.
When you first move into a house, you may have to do a certain amount of touching up, some of which may be the result of your moving in. After that, if you have a new house, your maintenance expenses may be very little for a while.
You should obtain from your builder or seller copies of the manufacturer's warranties on any mechanical or electrical equipment included in the home (heating plant, water heater, refrigerator, range, washing machine, dishwasher, etc.), together with information as to whom to call in case the equipment needs to be serviced. Read and carry out any instructions that may be supplied to you on how to use and maintain each piece of equipment properly.
If you buy a house which has been previously occupied, there is usually no action you can take against the seller to have defects corrected unless there has been misrepresentation by the seller. Check with an attorney for more information.
Remember, you are obtaining a loan from a private lender which must be repaid just as you must repay any money you borrow. The VA guaranty, which protects the lender against loss, encourages the lender to make a loan with terms favorable to the veteran. But if you fail to make the payments, you may lose your home through foreclosure, and you and your family would probably lose all the time and money you had invested in it.
It is most important to you that you make each mortgage payment on the date it is due. If at any time you are unable to make a payment on schedule, get in touch with your lender immediately. The lender may be able to help you avoid getting into serious difficulties. You can also reach out to the VA directly at 888-827-3702.