Simultaneous VA Loan Closings

Plan for VA Simultaneous Closing

Plan for VA Simultaneous Closing

WIth Real Estate creeping back toward “normal” we are now seeing more simultaneous closings.  A simultaneous close is when client sells one house and purchases another at the same time.  Oftentimes, they close on the exact same day.  Typically, some or all of the funds from the client’s sale are rolled over as a down payment on their new purchase.

It is always important that an Arizona home buyer time up their simultaneous sale and purchase.  After all, if the buyer’s sale is delayed or falls through than their purchase will be directly impacted.  If they needed the profit from the sale and/or they needed their previous loan to close  in order for their debt to income ratio to be low enough to qualify for their new loan than “impacted” is putting it lightly.  When a veteran is looking to use an Arizona VA loan to purchase their next home and they are simultaneously selling a home the stakes are a bit higher.

Buying and Selling with VA Home Loan

While all the important simultaneous closing factors such as cash to close and debt to income ratio are important on a VA transaction there is one VERY important factor that applies to only a VA simultaneous close.  What is so important?  It is called VA eligibility or entitlement.  You see, Veterans are granted a specific amount of VA entitlement which translates into how much they can borrow on a VA loan.  If a veteran does not have sufficient entitlement than their Arizona VA lender will not be able to close on their new VA home loan.  Their entitlement must be cleared prior to closing on their new VA loan in cases where they do not have enough VA entitlement due to the fact that they had a VA loan on the home they were selling.

This is where it get’s tricky – VA Planning

If the home the veteran is selling has a VA loan attached to it, the veteran may not have enough VA entitlement to qualify for their new VA loan until their previous loan closes AND the department of Veteran Affairs clears the veteran’s entitlement.  Don’t fret!  With some fancy footwork from the veteran’s Phoenix VA mortgage company, the VA can restore the veteran’s entitlement within the same day the veteran sells the home that is hogging all of their VA entitlement making them eligible for another new VA mortgage!

Planning a Simultaneous VA Loan Closing

While fancy footwork can save the day, veterans in need of restoring their entitlement after selling a property should give themselves and their VA mortgage lender at least 1 day before closing on a their new VA loan/new home.   This will allow for any possible delays the lender might run into when working with the department of Veteran Affairs on restoring the veteran’s entitlement needed for the new purchase.  Always a good idea to plan for potential delays especially when dealing with a government agency!  The great news, a simultaneous VA sale/purchase can be done.  Just make sure you do it right!

By Jeremy House

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