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When VA Loans Get Funded, What Happens Next?

If you're considering getting a VA mortgage loan, the chances are good that you have done plenty of research already. These loans offer substantial benefits over traditional mortgages from the average bank or credit union.

After all, if the government backs your loan, it's very likely that you'll get approved, even if your credit score isn't perfect or if you don't have a down payment. But what happens once your loan gets funded?

Well, it's time to start packing because you're about to buy your first home. While buying a home for the first time can be exciting, you must also act quickly, follow the set mortgage terms and conditions to ensure that everything goes as smoothly as possible from start to finish. This article will explore the basic things that happen once your VA loan gets funded. Read on to discover what you need to do once your VA loan has been financed.

Servicing Your Loan

Your loan servicing refers to where and how VA receives payments on your behalf. It's essential to keep up with the VA loan servicing process to ensure that your monthly payments get processed correctly and that you stay in good standing with the Department of Veterans Affairs. If you have questions about your VA loan and are looking for answers, it's essential to understand how servicing affects you and your finances.

It's important to note that you may not be sending the payments to the same institution that financed your home purchase when it comes time to pay your monthly mortgage. This seems odd, but it's completely normal. The lender who originated your loan can continue collecting payments, or they can sell off your mortgage note. This means a new company will be receiving monthly payments, forwarding your interest and principal portions as well as commencing foreclosure proceedings.

Even if you get a new loan servicer, your mortgage payment terms won't change whatsoever. Your VA loan servicer may be different from your mortgage lender or even your primary bank, but their job is to collect payments, handle any escrow issues, and deal with any other aspects of your loan without changing terms and conditions.

Your original lender must notify you at least 15 days before transferring your loan servicing to another company. They're required by law to provide you with precise information on who'll be servicing your loan and if the change will affect you. Below are the details that must be recorded on that notification:

  • The effective date and time of the loan servicing transfer

  • The name, contact information, and address of an institution or employee from your original lender and the new servicer; will enable you to contact them with any concerns.

  • The effective date and time your initial lender will stop receiving your monthly payments and when the new servicer will start.

  • A written and signed disclosure that the servicing transfer won't affect your loan's original terms and conditions.

While your new mortgage servicer may send you occasional messages reminding you of your loan terms, they’re not allowed to charge any late fees or penalties if you accidentally send your payment to the wrong place. That doesn’t mean you can’t be penalized, though—the rule is only active within the first 60 days from the effective date and time of servicing transfer. That said, it’s imperative to ensure all contact information for your new servicer is up-to-date and secure before making a switch.

Young couple owners moved into new home resting on couch

How to Keep Healthy Habits When Servicing Your VA Loan

When you sign up for VA loan servicing, it's essential to keep good habits about making timely mortgage payments. Those good habits will help you build a positive credit history, and in turn, may lower your interest rate on your VA loan. As long as you keep those habits intact, other lenders will look at your credit favorably if you decide to obtain a new loan.

While it may be easier said than done, a few things can help with achieving and maintaining good habits when handling your mortgage servicing. One of these is spending your cash slowly and scheduling your vast purchases like a new car purchase, home improvement projects, new appliances, etc.

What to Do if You Run Into Mortgage Trouble

If you’re having trouble paying your mortgage, you aren’t alone. Unfortunately, it is an all-too-common occurrence. When things get tough, you have options—and knowing what to do will give you peace of mind. Whether you need a few months to catch up on payments or want to restructure your loan for a better rate, here’s what to do if your mortgage payment is in trouble:

  • Reach your servicer right away if you find yourself stumbling to keep up with your monthly mortgage payments.

  • Contact your VA Regional Loan Center for more assistance.

  • Get in touch with VA’s foreclosure avoidance team at 877-827-3702

  • Contact the Servicemembers Civil Relief Act (SCRA) for homeowners protection if you're an active duty service member.


So you've been approved for your VA loan, and everything looks great on paper. You're ready to sign the paperwork and move on to the next stage of the process, but what happens when VA loans get funded? How does this process work? What do you need to know about servicing your loan? What if you run into mortgage payment problems? Generally, it's essential to understand what happens when your VA loan gets funded to better prepare yourself in handling your mortgage correctly.

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