Being a part of the military does entitle you to some really nice benefits and facilitations; one of which is the access to the VA home loans. These loans are available at very little to no down payment at all and millions of people have benefited from these in order to build their dream houses.
VA Loans cover financing as well as refinancing of mortgages and the credit guidelines can be altered to a great extent as per the user’s requirements. It is very unfortunate that many people who are entitled to these loans, do not opt to go for them because there seems to be a lot of misconceptions out there regarding the VA Loans. One of the biggest reasons behind this is that the rules and regulations regarding the VA Loans are subject to change and modifications based upon the feedback received from the users.
Let us now take a brief look at some of the biggest misconceptions regarding the VA Loans that are so prevalent nowadays.
The Biggest Misconceptions
The first and foremost misunderstood fact about the VA Loans are regarding their criteria of eligibility. People often tend to think that only those people can apply for the VA Loans who are currently serving in the military. On the contrary, anyone who has had a military career longer than 6 months are eligible for these loans.
The only requirement is that this six month window should be between 1964 to date. And the second biggest misconception is that people think that getting a Certificate of Eligibility makes certain that they would become entitled to the loan. That is certainly not the case. In order to qualify the applicant needs to prove that he has a good history of paying back his/her debts and has a reliable source of income.
One more thing that is very important to note here is regarding the funding fees.
A nominal amount of around 2.15% is required to be submitted as a one time payment. This is thought to be more expensive than the private mortgages, but in truth it is considerably less if you look at the figures in the long run. Private mortgages usually charge around 1 %, but those are the annual payments that need to be made.
There are also the perceptions that the VA Loans take a longer time to process than the normal house building loans. But there is no evidence available to support this supposition. Much like any other loan, the VA Loan applications are also processed within the month and the administrative body does not have to step in very often. Although the acceptance of an application is dependent on the private lenders but still the closing time is fairly acceptable.
And finally, it is quintessential to point out that there really is no real estate agent out there who is an expert in VA Loans. So it is advisable that you do not waste your time and money by going to them for consultations. Your best bet would be to look at a private lender who deals exclusively in VA home loans. These people generally have the most knowledge regarding the matter and can guide you better.
A seller can legally refuse to sell a home to a buyer for any reason they choose, including the type of loan a buyer is using to acquire the loan. Although it does not seem to make sense in a strong real estate market, some sellers choose to decline Offers that include the Veterans Administration (VA) loan financing.
Most buyers believe that if they bid near or at the selling price, the seller will naturally accept the offer. However, the selling price is just one of the considerations that a seller takes into account when considering the offer Of a buyer. Most marketers base the value of an offer on the amount of money they will receive once the sale is completed, or on their sales network. If an offer is at full price but comes with costs And additional charges, may be a lower offer than another that is for less money, but comes with lower costs.
One of the problems vendors have with VA loans is that there are closing costs that can only be paid by the seller but which other loan programs allow to pay for other parties.
These costs include common expenses such as document preparation, administrative, subscription, processing, transfer, tax service and notary expenses. This is not a big problem in areas where it is common for the seller to pay the majority Or all closing costs, but in other areas where sellers are not accustomed to paying closing costs, may cause a seller to refuse an offer.
VA should use VA appraisers to perform evaluations on VA loans. These appraisers not only determine the value of the prospective home but also verify that the home meets the minimum property standards set by the Veterans Administration. Although these standards are not so Strict as they were before 2006, a home must still be safe, stable and sanitary.
If a home has serious problems, such as foundation problems, roof problems or structural defects, the VA will not insure the loan until repairs are made . The seller must pay for these repairs even if the buyer pays more for the home to compensate. Sellers who believe that they would have to make this kind of repair and who do not have the money or the will to do so may opt to decline an offer To avoid going through the VA evaluation process.
Many sellers who reject an offer depend on the VA financing they do because they operate under a misconception. Some believe that because VA loans are 100 percent buyer financing or the loan program is unstable.
The VA loan program is a stable program with consistent guidelines. The lack of down payment is not a reflection of the buyer’s quality. Others believe that it takes more time to close a VA loan. Actually, you need a loan agent With experience no longer to close a VA loan than a conventional loan program does, even though there are more bureaucratic procedures.