VA Busts Home Loan Myths That Hurt Veteran Homebuyers in Idaho
1 in 3 Veterans say they don’t know about this benefit
The VA Home Loan is the most powerful home buying tool on the market. It—and the GI Bill—literally reshaped post-War America, and it’s a big reason why the historic VA Loan Guaranty Program has surged since the housing crash.
Despite generations of historic success, though, several myths and misconceptions deter millions of Veterans and Service members from partaking in this benefit.
Part of the reason is the ongoing awareness battle–about 1 in 3 home buying Veterans didn’t know they had a home loan benefit, according to VA survey data. So let’s set the record straight regarding common VA Loan myths.
Myth 1: Widows, Widowers and Surviving Spouses Don’t Qualify for VA Mortgages
Fact: The VA offers a variety of benefits and services to spouses of service members who are deceased of permanently disabled including home loans.
Myth 2: Military Members Deployed Overseas Can’t get a VA Guaranteed Loan
Fact: The VA loan program is focused on helping veterans and service members purchase homes they will live in year-round as their primary residence.
These aren’t for buying vacation homes or investment properties, however there are exceptions to the occupancy requirement, the most common being that a spouse can fulfill it on your behalf.
Myth 3: Veterans Are At a Disadvantage Because VA Loans Cost the Seller More Than Other Loans
Fact: It’s true that the VA limits that closing costs that can be paid by a Veteran. Some lenders require that the seller pay the “non-allowable” closing costs.
At Benchmark we have options that will allow the Veteran to make competitive offers that don’t require the seller to pay extra costs.
Myth 4: VA Loans Take Longer to Process and Close
Fact: The VA Home loan can close as quick as any other type of home loan. You simply need a Certificate of Eligibility to start the process. Some Lenders have the ability to issue the CofE for you.
At Benchmark, we are approved for automatic processing of VA loans. As a result your loan can be processed and closed by us without waiting for VA’s approval of your credit application… which means a VA loan typically closes in the same amount of time as any other loan at Benchmark.
Myth 5: A Veteran Can Only Use Their VA Loan Benefits Once
Fact: Even though many veterans have already used their loan benefits, it may be possible for them to buy homes again with VA financing using remaining or restored loan entitlement.
Once you’ve earned your benefit, it’s yours for life.
Myth 6: VA Appraisals are More Stringent than FHA or USDA Appraisals
Fact: While the VA use to be much pickier about the properties they would finance, changes in the last few years have made the VA requirements very similar to the requirements on FHA and Conventional loans.
When compared to conventional loans, VA appraisals do have some safety hazards that are looked at, but this is in the Veteran’s best interest to have these items fixed before living in the home.
Myth 7: VA Purchase Loans Are Not For Short-Sale or Foreclosed Real Estate
Fact: Much like other loan programs, the VA looks at the condition of the properties that they are willing to finance.
However, the VA requirements are very similar to the requirements on FHA and Conventional loans.
Myth 8: Veterans Can Only Have One VA Home Loan at a Time
Fact: The VA will allow for the financing of more than one property so long as the Veteran has sufficient eligibility.
The formula is complex, but we are happy to help you determine whether you would qualify.
Myth 9: VA Doesn’t Do Jumbo loans
Fact: VA Loan Limits typically change every year. In 2018, the loan limit starts at $453,100, which is not a cap on how much an eligible veteran can borrow.
Rather, this limit helps determine how much qualified veterans can borrow before needing to make a down payment. VA borrowers can absolutely purchase a home above the county loan limit, but doing so requires a down payment – typically equal to 25 percent of the difference between the VA loan limit and the purchase price of the home.
Myth 10: The Veteran Has to Have Perfect Credit to Use the VA loan
Fact: The VA loan is one of the most lenient loan programs when it comes to past credit hiccups.
Depending on the circumstances, there are even instances when you may use your VA Loan just 12 months after a bankruptcy and/or foreclosure.
We would be happy to discuss your scenario with you directly to determine whether you will qualify.
Myth 11: VA Loans are More Expensive
Fact: A Loans, like all government loans (USDA, FHA) have a funding fee added to some of the loan amounts. This funding fee ranges from 1.75% to 3.3% for most on the purchase price.
However, depending on your discharge or first-time use, this could be as low as 0%! USDA charges 2% and FHA charges 1.75%. Both USDA and FHA loans have monthly mortgage insurance on top of the upfront fees added to the loan, whereas VA loans do not.
Conventional loans do not have an upfront fee, but if you go over 80%, they do have monthly mortgage insurance so in most cases you will find a VA loan to be cheaper than conventional loans as well. Also, you do not have to put a down payment on a VA loan, whereas FHA and conventional loans do require at least 3.5% or more.
Myth 12: Only Retired or Discharged Veterans can us VA Loan Benefits
Fact: The truth is active service members get access to the VA Mortgage benefit as well.
Myth 13: Reservists Don’t Have VA Home Loan Benefits
Fact: There are different requirements for the National Guard and Reserves members, but these members may still qualify for the same VA-home loan benefits.
Myth 14: VA Home Loans are Only for Purchasing a Home
Fact: You can use your VA Home Loan benefits to purchase a home, repair or improve an existing home (refinance), or purchase a lot.
Click Here to Find Out if You Qualify for a VA Home Loan