Friday, January 12, 2024

Common VA Myths

 You've heard them!

    We have all heard the myths about the VA, and they always vary wildly. Sometimes you'll hear one and it makes you want to rethink using your entitlement, I know that when I was looking at using mine the first time it made me hit the pause button a few times. After working in the industry, using the VA loan twice, and quite a few classes over it, I can finally put to rest some of the biggest myths that often make others hit the pause button on their home buying journey.

1. Zero Down = Weak Buyer 

    If you don't put any money down when you buy a house, it's because your credit isn't good, you haven't budgeted for it or that you're not ready to be buying a home. Aside from the fact that you've earned this unique benefit, lets take a look at some of the facts. The median FICO score is 736, the median household income for VA home-buyers is $105,227, and the national average cost of a VA loan on a home is $389,383. Zero down makes you a smart buyer that will still have a savings account after you've closed on your new home.

2. VA loans are harder to get through underwriting

Why would you want to use a loan that you are expecting to be a challenge to get approved? This myth puts you in the mindset that you will have a harder time using a VA loan over a different loan, and for the majority of the Military the VA loan is our only option. A VA Loan does not make it any more challenging to get through underwriting than another loan. Here is a quote from VA 26-7 "Underwriters are encouraged to consider every possible appropriate factor in seeking a proper basis for approving loan applications for every qualified Veteran".

3. VA loans take longer to close

I want to use my benefit, but it is going to take longer than other loan types. This is 100% false. The average VA loan closes within 3 days of a Conventional loan. This next one ties in with 2 above, but sometimes you can find lenders that have automatic underwriting authority on VA loans. 

4. You can only have one VA loan at a time.

A lot of Veterans think that you can only have one VA loan at a time, and that you have to satisfy your current loan before you get another one. This ties into eligibility, entitlements and qualifications. There is no max loan for any Veteran/Active Duty, or surviving spouse with full entitlement.

6. VA loan appraisals are extremely strict.

I want to get a new home but they are extremely strict and picky, will I be able to find the home I really like without having to worry if it will appraise? So this one is a two part explanation, but it benefits the buyer greatly. The VA loan has more opportunities to influence the value than any other loan. You can always do a Reconsideration of Value (ROV), and 87% of the time this shows an average increase of $7,000 dollars per $100,000 of value. The second part of this is that yes, the VA does have a unique set of guidelines and standards that must be met or satisfied to approve a loan. This means that if you were looking at a house and the VA said "Absolutely not", it was definitely in your best interest that the house didn't pass their standards. 

Now we come to what it all means!

    You're always going to hear myths about VA loans, and that is never going to stop. A lot of things are constantly changing, there are quite a few moving pieces in any loan type. You should take everything you hear with a grain of salt, and do your own research from licensed REALTORS, Lenders, and even people who have used the VA loan in the past. The more theories that you hear, the more you need to be asking questions to the ones who can give you educated and informed answers. I hope that you've found this helpful, I have been wanting to write this for awhile because I think it hits on a lot of the "what if" scenarios we inevitably create. I have links on my blog to the VA and VA resources, to include the sources for what I wrote here.



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