Think back on your time as a real estate agent. Have you seen a listing that accepted Conventional, FHA and USDA but didn’t mention VA financing?
I think most agents have seen at least one. There are sellers and agents who are hesitant to accept VA offers, often because of misconceptions. It’s no doubt difficult to explain why to a VA buyer.
That’s why education for all parties is key.
Hesitation and needless fear can melt away with the proper understanding of the VA mortgage process. There’s a lot of myth and misunderstanding surrounding this historic home loan program, which has helped millions of Veterans and service members since World War II.
Agents who cut through the stereotypes and misnomers are doing their military clients a great service.
Arm yourself with these responses to those sellers and agents hesitant to consider VA offers.
Why Turn Away a Preapproved Buyer?
The VA may guaranty the mortgage, but private lenders are the ones doing the lending. This means VA buyers go through a preapproval process and underwriting with their lender just like everyone else.
If you have a VA buyer with a preapproval letter in hand, they’ve gone through the same, if not more stringent, preapproval process as the other buyers.
In fact, VA loans have had the lowest foreclosure rate of any product on the market for nearly all of the last eight years. This is due in part to prudent underwriting standards, residual income requirements and appraisals that focus on the health and safety of the occupants.
So not only are these buyers preapproved, but they’re actually more reliable and less risky, based on foreclosure criteria.
VA Appraisal Protections
There’s a host of stereotypes about VA appraisals, including “VA appraisals take forever” and “VA appraisals always come back with extensive repair lists.”
The VA established timeliness requirements for each state to guide agents and set appropriate expectations for appraisers. Nationally, they’re coming back in around 10 days on average.
The VA also established Minimum Property Requirements to protect Veterans and service members from homes that could cause physical or financial harm. Pursuant to the MPRs, homes must be safe, sanitary and structurally sound.
Some agents become frustrated when an appraisal notes needed repairs. Frustration is understandable when you want a home to close quickly. Try to remember that any repairs noted are there to protect the Veterans and service members who’ve protected our country.
It’s also important to remember that sellers don’t have to cover the cost of each and every repair. Buyers can pay for some of these as well.
Familiarize yourself with the VA’s Minimum Property Requirements so you can educate your buyers on what properties will and will not likely require extensive repairs.
Not Your Grandfather’s VA Loan
The current VA loan guaranty program is a far cry from the VA loan program of the past. The original legislation was created in 1944 to support those who served in World War II.
2014 marked the 70th anniversary of the VA loan and a lot has changed since its inception.
Several legislative updates and the use of technology have significantly impacted the process and turn times. It’s now more streamlined and convenient. A lender can obtain a certificate of entitlement automatically, order appraisals and conduct communication through the VA’s online portal.
One of the big misconceptions with VA loans is they take a lot longer to close as compared to conventional mortgages. This just isn’t the case anymore. When your buyer works with a VA knowledgeable lender, you’ll likely see the home close in 30 – 45 days.
It’s beneficial for all parties if the buyer works with a lender that understands the unique requirements of VA loans. If you’re working with a company that only closes one or two VA loans a year, you may run into delays due to unfamiliarity with the loan product.
Serving Those Who Served
Buyers using a VA loan have served our country. Typically, after 90 days on active duty or six years in the National Guard or Reserves, these service members join the elite ranks of individuals who have earned the VA mortgage guaranty benefit.
Additionally, those who were discharged early due to service-connected injuries and surviving spouses may also be eligible.
These men and women deserve our highest appreciation and praise. This mortgage option above all others was hard-earned.
VA loans aren’t the right fit for every military borrower, but they’ve helped expand access to homeownership in a time of tight lending.