For almost 80 years, VA loans have helped our country’s military service members realize the dream of homeownership. Sellers and real estate agents who choose to ignore the VA benefit earned by military families and Veterans are missing an opportunity to work with a strong, pre-approved buyer, and are discriminating against those who have served their country.
There are several misconceptions about VA loans, from the amount the loan will cover, closing costs, timing and much more. Learning what a VA loan covers and how it works, can greatly increase the odds a seller has in finding a qualified buyer. Below we shine the light on five common myths about VA loans.
Closing Time
Misconception: VA loans are slower to close than other, more traditional, loans.
Truth: According to the Veterans Association of Real Estate Professionals, VA loans, on average, close two days faster than traditional loans.
Closing Costs
Misconception: The seller is responsible for all of the buyer’s closing costs.
Truth: Sellers are not required to pay any portion of closing costs, unless it’s negotiated in the contract. However, sellers are required to pay for a termite inspection, which, on average, costs approximately $100.
The Buyer has No Money
Misconception: People and families using a VA loan do not have the funds to afford a house.
Truth: Unlike traditional mortgages, a VA loan buyer is not required to come up with a down payment. Veteran buyers may actually have more buying power because didn’t need to come up with three to 20 percent for a down payment, and therefore, could have more money sitting in the bank.
The Appraisal will Come in Low
Misconception: All VA loan appraisals come in significantly lower than asking value.
Truth: All home loans, regardless if it’s a VA loan or not, require an appraisal. The difference is VA appraisals are required to meet Minimum Property Standards (MPR), and that report is submitted to the VA for approval. The VA wants to ensure that the home is safe and secure and a family can live in it without fear of health hazards.
VA Loan Limits are Low
Misconception: VA loans are only for lower-priced housing.
Truth: Veterans are allowed to purchase any home for which they qualify, and can go over the qualifying rate if there is additional financial backing. Only a small percentage of homes exceed the amount a VA loan will support.
Sellers should not be scared of VA loan offers, but should embrace them. The family on the other end is likely more qualified for the purchase than other offers, and they’re using a benefit backed by the government. Veterans and their families have sacrificed for our country, and disregarding their home offers is doing a disservice to the very people who have fought to protect our freedoms.